What is the IFE Matrix?
The Internal Factor Evaluation (IFE) Matrix is a strategic management tool used to identify and evaluate a firm’s internal strengths and weaknesses. It provides a quantitative method to assess how well the organization is internally positioned to achieve its goals.
It’s like a report card for a company’s internal environment — telling you what’s working and what’s not, in a structured and data-driven way.
When Should You Use It?
The IFE Matrix applies for:
- During a strategic audit or internal analysis phase of strategic planning.
- When conducting a SWOT analysis — this tool feeds into the “Strengths” and “Weaknesses” components.
- To support evidence-based decision-making by quantifying qualitative internal data.
- Before choosing or formulating strategies, so you know what internal resources and capabilities you’re working with.
How to Develop an IFE Matrix: Step-by-Step
Step 1: Identify Key Internal Factors
This step lays the foundation. You need to thoroughly analyze and list the internal strengths and weaknesses across all functional areas of the organization. These areas may include:
- Management (e.g., experienced leadership, decision-making process)
- Marketing (e.g., strong brand, poor market positioning)
- Finance (e.g., healthy cash flow, high debt)
- Operations/Production (e.g., efficient processes, outdated machinery)
- Human Resources (e.g., skilled workforce, high turnover)
- Research & Development (e.g., strong innovation, weak pipeline)
- Information Technology (e.g., advanced systems, poor data security)
Tips:
- Aim for 10–20 key factors, typically split evenly (like 10 and 10) between strengths and weaknesses.
- Ensure factors are specific, actionable, and meaningful — avoid vague terms.
- Use internal reports, employee surveys, performance data, and departmental feedback.
- Do not allow more than 30 percent of the key factors to be financial ratios, because financial ratios are generally the result of many factors.
- Please use the AQCD method to evaluate each factor and avoid using vague and unclear statements.
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