Strategic Management – Week 5 Assignment

Toolbox Exercise – Internal Factor Evaluation Matrix (IFE)

NOTE REGARDING TOOLBOX EXERCISES – These exercises are meant to be cumulative in nature. Each week we will perform an exercise that will serve as the foundation for your Strategic Plan and Final Presentation. Your frame of reference for these exercises should be the shoe company you manage on the Business Simulation Game.

This exercise and matrix is done the same as the EFE, except this time you are organizing and paring down the Strengths and Weaknesses list from the SWOT analysis. Be aware that it is often more difficult to complete the strengths and weaknesses analysis because these are related to internal organization, and it is difficult to be objective.

·  Transfer the Strengths and Weaknesses from the SWOT list previously completed to a matrix like the one seen below. Number each item as S1, S2, S3, etc., and W1, W2, W3, etc.

·  As a team, determine which items are most important and vote accordingly.

·  If the list is rather lengthy, you may eliminate the less important items and repeat the exercise. For example, eliminate the bottom 20-30% of the items which got no or few votes.

·  Calculate an average score for each item. This will become the "weight" to be used in the next step. The total should be 100%. The higher the percentage, the more important the factor is. If you need to make minor adjustments to the score to equal 100%, do so.

·  Now that the group has determined the most important strengths and weaknesses, and has weighted them according to their importance, each item should be scored on a scale of 1 to 4, with 1 = "not very well" to 4 = "very well." For each opportunity, ask the question, "How well do the organization's current strategies take advantage of this strength?" and grade with the 1 to 4 scale. Repeat for the threats asking, "How well does the organization's current strategies prepare for or avoid this weakness?"

·  Computer and note the weighted score for each item by multiplying the weight times the grade.

o  For example, an item with a weight of 25% and a score of 2, the weighted score would be 50%.

·  Add all the scores to get a total score for the IFE matrix.

·  A Total Weighted Score of 250% would indicate that the organization is doing an average job of using their current strategies to capitalize on strengths and overcoming weaknesses. A >250% score indicates they are doing a better than average job; <250% a below average job. Look not just at the total score, but at the individual items; which ones pulled the score up; which ones pulled the score down. These may indicate areas where they want to continue current strategies, to modify or to develop completely new strategies to improve the overall IFE score.