IE MATRIX

INTERNAL-EXTERNAL MATRIX

• Strategic Management Tool
• Is based on the analysis of internal and external business factors which are combined into one suggestive model

INTERNAL-EXTERNAL MATRIX

• It is a continuation of EFE and IFE matrix

HOW DOES IT WORK

• Positions an organization into a nine cell matrix

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Y AXIS

• PLOT THE TOTAL WEIGHTED SCORE FROM THE EFE MATRIX ON THE Y AXIS AND DRAW A HORIZONTAL LINE ACROSS THE PLANE

X AXIS

• Take the score calculated in the IFE matrix then plot it on the x axis, and draw a vertical line across the plane.

The point where your horizontal line meets your vertical line is the determinant of your strategy. This point shows the strategy that your company should follow

On the x axis of the IE matrix, an IFE total weighted score of 1.0 to 1.99 represents a weak internal position.

A score of 2.0 to 2.99 is considered to average. A score of 3.0 to 4.0 is strong

On the y axis, an EFE total weighted score of 1.0 to 1.99 is considered low. A score of 2.0 to 2.99 is medium and a score of 3.0 to 4.0 is high

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Cells I, II, III suggest grow and build strategy. This means intensive and aggressive tactical strategies.
Your strategy should focus on market penetration, market development and product development.
From the operational perspective a backward integration, forward integration should be considered

CELLS IV V AND VI

CELLS VII VIII AND IX

• Harvest or exit strategy. If cost for rejuvenating the business are low, then it should be attempted to revitalize the business. In other cases, aggressive cost management is a way to play the end game

DIFFERENCE FROM BCG MATRIX

• First, the IE matrix measures different values on its axes. The BCG matrix measures market growth and market share. The IE matrix measures a calculated value that captures a group of external and internal factors. This means that the IE matrix requires more information about the business than the BCG matrix. While values for each axis in the BCG matrix are single-factor, values for each axis in the IE matrix are multi-factor figures. Because the IE matrix is broader in its definition, strategists often develop both the BCG Matrix and the IE Matrix when assessing their conditions and formulating strategies.

GRAND STRATEGY MATRIX

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SETTING UP THE QUADRANTS

• You will have four quadrants for your grand strategy matrix. The first represents strategies for maintaining rapid growth when you have a strong competitive position. The second offers rapid-growth strategies when you have a weak competitive position. The third provides strategies that relate to a weak competitive position and slow growth. The final quadrant lists strategies appropriate to strong competitive attributes with slow market growth.

SPACE MATRIX

STRATEGIC POSITION AND ACTION EVALUATION MATRIX

• Another tool that focuses on strategy formulation especially as related to the competitive position of an organization

OUTCOME OF SPACE MATRIX

• Four quadrants
• Aggresive
• Conservative
• Defensive
• Competitive

HOW TO CONSTRUCT SPACE MATRIX

• Plot calculated values for the competitive advantage (CA) and industry strength (IS) dimensions on the x axis
• The Y axis is based on the environmental stability (ES) and financial strength (FS) dimensions

7 STEPS IN CREATING sPACE MATRIX

• Choose a set of variables to be used to gauge the competitive advantage (CA), industry strength (IS), environmental stability (ES), and financial strength (FS)
• Rate individual factors using rating system specific to each dimension. Rate competitive advantage (CA) and environmental stability (ES) using rating scale from -6 (worst) to -1 (best). Rate industry strength (IS) and financial strength (FS) using rating scale from +1 (worst) to +6 (best).

7 STEPS

• 3. Find the average scores for competitive advantage (CA), industry strength (IS), environmental stability (ES), and financial strength (FS).
• 4. Plot values from step 3 for each dimension on the SPACE matrix on the appropriate axis.

7 STEPS

• 5. Add the average score for the competitive advantage (CA) and industry strength (IS) dimensions. This will be your final point on axis X on the SPACE matrix.
• 6. Add the average score for the SPACE matrix environmental stability (ES) and financial strength (FS) dimensions to find your final point on the axis Y
• 7. Find intersection of your X and Y points. Draw a line from the center of the SPACE matrix to your point. This line reveals the type of strategy the company should pursue.