Professional Documents
Culture Documents
Analytical Framework
Analytical Framework
Analytical Framework
Also called:
– Environmental Scanning
– Industry analysis
External Factor Evaluation (EFE) Matrix
Examples:
Development of Opportunities
Threats to be avoided
Importance of External Environment on Firm Behavior
Changes
Changesin
inthe
the Changes
Changesin
in Changes
Changesininthe
the
External
External Consumer
Consumer Products
Productsand
and
Environment
Environment Demand
Demand Services
ServicesaaFirm
Firm
Offers
Offers
Relationship Between Key External Forces and an Organization
Competitors
Competitors
Suppliers
Suppliers
Creditors
Creditors
Customers
Customers
Economic Employees
EconomicForces
Forces Employees
Communities
Communities
Social,
Social,cultural,
cultural, Managers
Managers
demographic,
demographic,andand AN
environmental
Stockholders
Stockholders ANORGANIZATION’S
ORGANIZATION’S
environmental Labor OPPORTUNITIES
OPPORTUNITIESAND
forces Laborunions
unions AND
forces Governments THREATS
THREATS
Governments
Technological
Technological Trade
Tradeassociations
associations
forces
forces Special
Specialinterest
interestgroups
groups
Competitive Products
Products
Competitive
forces Services
Services
forces
Markets
Markets
Natural
Naturalenvironment
environment
Economic Forces
• Examples include interest rates, tax rates,
inflation rates, consumption patterns, value of
the dollar, etc.
+5
+4
Conservative +3 Aggressive
+2
+1
Worst
CA IS
-6 -5 -4 -3 -2 -1 0 + 1 + 2 +3 + 4 + 5 + 6
Best -1
-2
Defensive -3
Competitive
-4
-5
Worst
-6
ES
• Stay close to competencies • Use internal strengths
• Don’t take excessive risks • Take advantage of external opportunities
• Market penetration • Avoid external threats
• Market development
FS • Market penetration
• Product development • Market development
• Concentric diversification • Product development
• Backward integration
• Forward integration
• Horizontal integration
Ag
ti ve gr • Conglomerate diversification
a es • Concentric diversification
rv siv • Horizontal diversification
nse e
Co
• Combination
CA IS
De ti ve
fe ti
ns
ive pe
m
Co • Backward integration
• Improve internal weaknesses
• Avoid external threats • Forward integration
• Retrenchment • Horizontal integration
• Divestiture • Market penetration
• Liquidation • Market development
• Concentric diversification • Product development
ES • Joint venture
ES avg.score = -3.4 + Average FS Score(3.16) = -0.24
Average CA Score = -2.14 +Avg.IS score (+3.43) = +1.29
Conclusion
• According to graph,ABC Entertainment falls into
the competitive quadrant of the SPACE matrix.
• It shows that ABC entertainment is good in
financial strength and average in environmental
stability.
• Therefore the company has to achieve the
competitive advantage by adopting growth
strategies in order to increase market share and
explore the product demand.
Internal-External
(IE) Matrix
Internal-External (IE) Matrix