IFE matrix stands for internal factors evaluation matrix is a strategic tools used to evaluate the internal strengths and weaknesses of a company. IFE has been used for internal evaluation of company, business unit or corporation functional areas which includes marketing, human resource, finance, information technology, corporate affairs, legal and compliance, business development, procurement and operations. The internal organizational structure depends upon organization size and industry.
Steps to develop IFE Matrix
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 firm’s 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 factor’s 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.
IFE Matrix for Pepsi Co.
|Strong brand||0.09 (8%)||4||0.36|
|Strong marketing and advertising of products around globe||0.07 (7%)||3||0.28|
|Products availability||0.08 (8%)||3||0.24|
|Revenue and Profits||0.08 (8%)||3||0.24|
|Market Share||0.07 (7%)||3||0.21|
|Competent workforce||0.05 (5%)||3||0.15|
|Wide variety of products||0.05 (5%)||3||0.15|
|Earning per share||0.02 (2%)||4||0.08|
|High debts||0.07 (7%)||2||0.14|
|Health Issues||0.08 (10%)||1||0.08|
|Some products have low sales||0.09 (9%)||2||0.18|
|Negative impact on brand image due to product recall||0.10 (10%)||1||0.10|
|Taste differentiation||0.05 (5%)||1||0.05|
|High Operating Expense||0.10 (5%)||1||0.10|
|Total Weighted Score||1.0(100%)||2.36|