The IE matrix is divided into three regions that have different strategy implications. Successful organizations are able to achieve a portfolio of businesses positioned in Region 1. Total weighted score is simply the sum of all individual weighted scores. Weights Each key factor should be assigned a weight ranging from 0.
The IE matrix used to plot the organization divisions in nine cell diagram, each cell have some meaning associated which suggest strategies. Recall that each division of an organization should construct an IFE Matrix and an EFE Matrix for its part of the organization, but oftentimes in performing case analysis, strategic-management students are asked to simply estimate divisional IFE and EFE scores, rather than prepare those underlying matrices for every division.
For these reasons, strategists in multidivisional firms often develop both the BCG Matrix and the IE Matrix in formulating alternative strategies. Therefore, it is a more difficult process than identifying the key factors. Division A division of a business entity is a portion of that business that operates under a different name.
The input factors have a clear meaning to everyone inside or outside the company.
Examples We provide only the general examples of both matrices. The firm can receive the same total score from 1 to 4 in both matrices. The results of a SWOT analysis can also be helpful as a mid-year analysis tool and for identifying whether and where the business needs to modify action steps required to meet annual business objectives.
Division 1 contributes the greatest proportion of total profits; it has the largest-percentage pie slice. Also, the size of each circle represents the percentage sales contribution of each division, and pie slices reveal the percentage profit contribution of each division in both the BCG and IE Matrix.
Anyway, the total weighted scores derived from the divisions allow construction of the corporate-level IE Matrix. For example, a business owner conducting a SWOT to use in a business plan might include past experience, financial and physical resources as specific strengths or weaknesses while an existing business might include business activities, processes and personnel.
The company is better prepared to meet the threats, especially the first threat.
Focuses on the key internal and external factors. Related Strategic Management Tools: The below diagram shows the structure of IE matrix. Although, this time you or the members of your group will have to decide what ratings should be assigned. Intensive market penetration, market development, and product development or integrative backward integration, forward integration, and horizontal integration strategies can be most appropriate for these divisions.
Although how internal strengths and weaknesses and external opportunities and threats are arranged within the matrix is up to its creator, each element refers to something different and must be listed separately.
The total score of 2. When using the EFE matrix we identify the key external opportunities and threats that are affecting or might affect a company.
Do the PEST analysis first. As indicated by the positioning of the four circles, grow and build strategies are appropriate for Divisions 1, 2, and 3. Unlike some other analyses e. This way you would know what competitors are doing right and what their strategies lack.
Using the tool Step 1. The IE Matrix is based on two key dimensions: You should do both analyses and combine their results to discuss new strategies or for further analysis.
Ratings from can be assigned to each opportunity and threat, but only the ratings from can be assigned to each Internal external ie matrix and to each strength. Region 2—The prescription for divisions that fall into cells III, V, or VII can be described as hold and maintain strategies; market penetration and product development are two commonly employed strategies for these types of divisions.
The IE Matrix is a strategic management tool which is used to analyze the current position of the divisions and suggest the strategies for the future. The business might identify and include potential customers, advances in technology and ideas for better serving its current customer base as external conditions or opportunities that can help move the business forward.
A common practice is to develop a BCG Matrix and an IE Matrix for the present and then develop projected matrices to reflect expectations of the future.
This visual representation serves as an important reminder the business needs to build on its strengths, work to minimize its weaknesses, take advantage of identified new opportunities and work to neutralize or counteract external or environmental threats the SWOT process uncovers. The ratings in internal matrix refer to how strong or weak each factor is in a firm.
Benefits Both matrices have the following benefits: The numbers range from 4 to 1, where 4 means a superior response, 3 — above average response, 2 — average response and 1 — poor response. Therefore, each factor has to be as specific as possible to avoid confusion over where the factor should be assigned.
The sum of all the weights must equal 1.The Internal‑External (IE) Matrix positions an organization’s various divisions in a nine cell matrix.
The IE Matrix is a strategic management tool which is used to analyze the current position of the divisions and suggest the strategies for the future. Characteristic of Internal-External Matrix The position of various divisions of an organization is categorized in a nine cell display.
The internal external matrix (IE) is much similar to the Boston Consulting Group matrix but there are certain differences like. THE EFE TOTAL WEIGHTED SCORE Internal–External (IE) Matrix The Internal–External (IE) Matrix is based on two key dimensions: the IFE total weighted scores on the x-axis and the EFE total weighted scores on the y-axis%(3).
IE stands for Internal external as the name suggest that it’s based upon internal and external factors of the organization.
The IE is an important strategic tool which comes under the portfolio management considered much similar to BCG Matrix. A horizontal representation, for example, often displays an internal matrix displaying strengths and weaknesses on the left side and an external matrix displaying opportunities and threats on the right.
The Internal-External (IE) Matrix positions an organization’s various divisions (segments) in a nine-cell display, illustrated in Figure The IE Matrix is similar to the BCG Matrix in that both tools involve plotting a firm’s divisions in a schematic diagram.Download