Key External Factors Analysis

Key External Factor (KEF) is any factor in the external environment of your company that has a material influence on your company performance. KEF examples include consumer spending (macroeconomic), transition to cloud computing (technology), government regulation of your industry (legal), climate change (environmental), rapid growth of Muslim community (social/cultural), globalization (integrated/composite).

Every KEF presents either an opportunity or a threat or both. In fact, it is highly beneficial to view every threat as an opportunity in disguise, a chance to make more money and to improve your corporate performance.

We are not the makers, we are the takers. At least as far as the KEF are concerned. Therefore, success and prosperity – and even survival! – of your company is basically determined by how well it dodges threats and utilizes opportunities presented by your KEF.

Hence, the foundation of your corporate management system is your KEF monitoring, analysis and utilization function. Which begins with a competent KEF analyst – an absolute must for a successful enterprise – who must first develop a prioritized list of your KEF (in the order of importance for the well-being of your company).

For each KEF you analyst then must describe the exact process of how the KEF in question influences the welfare of your business entity; opportunities and threats (risks) presented by the KEF and the best methodology for forecasting the dynamics of the KEF.

Afterwards, the analyst – together with top managers of your company – must develop and deploy the corporate process for monitoring and forecasting of the dynamics of the KEF in question. And another process – for using this dynamics in making and executing your corporate decisions – both strategic and operational. First and foremost – developing and executing your corporate plans – financial and operational, strategic and tactical.

The CBA process regarding your KEF function is pretty straightforward. First, you find answers to KEF-related questions (by filling in the Analysis section of the corresponding question in the KEF-related Aggregate Performance Scorecard). And support them by linking the appropriate corporate documents to the corresponding questions on KEF-related APS.

After that, you assign the Performance score to the corresponding question and complete Conclusions, Recommendations and Comments sections of the APS for each CBA question.  Based on these scores and ACRC for each question, you compute the Aggregate Performance Score for the whole KEF function and complete the aggregate ACRC.

As you can expect the performance of your KEF function to be well below maximum, you will need to develop and execute financial and operational plans for maximizing its performance.