Igna Corporation Internal and External Factors Evaluation Matrix
Business Strategy and Policy
Perform an External Factor Evaluation Matrix on your chosen corporation (Cigna Corp is my chosen company). The critical thing to remember about this analysis is that you should develop a thorough understanding of the factors chosen. Because of the importance of factor knowledge, you should acquire a minimum of five external sources of information regarding the factors that you choose. Your analysis should include a chart similar to the one attached to this document.
Choose 6-10 external factors for analysis (total factors will depend on the nature of the industry)
Four pages or less (not including chart)
Chart Must begin the assignment and be on one page only
For each factor write a paragraph or two as necessary discussing the nature of the factor, how it will impact the firm, and its importance to the future strategy of the firm (i.e., tell me why you assigned the rating score that you did).
INDUSTRY ANALYSIS: THE EXTERNAL FACTOR EVALUATION (EFE) MATRIX
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information. Illustrated in Table 1, the EFE Matrix can be developed in five steps:
1. List key external factors as identified in the external-audit process. Include a total of from eight to ten factors, including both opportunities and threats affecting the firm and its industry. List the opportunities first and then the threats. Be as specific as possible, using percentages, ratios, and comparative numbers whenever possible.
2. Assign to each factor a weight that ranges from 0.0 (not important) to 1.0 (very important). The weight indicates the relative importance of that factor to being successful in the firms industry. Opportunities often receive higher weights than threats, but threats too can receive high weights if they are especially severe or threatening. Appropriate weights can be determined by comparing successful with unsuccessful competitors or by discussing the factor and reaching a group consensus. The sum of all weights assigned to the factors must equal 1.0.
3. Assign a 1-to-4 rating to each key external factor to indicate how effectively the firms current strategies respond to the factor, where 4 the response is superior, 3 the response is above average, 2 the response is average, and 1 the response is poor. Ratings are based on effectiveness of the firms strategies. Ratings are, thus, company based, whereas the weights in Step 2 are industry based. It is important to note that both threats and opportunities can receive a 1, 2, 3, or 4.
4. Multiply each factors weight by its rating to determine a weighted score.
5. Sum the weighted scores for each variable to determine the total weighted score for the organization.
Regardless of the number of key opportunities and threats included in an EFE
Matrix, the highest possible total weighted score for an organization is 4.0 and the lowest possible total weighted score is 1.0. The average total weighted score is 2.5. A total weighted score of 4.0 indicates that an organization is responding in an outstanding way to existing opportunities and threats in its industry. In other words, the firms strategies effectively take advantage of existing opportunities and minimize the potential adverse effect of external threats. A total score of 1.0 indicates that the firms strategies are not capitalizing on opportunities or avoiding external threats.
An example of an EFE Matrix is provided in Table 1 for UST, Inc., the manufacturer of Skoal and Copenhagen smokeless tobacco. Note that the Clinton administration was considered to be the most important factor affecting this industry, as indicated by the weight of 0.20. UST was not pursuing strategies that effectively capitalize on this opportunity, as indicated by the rating of 1.01. The total weighted score of 2.10 indicates that UST is below average in its effort to pursue strategies that capitalize on external opportunities and avoid threats. It is important to note here that a thorough understanding of the factors being used in the EFE Matrix is more important than the actual weights and ratings assigned.
External Factor Evaluation Matrix (EFE)
KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE
1. Global markets are
practically untapped by
market .15 1 .15
2. Increased demand
caused by public
banning of smoking .05 3 .15
3. Astronomical Internet
advertising growth .05 1 .05
4. Pinkerton is leader in
discount tobacco market .15 4 .60
5. More social pressure to
quit smoking, thus
leading users to switch
to alternatives .10 3 .30
1. Legislation against the
tobacco industry .10 2 .20
2. Production limits on
resource competition .05 3 .15
3. Smokeless tobacco
market is concentrated
in southeast region of
United States .05 2 .10
4. Bad media exposure
from the FDA .10 2 .20
5. Clinton administration .20 1 .20
TOTAL 1.00 2.10
Business Strategy and Policy
Perform an Internal Factor Evaluation on your chosen corporation. The critical thing to remember about this analysis is that you should develop a thorough understanding of the factors chosen. Your analysis should include a chart similar to the one shown in Assignment #3 with the notable exception that categories should be a?Strengthsa? and a?Weaknessesa? instead of opportunities and threats.
A financial ratio analysis can be critical in finding some internal factors. Some websites that you may want to use are; bloomberg.com, , and other sites in collecting this information. The basic idea is to use ratio analysis (comparison of your company to its industry and competitors) to support the factors that you choose.
**We will be covering ratio analysis in this class. You should be able to obtain various financial ratios for your company by completing the following steps.
1. Go to Click a?moneya? on the top blue bar portion of the site
3. Type your companyas ticker symbol in the space provided and click a?get quotea?
4. Your companyas stock information should now be displayed. Find a?Fundamentalsa? along the left of the page
5. Click a?Key Ratiosa?
6. In the center of the screen are now options to click through all categories of key financial ratios for your firm. Please click through each of these pages:
Growth rates; Price ratios; Profit margins; Financial condition; Investment returns; Management efficiency
7. Print out each page and analyze
a? Do a chart identical to the EFE, except of course that the factors will be internal.
a? Choose 8-10 internal factors for analysis (or as many as you can discover).
a? Less than Four pages
a? Double spaced
a? For each factor write a paragraph or two as necessary discussing the nature of the factor, how it will impact the firm, and its importance to the future strategy of the firm (i.e., tell me why you assigned the weight and rating score that you did).
NOTE: PLEASE DONaT DO THE CHART BASE ON THE INFORMATION YOU PROVIDE IN THE PAPER I WILL DO IT. MY Company Name is CIGNA Corp NYS: CI