Question

explain IFE, EFE, CPM and QSPM matrices constructed ? advantages And disdvantages?

Answer 1

Explain IFE, EFE, CPM and QSPM matrices constructed?

Advantages and disadvantages?

IFE: Internal Factor Evaluation Matrix

EFE: External Factor Evaluation Matrix

CPM: Competitive Profiling Matrix

QSPM: Qualitative Strategic Planning Matrix

1. “Internal and external Factor evaluation matrix places the organization in a 9-cell matrix. It’s a management tool used to analyze the current position of the divisions and plan the future strategies accordingly.” It is based on internal and external business factors combined into a matrix. IFE weighted scores are plotted on the X-axis and EFE weighted scores are plotted on the Y-axis. The corporate level IFE matrix is designed based on the sum total of the different division matrix.

The IFE and EFE weighted scores are rated as follows:

IFE weighted score	Weak internal position
EFE weighted score

The internal and external is divided into three major regions with different strategic implication. It is drawn as follows:

Cells I , II, IV are described as grow and build leading to market penetration, market development and product development.

Cells III, V, VII can be handled by holding and managing the strategies. Market penetration and product development are the best strategies to use.

Cells VI, VIII, IX are to divest or harvest

Industry attractiveness	Business strength/ Competitive position
		(Grow, build)	(Grow, build)	Question mark (Hold and maintain)
		(Grow, build)	(Hold and maintain)	(Harvest or Divest)
		Profit Producer (Hold and maintain)	(Harvest or Divest)	(Harvest or Divest)

Advantages: It positions the organization in a schematic diagram and gives percentage sales contribution and percentage profit contribution of each division.

Disadvantages are it is time consuming and needs a lot of data.

It can be used in combination with the BCG matrix to deliver accurate results and plan future strategies accordingly.

1. Competitive profiling matrix: CPM: The CPM evaluates the external environment and the competition in the particular industry.   It is a tool used to measure competition and determine rivals and compare and contrast their strengths and weakness.

The process of CPM is as follows:

• The critical success factors should be evaluated, and the key areas identified where the firms must achieve the highest level of excellence to succeed in the particular industry. These factors could be internal or external and they vary from product to product and in different industries.
• Weight is assigned to each factor according to the relevance of the factor for the industry. The sum of weights should be equal to 1. The brand reputation can be weighted as .15, online presence as .14, market share as .12
• Rating of each factor based on how well the organization is doing in the area of operation. The range of rating is 1 to 4, 1 means major weakness and 4 meaning major strength.
• Benchmarking is done to evaluate your position according to the industry standards.
• Total score is arrived at by multiplying the weights with the rating. The company with the highest score is relatively better than its competitor.

Advantages it is a good tool and supports accurate decision making as same parameters are consider and benchmarked. It also analyses your strengths and weakness and can help target and overcome the weak areas.

Disadvantages are the relevant and subjective rating is done by individuals and can generate inaccurate results.

1. Quantitative strategic planning matrix: “It is a tool to evaluate available strategic options and determine the attractiveness of the strategy.”

The six steps to make a QSPM are as follows:

• Make a list of firms external opportunities and internal threats and weaknesses. These details can be taken from IEFE matrix. There should be minimum ten internal critical factors and ten external critical success factors.
• Weights should be assigned to the critical success factors both internal and external.
• The stage 2 should be evaluated for best alternative strategies available. These strategies can be recorded in the top row of the QSPM matrix.
• The attractiveness scores should be determined based on the evaluation and determining and analyzing all factors and defining which factor can be rated as not attractive=1, somewhat attractive=2, reasonable attractive=3, highly attractive =4. A dash can be assigned a particular strategy is not being considered or evaluated.
• Total attractiveness scores can be computed by multiplying the attractiveness with the weighted scores. The total attractiveness score will determine which strategy is suitable for the organization.
• The sum totals will advise which strategy is most suitable for the organization and organization can implement it accordingly.

Advantages are that it is subjective, analyses, and evaluates strategies systematically according to organizations requirement.

The disadvantages are that the attractiveness score is based on individual s judgment and can reduce the objectivity and consequently deliver incorrect results.