IFE (Internal Factor Evaluation) Matrix: Strengths

IFE (Internal factor evaluation) Matrix
IFE (Internal factor evaluation) matrix is one of the best strategic tool to perform internal audit of
any firm. IFE is use for internal analysis of different functional areas of business such as finance,
marketing,IT, operations, accounts, Human Resources and others depend upon the nature of
business and its size.
Before going into further details, there are some important terms in IFE matrix which should be
known to the individual who shall be using this tool of internal analysis of any Company or
Organization . The explanation of each term would be clearly explained in order to make it
easier to understand the concept for when you further go into details.
Following are the important components of IFE Matrix:
Internal Factors
Internal factors are the the outcome of detailed internal audit of a firm Obviously, every company
have some weak and strong points, therefor the internal factors are divided into two categories
namely strengths and weakness.
Strengths
Strengths are the strong areas or attribute of the company, which are used to overcome weakness
and capitalize to take advantage of the external opportunities available in the industry. The
strengths could be tangible or intangible; such as brand image, financial position, income, human
resource.
Weaknesses
Weaknesses are the risky areas which needs to be addressed on priority to minimize its impact.
The competitors always searching for the loop holes in your company and put their best effort to
capitalize on the identified weaknesses.
How we can differentiate strength and weakness in IFE matrix?

If this question comes into mind then dont worry its a good question and I will be the happy
man to answer this one. The strengths and weaknesses are organized in IFE matrix in different
portions mean all strengths are listed first under internal factors and then comes the internal
weakness. In case if all the factors are listed altogether then the rating will help you out to
identify internal strength and weakness.
Rating
Rating is common word I hope you are aware of it, in IFE rating is the way out to differentiate
internal strengths and weakness. Internal weakness are further divided in two categories namely
minor weakness and major weakness same goes of the strengths (minor strength and major
strength)
There are some important point related to rating in IFE matrix.
Rating is applied to each factor.
Major weakness is represented by 1.0
Minor weakness is represented by 2.0
Minor strength represented by 3.0
Major Strength represented by 4.0
Major weakness needs company attention to change into minor weakness then strength and
finally major strength.As compared to major strength minor weakness need little efforts of the
company to change it into strength. The range of rating start from minimum 1.0 which is worst
and maximum 4.0 which is the best factor of the company.
Weight
Weight attribute in IFE matrix indicates the relative importance of factor to being successful in
the firms industry. The weight range from 0.0 means not important and 1.0 means important,
sum of all assigned weight to factors must be equal to 1.0 otherwise the calculation would not be
consider correct.
Weighted Score
Weighted score value is the result achieved after multiplying each factor rating with the weight.
Total Weighted Score

The sum of all weighted score is equal to the total weighted score, final value of total weighted
score should be between range 1.0 (low) to 4.0(high). The average weighted score for IFE matrix
is 2.5 any company total weighted score fall below 2.5 consider as weak. The company total
weighted score higher then 2.5 is consider as strong in position.
Steps to develop IFE Matrix

[adsense]1. List key internal factors as identified in the internal audit process. Use a total of from
ten to twenty internal factors, including both strengths and weaknesses. List strengths first and
then weaknesses. Be as specific as possible, using percentages, ratios, and comparative numbers.
2. Assign a weight that ranges from 0.0 (not important) to 1.0 (all important) to each factor. The
weight assigned to a given factor indicates the relative importance of the factor to being
successful in the firms industry. Regardless of whether a key factor is an internal strength or
weakness, factors considered to have the greatest effect on organizational performance should be
assigned the highest weights. The sum of all weights must equal 1.0.
3. Assign a I to 4 rating to each factor to indicate whether that factor represents a major weakness
(rating = 1), a minor weakness (rating = 2), a minor strength (rating = 3), or a major strength
(rating = 4). Note that strengths must receive a 4 or 3 rating and weaknesses must receive a 1 or
2 rating. Ratings are thus company based, whereas the weights in Step 2 are industry based.
4. Multiply each factors weight by its rating to determine a weighted score for each variable.
5. Sum the weighted scores for each variable to determine the total weighted score for the
organization.
What are the examples of Internal Factors?

There are few examples of internal factors of the company.
Strengths
Strong marketing and promotion
Best product quality
Strong Financial condition
High Market Share
High value assets
Weakness
High cost operations
Manufacturing cost is high
High employee turnover rate
Expensive products
Loss in joint venture

What is the difference between IFE and EFE?
External factor evaluation matrix consider external environment for evaluation by considering
external opportunities and threats whereas IFE is the strategic tool to identify the internal factors
for internal audit.
Examples of IFE Matrix

Here are some examples of IFE Matrix.
Amazon IFE Matrix
As you can see in this examples the total weighted score value is 2.80 which means company
internal position is better.

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What are the components of an IFE matrix?

What are the components of an IFE matrix?

How are strengths and weaknesses differentiated in an IFE matrix?

How are strengths and weaknesses differentiated in an IFE matrix?

IFE (Internal factor evaluation) Matrix

Following are the important components of IFE Matrix:

How we can differentiate strength and weakness in IFE matrix?

There are some important point related to rating in IFE matrix.

Rating is applied to each factor.

Major weakness is represented by 1.0

Minor weakness is represented by 2.0

Minor strength represented by 3.0

Major Strength represented by 4.0

Total Weighted Score

Steps to develop IFE Matrix

What are the examples of Internal Factors?

Strong marketing and promotion

Best product quality

Strong Financial condition

High Market Share

High value assets

High cost operations

Manufacturing cost is high

High employee turnover rate

Loss in joint venture

Examples of IFE Matrix

Amazon IFE Matrix

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