Efas and Ifas

David Carr MGT485-1102B-02 Global Strategic Management Unit 2-Discussion Board 06/12/2011 In business we must consider planning activities about the organizations future. The focus of strategic planning is not to predict the future but instead on making better decisions here and now in order to reach a desired future. There is no known certainty about the future and business managers must make assumptions about what the future will hold.

In a previous discussion, we talked about strategic management planning and its aspects, the four basic elements were environmental scanning, strategy formulation, strategy implementation and evaluation and control (Hunger and Wheelen, 2007). This week’s assignment, we will describe the EFAS and the IFAS. Explain the purpose of each tool? We will also explain if there are any weaknesses in the EFAS/IFAS classification system?

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External Factors Analysis Summary (EFAS)- Is a tool that business strategists use to organize the external factors into the generally accepted categories of opportunities and threats as well as to analyze how well a particular company’s management (rating) is responding to these specific factors in light of perceived importance (weight) of these factors to the company.

Which has five columns, the first column lists the opportunities and threats, the second column list the weight assigned to the factor that is mentioned where the total weights adds up to 1. 0, the third column list the rating given to each factor from 5 outstanding to 1 poor, the fourth column list the weighted score which is the rating multiplied by the weight and the fifth column list the comments for that column giving us a composite score that range from 1 to 5 about how well the company is responding to external factors (Hunger and Wheelen, 2007).

The purpose of this tool is a business must scan its external environment for opportunities and threats, this scanning is the monitoring, evaluating and disseminating of information from the external environment to key personnel inside the organization to avoid strategic surprises and to ensure long-term health of the company which researchers have found a positive relationship between environmental scanning and profits for the organization. The variables that affect a corporation are ocietal environments (Economic forces, Technological forces, Political-legal forces and sociocultural forces) and task environments (Governments, local communities, suppliers, competitors, customers, creditors, employees, labor unions, special interest groups and trade associations). These factors can help the organization to determine its external factors analysis summary by the weights assigned to each aspect of its importance to business organizations and its response (Hunger and Wheelen, 2007).

Internal Factors Analysis Summary (IFAS)- Is a tool that business strategists use to organize the internal factors into the generally accepted categories of strengths and weaknesses and to analyze how well a particular company’s management is responding to these specific factors in light of the perceived importance of these factors to the company. The strengths and weaknesses are listed to obtain a composite score of how well the company is responding to internal factors (Hunger and Wheelen, 2007).

Although scanning the external environment is not enough to provide an organization with a competitive edge, strategic managers must look inside the organization itself to identify its internal strategic factors, the strengths and weaknesses that are most likely to determine whether the company will be able to take advantage of opportunities while they avoid likely threats. This internal scanning can be called an organizational analysis which is concerned with identifying and developing a company’s resources.

Those resources are the company’s assets like plant, equipment, location and human assets like the number of employees and the skills that they bring with them to the organization and organizational assets like culture and reputation. Strengths and weaknesses can determine if a company has a sustainable advantage along with many other internal factors that can be used to forecast the organizations internal factors analysis summary and a company’s response to its composite score from the internal environment (Hunger and Wheelen, 2007).

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