The Internal-External(IE)matrix
This matrix positions an organization’s various divisions in a nine-cell display. The matrix is similar to the BCG matrix in several respects. First, both tools involve plotting organizational divisions in a schematic diagram, this is why they are both called portfolio matrixes. Second, the size of each circle represents the percentage sales contribution of each division. Finally, the pie slices reveal the percentage profit contribution of each division.
There are also some differences between both i.e. the axes are different, the IE matrix requires more information about the division and the strategic implications of both are different. For these reasons strategies in multidivisional companies often develop both the BCG and IE matrices in the strategy-generation process.
The IE matrix is based on tow key dimensions (I) IFE i.e. internal factor evaluation total weighted score on the X-axis and (2) EFE i.e. external factor evaluation weighted score on the Y-axis. Each division of a firm should construct the IFE&EFE matrices, which help in the construction of a corporate level IE matrix.
On the X-axis of the IE matrix, an IFE total weighted score of 1.00 to 1.99 represents a weak internal position, 2.00 to 2.99 us considered average and a score of 3.0 to 4.0 is strong. Similarly, on the Y-axis, and EFE total weighted score of 1.00 to 1.99 is considered low, 2.00 to 2.99 is considered medium and a score of 3.0 to 4.0 is high.
The IE matrix can be divided into 3 major regions that have different strategy implications. First, the prescription for divisions that fall into cells I, II or IV can be “grow & build” intensive (market penetration, market development, and product development) or integrative (backward, forward and horizontal integration) strategies can be most appropriate for these divisions. The second division that falls into cells III, V or VII can be best be managed with “hold and maintain strategies” (market penetration and product development) third, a common prescription for divisions that fall into cell VI, VIII or IX is “harvest and divest”. Successful organizations can achieve a portfolio of businesses that are positioned in or around cell I in the IE matrix.
IE matrix example
The IFE total weighed score
Strong(3.0-4.0) 3.0 Average(2.0-2.99) 2.0 Weak (1.0-1.99)
| I | II | III |
| IV | V | VI |
| VII | VIII | IX |