Burger King

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B. External Factor Evaluation (EFE) Matrix

External Factor Evaluation (EFE) matrix is a well-known strategic tool has been used for the evaluation of external environment of a firm. External environment mainly consist of political, legal, economic, social and technological factors. A firm should determine the external factors and segregate them into opportunities and threats. The opportunities are the options available for a firm to further strengthen its position in an industry only if a firm exploits each offered opportunity. On the other hand, threats are considered as negative factors for a firm which may harm its position in an industry however, impact of threat could be minimized or eliminated if a firm responds to each threat in a timely manner.

Steps in developing the EFE Matrix:

1. Identify a list of KEY external factors (critical success factors). 2. Assign a weight to each factor, ranging from 0 (not important) to 1.0 (very important). 3. Assign a 1-4 rating to each critical success factor to indicate how effectively the firm’s current strategies respond to the factor. (1 = response is poor, 4 = response is extremely good) 4. Multiply each factor’s weight by its rating to determine a weighted score. 5. Sum the weighted scores.

Burger King’s EFE Matrix

Opportunities 
 Weight
 Rating
Weighted Score 
 Operates in fast growing industry
0.07 (7%) 
 3
 0.21
 Increase in demand of healthy products
 0.08 (8%)
 3
 0.24
 Cost competition
 0.09 (9%)
 2
 0.18
 Merger and acquisition
 0.06 (6%)
 2
 0.12
 Incorporate healthy food in its menu
 0.10 (10%)
 3
 0.30
 Globalization
 0.10 (10%)
 3
 0.30
 Threats
 
 
 
 Strong competition especially from Burger King
 0.10 (10%)
 3
 0.30
 New entrants in fast food industry
 0.05 (5%)
 3
 0.15
 Online sales increasing which will results in increasing competition  0.10 (10%)
 3
 0.30
 Changing consumer habits
 0.05 (5%)
 2
 0.10
 Political issues...
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