IFE Matrix Analysis or Internal Factor Evaluation Matrix analysis, is among the most ideal tools for strategic business management. IFE Matrix analysis is useful for the internal auditing of organizations.
The Internal Factor Evaluation matrix is employed in the internal analysis of various business functions like finance, marketing, IT, accounts, operations, Human Resources, etc, depending on the nature of the organization and its size.
Components of IFE Matrix Analysis
IFE Matrix Internal Factors
The Internal factors of IFE matrix comprise of the detailed results of the internal audit of an organization. Considering that each organization has its strengths and weaknesses, internal factors are subdivided into strengths and weaknesses.
A company’s strengths include its strong attributes or advantages that enable the organization to outshine its weaknesses or challenges. They also help a company to maximize or take advantage of the opportunities that exist in the external environment or market. Such strengths can either be tangible or intangible. They include factors line human resource capital, financial capital, brand image, etc.
An organization’s weaknesses include the risk areas or disadvantages that should be promptly addressed in order to mitigate their impact. Weaknesses should be minized because an organization’s competitors are constantly looking out for the loopholes existing within its strategy and making effort to capitalize on the weaknesses so identified.
Strengths and weaknesses in an IFE Matrix
Strengths and weaknesses in an Internal Factor Evaluation matrix are organized into different portions. This means that an organization’s strengths are listed under Internal factors first. After that, weaknesses are listed second under Internal factors. However, if both internal factors are mixed up in their listing, the rating attached to those factors is used to differentiate between strengths and weaknesses.
Rating of IFE Matrix Internal Factors
In an IFE matrix, rating is used to differentiate between internal strengths and internal weaknesses. Internal weaknesses in an IFE matrix are further subdivided into two lesser categories as major weaknesses and minor weaknesses. Similarly, internal strengths are subdivided into major and minor strengths.
Important Considerations when rating Internal factors of the IFE matrix Analysis
- Each factor is assigned a rating
- Major weaknesses are represented by 1.0
- Minor weaknesses are represented by 2.0
- Major strengths are represented by 4.0
- Minor Strengths are represented by 3.0
The major internal weaknesses of an IFE matrix need to be converted by the organization into minor weaknesses, then converted further into strengths and, subsequently, major strengths. Compared to major strengths, the minor weaknesses of an IFE matrix need less effort for them to be converted into strengths.
The rating of of a company’s strengths and weaknesses ranges from a minimum of 1.0 for the worst factors to a maximum of 4.0 which is assigned to the best internal factor.
Weight of Internal Factors
In an IFE matrix, the weight attribute is used to indicate the relative importance of each factor in terms of its usefulness in contributing to the success of an organization in the market. The weight attribute of each factor ranges from 0.0, which means the internal factor is not important, to 1.0, which means the internal factor is not important.
In the IFE matrix analysis, the sum of all the weights assigned to the internal factors must add up to 1.0, contrary to which the analysis would be considered erroneous.
IFE Matrix Weighted Score
In an IFE matrix, the weighted score value refers to the result that is acquired after multiplying the rating of each factor with its associated weight.
What is Total Weighted Score?
The total sum of all of the weighted scores is the same or equal to the total weighted score. In internal factor matrix analysis, the final value of the total weighted score is supposed to range from 1.0 (for low value factors) to 4.0 (for high value factors).
The average weighted score for any given IFE matrix analysis is 2.5. Any company whose total weighted score falls below 2.5 is considered weak. Where a company’s total weighted score rises above 2.5, its position in the market is considered strong.
A strong total weighted score from an IFE matrix analysis indicates that a business organization has a strong position over its competitors. The results of the Internal Factor Evaluation Matrix are used alongside those of the EFE Matrix Analysis in QSPM Matrix Analysis.