Exam

Name___________________________________

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1)
Industry analysis is also referred to as external strategic management audit.

1)

_______

2)
An external audit focuses on identifying and evaluating trends and events within the control of
management.

2)

_______

3)
The aim of an external audit is to develop an exhaustive list of every possible factor that could influence
the business.

3)

_______

4)
External audits attempt to identify key variables that offer actionable responses.

4)

_______

5)
Five major categories of external variables are 1) economic forces; 2) social and cultural forces; 3)
political, governmental and legal forces; 4) technological forces; and 5) demographic forces.

5)

_______

6)
As many managers and employees as possible should be involved in the process of performing an
external audit.

6)

_______

7)
To perform an external audit, a company first must gather competitive intelligence and information about
social, cultural, demographic, environmental, economic, political, legal, governmental and technological
trends.

7)

_______

8)
Freund argues that key external factors must not be hierarchical.
8)

_______

9)
Research findings suggest that a greater percentage of a firm's profitability can be explained by the
industry than can be explained by the firm's internal factors.

9)

_______

10)
An economic trend in the Arab world is an increasing number of two-income households.

10)

______

11)
Economic factors do not have much impact on the attractiveness of strategies.

11)

______

12)
An increase in interest rates is directly related to an increase in both discretionary income and the
demand for discretionary goods.

12)

______

13)
In Arab countries that are oil producers, government expenditures increase and jobs become more
readily available when oil revenues increase.

13)

______

14)
In some Arab countries, companies that depend heavily on imports benefit greatly when the dollar falls
against the yen and euro.

14)

______

15)
Decreasing demands for oil will significantly impact the economies of many countries in the Middle East
region, as these countries are either oil producers or labor exporters for the oil-producing countries.

15)

______

16)
The Arab region is experiencing little change in terms of social priorities and population changes.

16)

______

17)
The Arab world, in general, has a high rate of birth; and the youth demographic group is one of the
largest in the population.

17)

______

18)
With about 60 percent of its population under 25 years of age, the Arab world is one of the most youthful
regions in the world.

18)

______

19)
The Arab Human Development Report 2009 shows that life expectancy of the Arab population, on
average, jumped from 46 years in 1960 to about 70 in 2005.

19)

______

20)
All Arab countries share a similar culture and have the same ethnic and religious beliefs.

20)

______

21)
Spending on domestic and international travel by Gulf nationals in 2000 amounts to 8.7 percent of the
total personal consumption in the region, and is expected to grow at 5.2 percent per year over the next
decade.

21)

______

22)
Social and demographic trends are not shaping the way the Arabs live, work, produce, and consume.

22)

______

23)
Although the Arab world has one of the highest rates of expansion of the youth demographic in the world,
the growing percentage of the older segment is apparent in some countries.

23)

______
 24)
In 2050, approximately a quarter of the populations are expected to be aged 60 years and older in five
Arab countries.

24)

______

25)
Political, governmental, and legal factors are considered key threats for most small and large
organizations.

25)

______

26)
Political forecasts can be the most important part of an external audit for firms that depend heavily on
government contracts.

26)

______

27)
In addition to liberalization, Arab executives have shown an interest in asking their respective
governments to join the World Trade Organization and in protecting the environment.

27)

______

28)
Mass communication and high technology are creating similar patterns of consumption in diverse
cultures worldwide, which means that many companies may find it difficult to survive by relying solely on
domestic markets.

28)

______

29)
Within the European Union (EU), tax rates have been standardized to end competitive tax breaks among
member countries.

29)

______

30)
The Internet is changing the very nature of many industries by altering product life cycles and changing
the historical trade-off between production standardization and flexibility.

30)

______

31)
In practice, critical technology decisions are too often delegated to lower organizational levels or are
made without an understanding of their strategic implications.
31)

______

32)
Pepsi Bottling is the top beverage company in the U.S.

32)

______

33)
Competition in virtually all industries can be described as intense, and sometimes as cutthroat in the
Arab world.

33)

______

34)
"Innovate or evaporate; particularly in technology-driven businesses, nothing quite recedes like success"
is a characteristic of the most competitive companies.

34)

______

35)
Corporate intelligence can be defined as a systematic and ethical process for gathering and analyzing
information about the activities and general business trends of the competition, to further a business's
own goals.

35)

______

36)
Internal opportunities can be represented by major competitors' weaknesses.

36)

______

37)
According to Business Week, there are less than 500 corporate spies now actively engaged in intelligence
activities.

37)

______

38)
According to Business Week, 9 out of 10 large companies have employees dedicated solely to gathering
competitive intelligence.

38)

______

39)
An effective CI program allows all areas of a firm to access consistent and verifiable information in
making decisions.

39)

______

40)
Competitive intelligence is not considered corporate espionage because 95 percent of the information a
company needs to make strategic decisions is available and accessible to the public.

40)

______

41)
Because companies are fearful of corporate espionage, cooperative agreements between competitors are
becoming less popular.

41)

______

42)
Learning from the partner is a major reason why Asian and European firms enter into cooperative
agreements.

42)

______

43)
Market commonality is the extent to which the type and amount of a firm's internal resources are
comparable to a rival.

43)

______

44)
According to Michael Porter, five competitive forces create vital opportunities and threats to
organizations 1) new entrants; 2) substitute products or services; 3) bargaining power of suppliers; 4)
bargaining power of buyers; and 5) rivalry among existing firms.

44)

______

45)
The first step for using Porter's Five-Forces Model is to evaluate the relative strength of each competitive
force.

45)

______

46)
The most powerful of Porter's five competitive forces is usually the bargaining power of consumers.

46)
______

47)
Significant barriers to entry are not always sufficient to keep some new firms from entering industries
with higher-quality products, lower prices and substantial marketing resources.

47)

______

48)
Laser eye surgery would be considered a substitute product for eyeglasses and contact lenses.

48)

______

49)
Forward integration is used by firms to gain control or ownership of suppliers.

49)

______

50)
The bargaining power of consumers can be the most important force impacting competitive advantage.

50)

______

51)
Forecasts are educated assumptions about future trends and events.

51)

______

52)
Qualitative forecasts are most appropriate when historical data are available, and when the relationships
among key variables are expected to remain the same in the future.

52)

______

53)
Quantitative forecasts become less accurate as historical relationships become less stable.

53)

______

54)
Linear regression is based on the assumption that the future will be different from the past.

54)

______

55)
Linear regression is a popular technique for qualitative forecasts.

55)

______

56)
Without reasonable assumptions, the strategy-formulation process could not proceed effectively.

56)

______

57)
Globalization is a process of worldwide integration of strategy formulation, implementation and
evaluation activities.

57)

______

58)
A global strategy seeks to meet the needs of customers worldwide with the lowest cost at the highest
value.

58)

______

59)
A global strategy includes designing, producing, and marketing products with global needs in mind,
instead of considering individual countries alone.

59)

______

60)
It is clear that different industries become domestic for different reasons.

60)

______

61)
An EFE Matrix does not alow strategists to summarize and evaluate economic, social, cultural,
demographic, environmental, political, governmental, legal, technological, and competitive information.

61)

______

62)
In an External Factor Evaluation Matrix, opportunities often receive higher weights than threats, but
threats too can receive high weights if they are especially severe or threatening.

62)

______

63)
Regardless of the number of key opportunities and threats included in an External Factor Evaluation
Matrix, the highest possible total weighted score for an organization is 4.0, and the lowest possible total
weighted score is 0.0.

63)

______

64)
A Competitive Profile Matrix allows strategists to summarize and evaluate economic, social, cultural,
demographic, environmental, political, governmental, legal, technological, and competitive information.

64)

______

65)
Both a Competitive Profile Matrix and an EFE Matrix have the same meaning in the weights, ratings and
total weighted scores.

65)

______

66)
The critical success factors in a Competitive Profile Matrix are often the same as those in an EFE Matrix.

66)

______

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers
the question.
67)
________ is not part of an external audit.

67)

______
A)
Studying the political environment
B)
Analyzing social, cultural, demographic and geographic forces
C)
Analyzing financial ratios
D)
Analyzing available technologies
E)
Analyzing competitors

68)
Identifying and evaluating key social, political, economic, technological and competitive trends and
events are the main components of

68)

______
A)
performing an external audit.
B)
formulating strategy.
 C)
developing an effective mission statement.
D)
conducting an internal audit.
E)
implementing strategy.

69)
The process of performing an external audit needs to include

69)

______
A)
as many managers and employees as possible.
B)
between 15 to 20 managers for it to be valid
C)
stockholders and external government agencies
D)
primarily front-line supervisors
E)
only top level managers, as it's a planning function.

70)
To perform an external audit, a company first must

70)

______
A)
get an approval from the Securities and Exchange Commission.
B)
perform an internal audit.
C)
hire a consultant to develop a comprehensive strategic plan.
D)
gather competitive intelligence and information about external trends.
E)
all of these

71)
Freund emphasizes that key external factors should be all of these except

71)

______
A)
measurable.
B)
hierarchical in the sense that some will pertain to the overall company while others will be more narrowly
focused.
C)
important for achieving long-term and annual objectives.
D)
applicable to all competing firms.
E)
relatively few in number.

72)
The I/O approach to competitive advantage argues that external factors are ________ internal factors in a
firm achieving competitive advantage.

72)

______
A)
more important than
B)
less important than
C)
less common than
D)
more common than
E)
as important as

73)
According to I/O theorists, which of the following contributes least to firm performance?

73)

______
A)
Economies of scale
B)
Product differentiation
C)
Internal resources
D)
Barriers to market entry
E)
Level of competitiveness

74)
What happens to the demand for discretionary goods when interest rates rise?

74)

______
A)
It declines.
B)
It stays the same.
C)
There is no way to tell.
D)
It first rises then declines.
E)
It rises.

75)
The effect of trends in the dollar's value on companies in different industries and in different locations are

75)

______
A)
significant and equal.
B)
neglibible.
 C)
significant and unequal.
D)
insignificant and unequal.
E)
marginal and equal.

76)
Generally, at the present time, a high worldwide demand for ________ generates more revenue for Arab
countries and allows these countries to invest in various economic sectors.

76)

______
A)
gold

B)

food

C)

steel

D)

diamond

E)

oil

77)
The Arab world has just over _____ million people.

77)

______
A)
200

B)

250

C)

300

D)

350

E)

400

78)
Which of the following was a small village in the 1960s and is now a thriving world city?
78)

______
A)
Manama
B)
Muscat
C)
Jeddah
D)
Dubai
E)
Abu Dhabi

79)
Which Arab country or territory has the highest percentage of population aged 60 years and older as of
2000 ?

79)

______
A)
Lebanon

B)

Yemen

C)

Algeria

D)

Djibouti

E)

Tunisia

80)
Which Arab country or territory will have the highest percentage of population aged 60 years and older
as of 2050 ?

80)

______
A)
Comoros

B)

Sudan

C)

Kuwait

D)

Bahrain
 E)

UAE

81)
Who are the world's longest-living people?

81)

______
A)
Americans
B)
Japanese
C)
Filipinos
D)
Indians
E)
Egyptians

82)
Older population segments are especially interested in

82)

______
A)
crime prevention.
B)
financial servoces.
C)
travel and leisure.
D)
health care.
E)
All the above.

83)
Which large ethinic minority in North Africa contributes significantly to the economic prosperity and
development of the area?

83)

______
A)
Berber

B)

Moroccan

C)

Indian

D)

Kenyan
 E)

British

84)
When an industry relies heavily on government contracts, which forecasts can be the most important part
of an external audit?

84)

______
A)
Competitive
B)
Political
C)
Multinational
D)
Economic
E)
Technological

85)
Which of these does not significantly affect firms?

85)

______
A)
Lobbying activities
B)
Constitutional laws
C)
Antitrust legislation
D)
Tax rates
E)
Patent laws

86)
Some countries that have petitioned to be admitted to the EU include

86)

______
A)
Ukraine
B)
Georgia
C)
Turkey
D)
Croatia
E)
All the above

87)
Which company has survived as a manufacturer of inexpensive audio products by centralizing its world
production in Singapore?
87)

______
A)
Sony
B)
Panasonic
C)
Hewlett-Packard
D)
Philips
E)
General Electric

88)
Which country is Japan's largest trading partner?

88)

______
A)
U.S.

B)

UAE

C)

China

D)

U.K.

E)

Germany

89)
The term that refers to the EU's effort to end competitive tax breaks among member countries is

89)

______
A)
tax harmonization.
B)
double taxation.
C)
equity taxation.
D)
taxation bias.
E)
tax reconciliation.

90)
Technological advancements can create new ________ advantages that are more powerful than existing
advantages.

90)
______
A)
competitive
B)
social
C)
environmental
D)
economic
E)
comparative

91)
Which is an important sector of the economy for a number of Arab countries highly vulnerable to climate
change?

91)

______
A)
Food production
B)
Metals
C)
Textiles
D)
Paper
E)
Tourism

92)
Collecting and evaluating information on competitors is essential for successful

92)

______
A)
strategy formulation.
B)
strategy management.
C)
strategy implementation.
D)
strategy evaluation.
E)
internal analysis.

93)
In 2010, which company had the dominant market share in the beverages industry?

93)

______
A)
Coca-Cola Enterprises
B)
Molson Brewing
C)
Coca Cola
D)
PepsiCo
E)
Dr Pepper Snapple Group

94)
The term used to describe the systematic and ethical process for gathering and analyzing information
about the competition's activities and general trends to further a business' own goals is

94)

______
A)
unethical business practice.
B)
information sharing.
C)
artificial intelligence.
D)
competitive intelligence.
E)
competitive advantage.

95)
________ is not a basic mission of a competitive intelligence program.

95)

______
A)
To provide a general understanding of an industry
B)
To identify industry executives who could be hired by the firm
C)
To provide a general understanding of a company's competitors
D)
To identify areas where competitors are vulnerable and to assess the impact strategic actions would have
on competitors
E)
To identify potential moves a competitor might make that would endanger a firm's position in the market

96)
Which statement about business intelligence is least accurate?

96)

______
A)
Running an intelligence program requires many people.
B)
Intelligence gathering is an unethical business practice.
C)
Business intelligence is equal to espionage.
D)
Collecting intelligence about competitors violates antitrust laws.
E)
Running an intelligence program requires many computers and other resources.

97)
Keeping strategies secret from employees and stakeholders can do all of the following except

97)
______
A)
provide competitive advantage to competitors.
B)
inhibit employee and stakeholder understanding.
C)
forego valuable employee or stakeholder input.
D)
inhibit employee and stakeholder communication.
E)
inhibit employee and stakeholder commitment.

98)
Learning from the partner is a major reason why ________ firms enter into cooperative agreements.

98)

______
A)
American

B)

Asian

C)

Mexican

D)

African

E)

European

99)
Intensity of competition ________ in lower-return industries.

99)

______
A)
fluctuates
B)
is lowest
C)
is non-existent
D)
is highest
E)
is not important

100)
What is not one of Michael Porter's five competitive forces?

100)

_____
 A)
Bargaining power of suppliers
B)
Bargaining power of buyers
C)
Rivalry among existing firms
D)
Bargaining power of unions
E)
New entrants

101)
According to Porter, what is usually the most powerful of the five competitive forces?

101)

_____
A)
Rivalry among competing firms
B)
Potential entry of new competitors
C)
Bargaining power of consumers
D)
Bargaining power of suppliers
E)
Potential development of substitute products

102)
Whenever new firms can easily enter a particular industry, the intensity of competitiveness among firms

102)

_____
A)
stays the same.
B)
neutralizes.
C)
increases.
D)
decreases.
E)
fluctuates.

103)
If suppliers are unreliable or too costly, which of these strategies may be appropriate?

103)

_____
A)
Backward integration
B)
Forward integration
C)
Market penetration
D)
Horizontal integration
E)
Concentric diversification
 104)
What level of bargaining power do consumers have when the products being purchased are standard or
undifferentiated?

104)

_____
A)
Marginal
B)
Not necessary
C)
High
D)
Negative
E)
Low

105)
Because of the Internet, barriers to personal and business success are

105)

_____
A)
being eliminated.
B)
significantly enhanced.
C)
acting like glass walls.
D)
lower.
E)
being built.

106)
What are educated assumptions about future trends and events?

106)

_____
A)
Statistics
B)
Facts
C)
Predictions
D)
Forecasts
E)
Guesses

107)
The international challenge faced by Arab corporations is twofold

107)

_____
A)
how to enhance imported goods in domestic markets and minimize exports to other nations.
 B)
how to defend domestic markets against imported goods while minimizing exports.
C)
how to gain exports to other nations and enhance market share for imported goods in domestic markets.
D)
how to gain and maintain exports to other nations and how to defend domestic markets against imported
goods.
E)
how to increase exports to other countries and how to increase imports from other countries.

108)
Which of the following is a process of worldwide integration of strategy formulation, implementation and
evaluation activities?

108)

_____
A)
Industry analysis
B)
Brainstorming
C)
Industrialization
D)
Mission development
E)
Globalization

109)
Globalization of industries is occurring for all of these reasons except

109)

_____
A)
the emergence of global buyers.
B)
e-commerce and the instant transmission of money and information across continents.
C)
a worldwide trend toward different consumption patterns.
D)
a worldwide trend toward similar consumption patterns.
E)
the emergence of global sellers.

110)
What is the first step in designing an EFE Matrix?

110)

_____
A)
Identifying key external factors in the industry
B)
Summing the weighted score for each competitor
C)
Calculating the sales of each competitor
D)
Determining four competitors
E)
Drawing the horizontal and vertical lines for the matrix
 111)
What is the range for a firm's total weighted score in an External Factor Evaluation Matrix?

111)

_____
A)
0 to 5

B)

1 to 5

C)

0 to 10

D)

0 to 4

E)

1 to 4

112)
One difference between CPM and EFE is that

112)

_____
A)
CPM includes both internal and external issues.
B)
CPM is only used in small firms.
C)
the weight and total weighted score mean opposite.
D)
CPM is performed only for the company, whereas EFE is performed for both the company and the
competitors.
E)
CPM ratings range from 1 to 10.

ESSAY. Write your answer in the space provided or on a separate sheet of paper.
113)

What are the five major types of external forces that should be examined as part of an external audit?

114)

Discuss the process of performing an external audit.

115)

Discuss the I/O approach in relation to competitive advantage.

116)

Identify five key economic variables that could represent major opportunities or threats to a bank in your
town or city.
 117)

List three opportunities and three threats that could represent key factors facing your college or
university.

118)

Explain how the Internet is changing businesses around the world.

119)

Discuss the following statement "Corporate intelligence is not corporate espionage because 95 percent of
the information a company needs to make strategic decisions is available and accessible to the public."

120)

According to Michael Porter, what are the five competitive forces that create vital opportunities and
threats for organizations? Which force do you feel is most important in the computer industry today?
Why?

121)

Discuss the following statement "Planning would be impossible without assumptions."

122)

List five steps that comprise an effective framework for conducting an EFE Matrix. Explain the details
involved in performing any one of the steps.

123)

What is a CPM and how is it different from a EFE Matrix?

1)

TRUE
2)
FALSE
3)
FALSE
4)
TRUE
5)
FALSE
6)
TRUE
7)
TRUE
8)
FALSE
9)
FALSE
10)
TRUE
11)
FALSE
12)
FALSE
13)
TRUE
 14)
FALSE
15)
TRUE
16)
FALSE
17)
TRUE
18)
TRUE
19)
TRUE
20)
FALSE
21)
TRUE
22)
FALSE
23)
TRUE
24)
TRUE
25)
FALSE
26)
TRUE
27)
TRUE
28)
TRUE
29)
FALSE
30)
TRUE
31)
TRUE
32)
FALSE
33)
TRUE
34)
TRUE
35)
FALSE
36)
FALSE
37)
FALSE
38)
TRUE
39)
TRUE
40)
TRUE
41)
FALSE
42)
TRUE
43)
FALSE
44)
TRUE
45)
FALSE
46)
FALSE
47)
TRUE
48)
TRUE
49)
FALSE
50)
TRUE
51)
TRUE
52)
FALSE
53)
TRUE
54)
FALSE
55)
FALSE
56)
TRUE
57)
TRUE
58)
TRUE
59)
TRUE
60)
FALSE
61)
FALSE
62)
TRUE
63)
FALSE
64)
FALSE
65)
TRUE
66)
FALSE
67)
C
68)
A
69)
A
70)
D
71)
E
72)
A
73)
C
74)
D
 75)
C
76)
E
77)
C
78)
D
79)
A
80)
E
81)
B
82)
E
83)
A
84)
B
85)
B
86)
E
87)
E
88)
C
89)
A
90)
A
91)
E
92)
A
93)
C
94)
D
95)
B
96)
C
97)
A
98)
B
99)
D
100)

D
101)

A
102)

C
103)
A
104)

C
105)

A
106)

D
107)

D
108)

E
109)

C
110)

A
111)

E
112)

A
113)

External forces can be divided into five broad categories 1) economic forces, 2) socialand demographic
forces, 3) political and governmental, 4) envionmental forces, and 5) technological forces. Students might
discuss the relationships among these forces and an organization, following the points depicted in Figure
3-2.
114)

To perform an external audit, a company first must gather competitive intelligence and information about
economic, social, cultural, demographic, environmental, political, governmental, legal and technological
trends. Once information is gathered, it should be assimilated and evaluated. A meeting or series of
meetings of managers is needed to collectively identify the most important opportunities and threats
facing the firm. These key external factors should be listed on flip charts or a whiteboard. A prioritized
list of these factors could be obtained by requesting that all managers rank the factors identified, from 1
for the most important opportunity/threat to 20 for the least important opportunity/threat.
115)

The I/O approach to competitive advantage advocates that external factors are more important than
internal factors in a firm achieving competitive advantage. Proponents of the I/O view contend that
organizational performance will be primarily determined by industry forces, rather than the firm's
internal functional decisions made. Research findings suggest that approximately 20 percent of a firm's
profitability can be explained by the industry, whereas 36 percent of the variance in profitability is
attributed to the firm's internal factors. Effective integration of both external and internal factors is the
key to securing and keeping a competitive advantage.
116)

Student answers will vary. However, they should look at economic, social/cultural, political/legal,
technological and competitive factors. Refer to Table 3-1 on page 85.
117)

Student answers will vary. However, they should look at economic, social/cultural, political/legal,
technological and competitive factors.
118)
The Internet is acting as a national and even global economic engine that is spurring productivity. The
Internet is saving companies billions of dollars in distribution and transaction costs from direct sales to
self-service systems. The Internet is changing the very nature of opportunities and threats by altering the
life cycles of products, increasing the speed of distribution, creating new products and services, erasing
limitations of traditional geographic markets and changing the historical trade-off between production
standardization and flexibility. It is also altering economies of scale, changing entry barriers and
redefining the relationship between industries and various suppliers, creditors, customers and
competitors. An emerging consensus holds that technology management is one of the key responsibilities
of strategists.
119)

Firms need an effective competitive intelligence (CI) program. The three basic missions of a CI program
are 1) to provide a general understanding of an industry and its competitors, 2) to identify areas in which
competitors are vulnerable and to assess the impact strategic actions would have on competitors and 3)
to identify potential moves a competitor might make that would endanger a firm's position in the market.
An effective CI program allows all areas of a firm to access consistent and verifiable information in
making decisions.
120)

The first one is rivalry among competing firms. The second is potential entry of new competitors. The
third is potential development of substitute products. The fourth is bargaining power of suppliers. The
last one is bargaining power of consumers.
121)

By identifying future occurrences that could have a major effect on the firm and by making reasonable
assumptions about those factors, strategists can carry the strategic-management process forward.
Assumptions are needed only for future trends and events that are most likely to have a significant effect
on the company's business. Assumptions can serve as checkpoints on the validity of strategies. If future
occurrences deviate significantly from assumptions, strategists know that corrective actions may be
needed. Without reasonable assumptions, the strategy-formulation process could not proceed effectively.
Firms that have the best information generally make the most accurate assumptions, which can lead to
major competitive advantages.
122)

The EFE Matrix can be developed in five steps 1) list key external factors as identified in the external-
audit process with a total of from 10 to 20 factors, including both opportunities and threats that affect the
firm and its industry; 2) assign to each factor a weight that ranges from 0.0 to 1.0; 3) assign a 1 to 4
rating to each key external factor to indicate how effectively the firm's current strategies respond to the
factor, where 4 = the response is superior, 3 = the response is above average, 2 = the response is
average, and 1 = the response is poor; 4) multiply each factor's weight by its rating to determine a
weighted score; and 5) sum the weighted scores for each variable to determine the total weighted score
for the organization.
123)

The Competitive Profile Matrix (CPM) identifies a firm's major competitors and its particular strengths
and weaknesses in relation to a sample firm's strategic position. The weights and total weighted scores in
both a CPM and EFE have the same meaning. However, critical success factors in a CPM include both
internal and external issues; therefore, the ratings refer to strengths and weaknesses. Differences
between the CPM and EFE include
1) The critical success factors in a CPM are broader
2) The critical success factors in a CPM are not grouped into opportunities and threats as they are in an
EFE.
3) In a CPM, the ratings and total weighted scores for rival firms can be compared to the sample firm.