Assurance Exercise 3A:

DEVELOPING AN EFE MATRIX FOR MCDONALD’S CORPORATION

PURPOSE:

This exercise will provide practice developing an EFE Matrix. An EFE Matrix summarizes the
results of an external audit. This is an important tool widely used by strategists.

NOTES:

Five Steps for Developing an EFE Matrix:

1) List external factors.

2) Assign a weight from 0-1 with 0 being not important and 1 being very
important. The total weights assigned must equal 1.

3) Assign a 1-4 rating to each external factor based on effectiveness of current

strategy. 1 = Poor, 2 = Average, 3 = Above average, and 4 = Superior.

4) Calculate weight * rating.

5) Sum. The highest score is 4 while the lowest is 1. The average is 2.5.
 Weig Rati Weighted
OPPORTUNITIES ht ng Score

O1: Anticipated 4% growth rate in QSR industry. 0.06 3 0.18

O2: Low fat, low calorie, healthy hamburger –

first on market. 0.07 1 0.07

O3: Many restaurants have outdated

appearance. 0.06 3 0.18

O4: Respond to social changes by healthy food

innovations. 0.04 3 0.12

O5: Increased beverage options (Gourmet

coffees). 0.06 3 0.18

O6: Breakfast not available at 25% of locations. 0.06 3 0.18

O7: Joint ventures with retailers can place new

locations in high traffic areas at lower capital
cost. 0.03 4 0.12

O8: Continued focus on corporate social

responsibility. 0.02 2 0.04

O9: Int’l expansion into emerging markets. 0.06 3 0.18

O10: Diversify portfolio. 0.03 2 0.06

Weig Rati Weighted

THREATS ht ng Score

T1: More health conscious customers. 0.07 3 0.21

T2: Vulnerability in older, established markets to

modern upstarts. 0.04 3 0.12

T3: Global economic recession = reduced

consumer spending. 0.06 4 0.24

T4: Markets in US and EU are mature and

saturated. 0.07 3 0.21
T5: Subway and YUM! Brands expanding into
developing markets at a higher rate. 0.06 2 0.12

T6: Litigation 0.03 3 0.09

T7: Brand equity at risk: 80% of restaurants

owned by franchisees. 0.04 3 0.12

T8: Contamination of the food supply could

damage sales, reputation, etc. 0.04 4 0.16

T9: Intense price pressure from competitors. 0.07 4 0.28

T10: Negative public opinion campaigns. 0.03 2 0.06

TOTAL: 1.00 2.92