Automotive Industry External Factor Evaluation (EFE) Matrix

In the first column lists key external factors, namely opportunities and threats. These key external factors are derived from tine external-audit process including the opportunities and threats exercise, the CPM (competitor analysis), Porter’s Five Forces, the industry life cycle, and profit pools.

The second column is weights assigned to each factor. They show the relative importance of that factor to being successful in the firm’s industry. The sum of all weights equals 1.0.

The third column is the rating. This represents how effectively GM’s existing strategies address each factor. A 4 means it responds to that factor superbly, while a 1 indicates a poor response.

The weighted score is in the last column. This figure is simply the weights multiplied by the ratings. At the bottom of the last column lies the total weighted score. 1.0 is the lowest possible, 2.5 the middle, and 4.0 is the highest.

With a rating of 2.1, GM is not performing exceptionally well. It is slightly below the average possible score of 2.5. This is in response to the industry’s key external opportunities and threats.