External Factor Evaluation Matrix of Godrej India

External Factor Evaluation (EFE) matrix method is a strategic-management tool often used for assessment of current business conditions. The EFE matrix is a good tool to visualize and prioritize the opportunities and threats that a business is facing.
By adding the weighted score of various opportunities and threats of Godrej, we get the total weighted score of 2.90. Here it should be noted that the highest possible total weighted score of a firm is 4 whereas the lowest possible total weighted score is 1. The total weighted score remains in the limit of 1 to 4 regardless of the total number of opportunities and threats. Similarly, the average total weighted score is 2.5. If the total weighted score of a company is 4, it means that the company is effectively taking advantage of existing opportunities and is also able to minimize the risk. On the other hand, the total weighted score of 1 shows that firm is not able to take advantage of current opportunities or avoid external threats.

External strategic factors	Weight	Ratings	Weighted score
Opportunity
Market globalization	0.10	4	0.40
Manufacturing system more efficient	0.05	2	0.10
Use of standard parts of model	0.05	2	0.10
Competitive advantage	0.05	3	0.15
Innovation	0.10	2	0.20
Global economic growth	0.10	2	0.20
Brand Loyalty	0.10	3	0.30

Threats
Restriction in markets	0.05	4	0.80
Environmental regulatory controls	0.05	1	0.05
Competitors	0.15	3	0.30
Distribution Channel	0.15	3	0.30
Total	1.00		2.90

In the case of Godrej Refrigerator, the total weighted score is above average, which means that the Godrej strategies are effective and the company is taking advantage of existing opportunities along with minimizing the potential adverse effects of external threats.
The most important factors for external factors analysis are globalization, growth, innovation and brand loyalty. So these factors are given 0.10 each. Among threats, there are supply chain, distribution channel and competitors. Competitors and distribution channel get 0.15 points. Other factors also influence.
Here are few factors that are identified on the basis of study and data. Few factors that are strength to the company are brand loyalty and globalization. Godrej has spread its business all over the globe. It is running its business in more than 16 countries. As of now it is trying to capture the Middle East and South East Asian markets. So it is given 4 out of 5. As Godrej is a home ground company, consumers use to have more faith and it gets an identity of local manufacturer. But the competitors like Whirlpool, Videocon and Samsung are bringing more innovation. So it scores low in innovation, manufacturing standard and market growth. If we see recent year’s data we will get to know that its market share has decreased rapidly. But still Indian is loyal to this brand.
In the study it is found that the distribution channel of Godrej is not up to that mark. Competitors like Samsung, Whirlpool and Videocon are paying more commission and they have a strong relation with their distributors. So this factor gets lesser score. Competitive advantage is that Godrej is making its product in India, which is a cheaper market. They get engineers, workers and staffs in a very low salary. That’s the competitive advantage they are getting.

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