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

Instructions

Step 1 Join with two other students in class, and jointly prepare an EFE Matrix for McDonald’s Corporation. Refer back to the Cohesion Case and to Exercise 1A, if necessary, to identify external opportunities and threats. Use the information in the S&P Industry Surveys that you copied as part of Assurance of Learning Exercise 1A. Be sure not to include strategies as opportunities, but do include as many monetary amounts, percentages, numbers, and ratios as possible.

Step 2 All three-person teams participating in this exercise should record their EFE total weighted scores on the board. Put your initials after your score to identify it as your team’s.

Step 3 Compare the total weighted scores. Which team’s score came closest to the instructor’s answer? Discuss reasons for variation in the scores reported on the board.

Data from Exercises 1A

The purpose of this exercise is to get you familiar with strategy terms introduced and defined in Chapter 1. Let’s apply these terms to McDonald’s Corporation (stock symbol = MCD). 

Instructions

Step 1 Go to www.mcdonalds.com, which is McDonald’s Web site. Click on the word Search. Then type in the words Annual Report. Then print the 2009 McDonald’s Annual Report. This document may be 100 pages, so you may want to print it in your college library or order the report directly from McDonald’s as indicated on the Web site. The Annual Report contains excellent information for developing a list of internal strengths and weaknesses for MCD.

Step 2 Go to your college library and make a copy of Standard & Poor’s Industry Surveys for the restaurant industry. This document will contain excellent information for developing a list of external opportunities and threats facing MCD.

Step 3 Go to the www.finance.yahoo.com Web site. Enter MCD. Note the wealth of information on McDonald’s that may be obtained by clicking any item along the left column. Click on Competitors down the left column. Then print out the resultant tables and information. Note that McDonald’s two major competitors are Yum! Brands, Inc. and Burger King Holdings.

Step 4 Using the Cohesion Case, the www.finance.yahoo information, the 2009 Annual Report, and the Industry Survey document, on a separate sheet of paper list what you consider to be MCD’s three major strengths, three major weaknesses, three major opportunities, and three major threats. Each factor listed for this exercise must include a %, #, $, or ratio to reveal some quantified fact or trend. These factors provide the underlying basis for a strategic plan because a firm strives to take advantage of strengths, improve weaknesses, avoid threats, and capitalize on opportunities.

Step 5 Through class discussion, compare your lists of external and internal factors to those developed by other students and add to your lists of factors. Keep this information for use in later exercises at the end of other chapters.

Step 6 Be mindful that whatever case company is assigned to your team of students this semester, you can start to update the information on your company by following the steps just listed for any publicly-held firm.