IE matrix: build it from your IFE and EFE totals
Build an Internal-External (IE) matrix: plot your IFE total and EFE total on the nine-cell grid and read the grow, hold or harvest region.
The Internal-External (IE) matrix plots a firm on a nine-cell grid using two totals: its IFE total on the horizontal axis and its EFE total on the vertical axis. The cell it lands in, numbered I to IX, puts it in one of three regions: grow and build, hold and maintain, or harvest or divest.
The IE matrix uses the totals, not the factors behind them, so you start it only once your IFE and EFE matrices are finished. It belongs to the matching stage of the strategy-formulation framework.
The IE matrix takes its vertical axis from your EFE total. Try the sample EFE, no account needed.
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What the IE matrix is for
The IE matrix is a nine-cell matching-stage tool that plots your IFE total against your EFE total. It takes the two summaries from the input stage and shows, in one picture, how the firm's internal position and its external position fit together.
- It is fed by your IFE matrix (horizontal axis) and your EFE matrix (vertical axis).
- It feeds the choice of strategy alternatives: the region tells you whether the firm should grow, hold or cut back.
What you need before you start
The first step in building an IE matrix is to finish the two matrices it reads: a completed IFE with weights that sum to 1.0, and a completed EFE with weights that sum to 1.0. Each total is a number from 1.0 to 4.0. If either matrix is unfinished, its total is not ready to plot.
If your firm has several divisions, you need one IFE total and one EFE total for each division, plus each division's share of company revenue and its share of profit.
Step 1: Take the IFE and EFE totals
Copy the total weighted score from your IFE matrix and from your EFE matrix, to two decimals. Do not re-score anything here: the IE matrix has no factors of its own, so a total that looks wrong is fixed in the matrix it came from.
Step 2: Place each total in its band
Each axis has three bands. The horizontal axis is the IFE total, with the strong end on the left, so 4.0 sits at the left edge. The vertical axis is the EFE total, with high at the top.
IFE total (horizontal): 3.0–4.0 strong, 2.0–2.99 average, 1.0–1.99 weakEFE total (vertical): 3.0–4.0 high, 2.0–2.99 medium, 1.0–1.99 low
The bands are 1.0 to 1.99, 2.0 to 2.99 and 3.0 to 4.0, so the edges are 2.0 and 3.0, not the 2.50 average. A total of 2.60 is average, and so is 2.10. Round each total to two decimals first, and say how you banded one that still sits on an edge.
Step 3: Find the cell and read its region
Go across to the IFE band and down to the EFE band. The cell is where they meet. The cells are numbered I to IX, left to right and then top to bottom, and they fall into three regions:
- Cells I, II and IV: grow and build.
- Cells III, V and VII: hold and maintain.
- Cells VI, VIII and IX: harvest or divest.
David lists the strategies usually considered for each region. They are options to shortlist, not a decision, and the wording varies by edition.
- Grow and build: Intensive strategies (market penetration, market development, product development) or integrative strategies (backward, forward, horizontal integration).
- Hold and maintain: Market penetration and product development.
- Harvest or divest: David gives no separate list. Harvest the division or sell it.
“Why is the firm in this cell and not the one next to it?”
Quote the two totals and the band edges: the IFE total puts the firm in a column, the EFE total in a row. If a total is close to an edge, say so and point to the factor weights and ratings behind it.
Step 4: If the firm has several divisions
A multi-division firm plots each division separately, from that division's own IFE and EFE totals. Draw each division as a circle sized by its share of company revenue, with a pie slice for its share of profit, so the largest divisions stand out. Divisions can land in different regions, and that is the point: the matrix shows which parts of the firm to build and which to hold or harvest.
Worked example: Tala Provisions (fictional)
Tala Provisions, Inc. is a fictional coffee roaster with one business, so it plots as one point. Its EFE total is the 2.90 from the EFE guide, and its IFE total is the 3.10 from the IFE guide.
IFE total 3.10: in 3.0–4.0, so strongEFE total 2.90: in 2.0–2.99, so mediumstrong IFE and medium EFE: cell IV
| StrongIFE 3.0–4.0 | AverageIFE 2.0–2.99 | WeakIFE 1.0–1.99 | |
|---|---|---|---|
| High | |||
| Medium | |||
| Low |
Tala sits in cell IV, in the grow and build region. The IFE total puts it in the strong column and the EFE total in the medium row, so the IE matrix places it at the left edge, one row down from the top.
The IE matrix takes its vertical axis from your EFE total. Try the sample EFE, no account needed.
How to read the result
The region is the reading. Tala's cell IV is in the grow and build region, so its IE position supports strategies that grow the business. The cell number alone is not a strategy: it says where the firm stands, and your strategy alternatives still have to be chosen and justified.
The grid is only as good as the two totals. They summarize your own judgments, so a different weight in the IFE or EFE could move the firm to another cell. That is why you quote the totals, not just the cell.
Where sources disagree: your adviser may prescribe a different layout of the axes or another way of drawing the grid. If so, follow it. Strama uses David's: the IFE total across with the strong end at the left, the EFE total up with high at the top, and cells numbered I to IX from the top left.
Common mistakes
Plotting the factors instead of the totals.
The IE matrix has no factors of its own. A factor's weight or rating is not an axis value, so the point lands in the wrong cell.
Fix: plot only the IFE total and the EFE total, each from its finished matrix.
Putting the strong end of the IFE axis on the right.
In David's grid the IFE total runs from 4.0 at the left to 1.0 at the right. Flipping it moves every cell number and, with it, the region you report.
Fix: draw the grid with the strong IFE column on the left, and check one known point before you trust it.
Reading 2.50 as a band edge.
2.50 is the average of the scoring scale, but the IE bands change at 2.0 and 3.0. A total of 2.60 is average, not above it.
Fix: compare each total with 2.0 and 3.0 when you band it.
Using a total from a matrix whose weights do not sum to 1.0.
The total cannot be compared with the scale, so the band is meaningless.
Fix: check both weight columns sum to 1.0 before you copy the totals.
Stopping at the cell number.
“We are in cell IV” answers where, not what to do.
Fix: name the region and say which strategy alternatives it supports, and which it does not.
What your panel will ask
What stage of the strategy-formulation framework includes the IE matrix?
The matching stage, alongside the TOWS matrix (David calls it the SWOT matrix), the SPACE matrix, the BCG matrix and the grand strategy matrix. It uses the input stage's IFE and EFE totals.
How did you start the IE matrix?
With the two finished totals. Show the IFE matrix and the EFE matrix they come from, and say that the IE matrix has no factors of its own.
Why is the firm in cell IV?
Quote the totals: an IFE total of 3.10 is strong and an EFE total of 2.90 is medium. Where they meet is cell IV.
What do you do with several divisions?
Plot each division as a circle sized by its share of company revenue, from its own IFE and EFE totals, and discuss each division's region.
Where it goes next
Upstream are the IFE matrix and the EFE matrix. The IE matrix is one of several matching-stage tools: the others are the TOWS matrix (David calls it the SWOT matrix), the SPACE matrix, the BCG matrix and the grand strategy matrix. The strategy alternatives from all of them go to the QSPM in the decision stage.
The IE matrix takes its vertical axis from your EFE total. Try the sample EFE, no account needed.
Where this fits in your paper: the STRAMA paper format guide.
Sources
Method: Fred R. David's strategy-formulation framework, as set out in his Strategic Management: Concepts and Cases. Check the edition your program uses for page references.
Tala Provisions, Inc. and its sources are fictional. Its EFE total is the one in the EFE guide, and its IFE total comes from the weights and ratings made up for the IFE guide.
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The IE matrix takes its vertical axis from your EFE total. Try the sample EFE, no account needed.
Related guides
- IFE matrix
Build an Internal Factor Evaluation (IFE) matrix: list strengths then weaknesses, weight them to 1.0, rate 1 to 4, and read the total against 2.50.
- Grand strategy matrix
Use the grand strategy matrix: judge competitive position and market growth, find your quadrant, and read the typical strategies, with values as evidence.
- QSPM matrix
Build a QSPM matrix: take weights from your EFE and IFE, score strategies 1 to 4, compute TAS and sum. Covers five strategies in one QSPM, and limits.