External Factor Evaluation (EFE) Matrix is a strategic management tool which allows the strategists to examine the cultural, social, economic, demographic, political, legal, and competitive information. EFE Matrix indicates whether the firm is able to effectively take advantage of existing opportunities along with minimizing the external threats. Similarly, it will help the strategists to formulate new strategies and policies on the basis of existing position of the company. An example of external factor evaluation (EFE) matrix is given for the Perrigo Company (Leading global healthcare supplier that develops, manufactures and distributes over-the-counter (OTC) and prescription pharmaceuticals).

Steps in the Construction of EFE Matrix