Business Strategy Discussion Notes

Overview

• Ongoing discussion of two modules related to business strategy.
• Focus on business concepts: IE Matrix, EFE Matrix, IFE Matrix.

Semester Timeline

• Current semester nearing finals.
• Following week after this will focus on major subjects.

Key Concepts

External Factor Evaluation (EFE) Matrix

• Evaluates external factors affecting a company.
• Assigns weight values to factors influencing competitiveness.
• Steps for EFE:
  • Assign specific weight values to external factors.
  • Rate company performance on each factor.
  • Multiply ratings by weight values to get weighted scores.
  • Sum total for overall weighted score.

Internal Factor Evaluation (IFE) Matrix

• Evaluates internal strengths and weaknesses.
• Similar process as EFE:
  • Focus on internal factors that can be controlled.
  • Calculate total weighted score.

IE (Internal-External) Matrix

• Combines results from EFE and IFE matrices.
• Plotted on an X and Y axis to visualize competitive position and industry conditions.
  • X-Axis: Internal factors (IFE results)
  • Y-Axis: External factors (EFE results)
• Nine-cell platform categorized into three major regions:
  • Grow and Build Region (Cells 1, 2, 4):
    • Indicates strong performance; strategies include market penetration, market development, product development, and diversification.
    • Companies can explore new markets or develop current products.
  • Hold and Maintain Region (Cells 3, 5, 7):
    • Companies are performing well but not outstanding.
    • Strategies often include market penetration and product development.
    • Focus on maintaining performance rather than drastic changes.
  • Harvest and Divest Region (Cells 6, 8, 9):
    • Companies in decline; may need to liquidate or cut costs to minimize losses.
    • Focus on reducing unnecessary expenses.

Example Calculation

• EFE total weighted score: 2.46
• IFE total weighted score: 2.79
• Resulting score falls in the Hold and Maintain Region (Cell 5).
• Recommended strategies: market penetration or product development.

Conclusion

• Understanding the IE Matrix is crucial for formulating business strategies based on competitive positioning and industry environment.
• Emphasis on using EFE and IFE matrices as foundational tools in strategic planning.