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When using the EFE matrix we identify the key external opportunities and threats that are affecting or might affect a company. Where do we get these factors from? Strengths and weaknesses are used as the key internal factors in the evaluation.
When looking for the strengths, ask what do you do better or have more valuable than your competitors have? In case of the weaknesses, ask which areas of your company you could improve and at least catch up with your competitors? The general rule is to identify key external factors and additional key internal factors, but you should identify as many factors as possible.
Weights Each key factor should be assigned a weight ranging from 0. The number indicates how important the factor is if a company wants to succeed in an industry. If there were no weights Airasia swot analysis, all the factors would be equally important, which is an impossible scenario in the real world.
The sum of all the weights must equal 1. Separate factors should not be given too much emphasis assigning a weight of 0. Weights have the same meaning in both matrices. The numbers range from 4 to 1, where 4 means a superior response, 3 — above average response, 2 — average response and 1 — poor response.
Ratings, as well as weights, are assigned subjectively to each factor. The company is better prepared to meet the threats, especially the first threat. The ratings in internal matrix refer to how strong or weak each factor is in a firm.
The numbers range from 4 to 1, where 4 means a major strength, 3 — minor strength, 2 — minor weakness and 1 — major weakness. The process of assigning ratings in IFE matrix can be done easier using benchmarking tool. Each key factor must receive a score.
Total weighted score is simply the sum of all individual weighted scores. The firm can receive the same total score from 1 to 4 in both matrices.
The total score of 2. In internal evaluation a low score indicates that the company is weak against its competitors. In our example, the company has received total score 2. The company should improve its strategy and focus more on how take advantage of the opportunities.
Benefits Both matrices have the following benefits: The input factors have a clear meaning to everyone inside or outside the company. The matrices do not require extensive expertise, many personnel or lots of time to build. Focuses on the key internal and external factors.
Unlike some other analyses e. Both analyses only identify and evaluate the factors but do not help the company directly in determining the next strategic move or the best strategy.
Other strategy tools have to be used for that. SWOT matrix has the same limitation and it means that some factors that are not specific enough can be confused with each other.
Some strengths can be weaknesses as well, e. The same situation is with opportunities and threats. Therefore, each factor has to be as specific as possible to avoid confusion over where the factor should be assigned.
Using the tool Step 1. Do the PEST analysis first. The information from the PEST analysis reveals which factors currently affect or may affect the company in the future. At this point, the factors can be either opportunities or threats and your next task is to sort them into one or the other category.In December , just a few months after the terrorist attacks on New York and Washington left the international airline industry reeling, a new Malaysian company called ‘Tune Air’ purchased a small underperforming domestic Malaysian airline known as ‘AirAsia’ for 1 Malaysian ringgit and the assumption of 40 million ringgit in debt.
This SWOT example for 7-Eleven convenience stores is designed to help you understand and structure a SWOT analysis. It is ideal for university assignments or as a template for a business exercise.
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The SWOT analysis of the both companies have identified that the companies have several strengths and opportunities. However the recently the companies have .