Internal Factor Evaluation Matrix

IFE (Internal factor evaluation) matrix is one of the best strategic tools to perform internal audits of any firm. IFE uses 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 the 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 the IFE Matrix:

Internal Factors

Internal factors are the outcome of a detailed internal audit of a firm Obviously, every company has some weak and strong points, therefore the internal factors are divided into two categories namely strengths and weakness.

Strengths

Strengths are the strong areas or attributes of the company, which are used to overcome weaknesses 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 that need to be addressed on priority to minimize its impact. The competitors always searching for the loopholes in your company and put their best effort to capitalize on the identified weaknesses.

How we can differentiate strengths and weaknesses in the IFE matrix?

If this question comes into mind then don’t worry its a good question and I will be the happy man to answer this one. The strengths and weaknesses are organized in the 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 a common word I hope you are aware of it, in IFE rating is the way out to differentiate internal strengths and weaknesses. Internal weakness are further divided into two categories namely minor weakness and major weakness the same goes of the strengths (minor strength and major strength)

There are some important points related to a rating in the IFE matrix.

• Rating is applied to each factor.
• A major weakness is represented by 1.0
• A 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 starts from minimum 1.0 which is worst and maximum 4.0 which is the best factor of the company.

Weight

The weight attribute in the IFE matrix indicates the relative importance of factor to being successful in the firm’s industry. The weight range from 0.0 means not important and 1.0 means important, the sum of all assigned weight to factors must be equal to 1.0 otherwise the calculation would not be considered correct.

Weighted Score

The weighted score value is the result achieved after multiplying each factor rating with the weight.

Total Weighted Score

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