What is the next step after multiplying each factor's weight by its rating in an External Factor Evaluation (EFE) Matrix?

What is the next step after multiplying each factor's weight by its rating in an External Factor Evaluation (EFE) Matrix?

• A. Identifying key external factors
• B. Summing the weighted scores for each variable
• C. Determining preferred strategic factors
• D. Drawing the horizontal and vertical lines for the matrix

Answer: (B)

In the context of the External Factor Evaluation (EFE) Matrix, the next logical step after multiplying each factor’s weight by its rating is to sum the weighted scores for each variable. This summation is crucial because it consolidates the weighted assessments of all identified external factors into a single overall score, which reflects the organization's performance relative to those factors. This score provides a quantitative measure that can be compared to the evaluations of competitors or previous assessments, helping to identify strengths and weaknesses in strategic positioning. The overall score helps decision-makers focus on the essential external elements that impact the organization. By analyzing the summed scores, organizations can gain insights into how effectively they are responding to external challenges and opportunities, informing strategic planning and resource allocation.

In the context of the External Factor Evaluation (EFE) Matrix, the next logical step after multiplying each factor’s weight by its rating is to sum the weighted scores for each variable. This summation is crucial because it consolidates the weighted assessments of all identified external factors into a single overall score, which reflects the organization's performance relative to those factors. This score provides a quantitative measure that can be compared to the evaluations of competitors or previous assessments, helping to identify strengths and weaknesses in strategic positioning.

The overall score helps decision-makers focus on the essential external elements that impact the organization. By analyzing the summed scores, organizations can gain insights into how effectively they are responding to external challenges and opportunities, informing strategic planning and resource allocation.