Question

What is Lazada's Internal Factor Evaluation (IFE) Matrix?

Answer 1

IFE stands for internal factor evaluation.

It is a type of matrix used to study the strategy of a company. In other words, it is a summary of an internal management audit. It summarizes the strengths and weaknesses of an organisation

As we know about SWOT analysis which stands for Strengths, weaknesses, threats and opportunities.

A SWOT analysis consists of two types of factor matrix. Internal factor matrix and the external factor matrix.

Thus internal factor matrix is a subpart of SWOT analysis.

In SWOT the strengths and weaknesses are the internal factors to the organisation whereas opportunities and threats are external to the organisation.

The components of the IFE matrix are as follows

A. Internal factors = All weaknesses and strengths

B. Weights = 0 to 1 (it means all the strengths and weaknesses will have a weight between 0 to 1 depending on managements strategy and subjectivity. And the sum total of these weights must be 1

C. Rating = 1 to 4

Where,

1 = major weakness, 2 = minor weakness, 3 = minor strengths, 4 = major strengths.

D. Weighted Score

The construction of the IFE matrix is as follows

1. Make a table with four columns

2. Write down all the strengths and weaknesses in the first column

3. Give weights to each factor (strengths and weakness). The sum of the weights must be 1

4. Give rating to factors (1 = major weakness, 2 = minor weakness, 3 = minor strengths, 4 = major strengths)

5. Calculate the total weighted score by multiplying the weights with ratings

A total weighted score of more than 2.5 is considered to be good.