SINA Corporation: Threats and Opportunities of External Factor Evaluation (EFE) Matrix

SINA Corporation
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SINA Corporation
Introduction
An External Factor Evaluation (EFE) Matrix refers to a strategic-management tool that is commonly utilized in assessing current business conditions. It can be utilized in examining the external business environment of a company and in identifying the threats and opportunities faced by an organization. The factors from the external environment that affect an organization can be obtained from Porter’s 5 Forces or PESTEL analysis. Incorporated in the year 1997, SINA Corporation is an online media firm that serves both China and the Chinese communities in other parts of the globe. Its digital media network of SINA.com, Weibo, and SINA mobile allows Internet users to be able to access user-generated contents (UGCs) and professional media in multi-media formats from mobile devices and personal computers, and share their interests with their acquaintances and friends (Reuters, 2018). In this paper, an EFE Matrix is performed on SINA Corporation. The external factors include the threats and opportunities in the company’s external environment.
External Factors
Opportunities
Expand globally into other markets: Tencent can expand into markets in other parts of the world such as markets in Africa, Europe, South America and even other parts of Asia. With annual revenue of about $1.5 billion, SINA Corporation certainly has the financial capability to expand internationally. This factor will impact SINA Corporation positively by boosting its financial bottom line. Currently, SINA Corporation, through SINA.com, serves the Chinese communities globally in Hong Kong, Taiwan, Mainland China, and North America. The sites comprise of Chinese-language news as well as content that is organized into interest-based channels (Reuters, 2018). The factor is important to SINA Corporation’s future strategy in that the expansion will enable it to access new markets which would result in increased revenues and profits thanks to the new customer base. Its response strategy to this opportunity is above average. For this reason, it is assigned a Weight of 0.2 and a Rating of 3 hence Weighted Score of 0.6.
Market growth: Market is growing as the number of people in China who use the internet is increasing. This factor will positively impact the firm by helping improve its financial bottom line. The factor is important to the company’s future strategy as it provides an opportunity for the company to increase its revenues and profits within the Chinese market. At the moment, 802 million people in China use the Internet actively, which make up an estimated 57.7% of the country’s total population (McCarthy, 2018). This is likely to increase in future as Internet penetration in the nation continues to grow. It is an opportunity that SINA Corporation can fully exploit to its advantage. The company’s response strategy to this opportunity is average. As such, this factor is assigned a Weight of 0.3 and a Rating of 2 hence a Weighted Score of 0.6.
Increase in customer spending: Consumer spending on services and goods in China has grown steadily, which has contributed greatly to the country’s economic growth. In the first six months of 2018, consumer spending per capita rose by 8.8% year-on-year to reach $1,439 or 9,609 Yuan (Jing, 2018). This is an indication that consumers in China would likely increase their spending on the services and products offered by SINA Corporation. This factor will impact the company since the increasing customer spending in China provides an opportunity for SINA Corporation to increase its revenues. It is an important factor for the company’s strategy as the firm can position itself in a manner that will enable it to exploit this opportunity to grow its revenues and profits. The firm’s response strategy to this opportunity is average. Therefore, this factor is assigned a Weight of 0.15 and a Rating of 2 hence a Weighted Score of 0.3.
New technology: SINA Corporation can leverage new technology and gain market share. Through the use of the latest and ground-breaking technology, the company would be able to get an edge over competitors such as NetEase, Alibaba, and Tencent. Furthermore, by using ...