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 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.

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.