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| Strategic Management |
Strategic
Management MGT603
VU
Lesson
28
BOSTON
CONSULTING GROUP (BCG)
MATRIX
Learning
objective
After
understanding this chapter you are
able to understand BCG and
IE matrices and also
understand
how
to prepare these matrices
for any organization and what
its practical implementation in
various
organizations.
The
Internal-External (IE)
Matrix
This
is also an important matrix of
matching stage of strategy
formulation. This matrix already
explains
earlier.
It relate to internal (IFE)
and external factor evaluation (EFE).
The findings form internal
and
external
position and weighted score
plot on it. It contains nine
cells. Its characteristics is a s
follow
·
Positions
an organization's various divisions in a nine-cell
display.
·
Similar
to BCG Matrix except the IE
Matrix:
o
Requires
more information about the
divisions
o
Strategic
implications of each matrix are
different
·
Based
on two key dimensions
o
The
IFE total weighted scores on the
x-axis
o
The
EFE total weighted scores on the
y-axis
·
Divided
into three major
regions
o
Grow
and build Cells I, II, or
IV
o
Hold
and maintain Cells III, V, or
VII
o
Harvest or
divest Cells VI, VIII, or IX
105
Strategic
Management MGT603
VU
Steps
for the development of IE
matrix
1.
Based on two key dimensions
IFE and EFE.
2.
Plot IFE total weighted
scores on the x-axis
and the EFE total weighted
scores on the y
axis
3.
On the x-axis
of the IE Matrix, an IFE total
weighted score of 1.0 to
1.99 represents a
weak
internal
position; a score of 2.0 to
2.99 is considered average;
and a score of 3.0 to 4.0 is
strong.
4.
On the y-axis,
an EFE total weighted score of
1.0 to 1.99 is considered
low; a score of 2.0 to 2.99
is
medium;
and a score of 3.0 to 4.0 is
high.
5.
IE Matrix divided into three
major regions.
Grow
and build Cells I, II, or
IV
Hold
and maintain Cells III, V, or
VII
Harvest
or divest Cells VI, VIII, or
IX
106