Assignment 08: Internal Strengths and Weaknesses

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Strategic Analysis for Healthcare

Chapter 19

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Internal–External Matrix

The internal–external (I/E) matrix uses the data that was originally assembled in the SWOT analysis (Chapter 9 and Chapter 17) and transferred into the EFE (Chapter 10) and IFE (Chapter 18) analyses, and it helps make sense out of the EFE and IFE results.

The I/E matrix positions an organization in a nine-cell display, with placement determined by EFE and IFE total scores.

To begin constructing the I/E matrix, the range of possible EFE scores is placed on the vertical axis, and the range of IFE scores is placed in the horizontal axis.

Health Administration Press

Internal–External Matrix

Health Administration Press

Internal–External Matrix

The horizontal axis of the matrix reflects internal strength and is divided into three categories:

weak (1.0–1.99),

average (2.0–2.99), and

strong (3.0–4.0).

The vertical axis reflects industry attractiveness and is divided into

low (1.0–1.99),

medium (2.0–2.99), and

high (3.0–3.99) categories.

The three categories on each axis combine to form nine boxes in the matrix.

Health Administration Press

Internal–External Matrix

The organization is then plotted based on the intersection of its IFE and EFE scores.

The locations in the I/E matrix correspond to certain standard implied strategies.

The strategic groups are marked in Exhibit 19.2 by the letters A, B, and C. The implied strategies corresponding to each letter are listed below the matrix.

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Internal–External Matrix

Within the I/E matrix, the organization is represented as a circle.

As with the General Electric matrix and the Boston Consulting Group matrix, the size of the circle represents the size of the market and the pie slice represents the organization in terms of sales or profit within that market.

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Internal–External Matrix

Integration Strategies

Forward integration: Ownership or increased control over distributors or retailers

Backward integration: Ownership or increased control over suppliers

Horizontal integration: Ownership or increased control over competitors

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Internal–External Matrix

Intensive Strategies

Market development: Introducing new products or present products into new areas

Product development: Improvement or modification of products for increased sales

Market penetration: Increased share for present products by increased effort

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Internal–External Matrix

Defensive Strategies

Joint venture: Two or more firms joining and creating a third co-owned firm

Retrenchment: Regrouping via cost- and asset-reduction techniques

Divestiture: Selling a product line, division, or business unit

Liquidation: Selling all company assets

Health Administration Press

Internal–External Matrix

Later, as you begin to develop specific strategies, you can refer back to the I/E matrix and see if your strategy development is consistent with the implied directions.

If it is, great! You are on the right path.

But if the strategies you are developing are inconsistent with those suggested by the matrix, some serious consideration is needed.

For example, if the strategies you develop are all aggressive and the I/ E matrix is suggesting retrenchment or divestiture, a disconnect exists somewhere.

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Exercise

Break into groups and create an I/E matrix for your project organization using the space on page 131 of your book.

You will need IFE and EFE scores from previous chapters.

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EFE Score

IFE Score

Weighted IFE Score

Strong 3.0- 4.0 Average 2.0 to 2.99 Weak 1.0 to 1.99

Weighted EFE Score

High 3.0-

4.0

A B

Medium

2.0 to

2.99

A B

Low 1.0

to 1.99

B C C

Implied Strategies-

A Grow and Build Integration strategies, intensive strategies

B Hold and Maintain Market penetration, product development, joint venture

C Harvest or divest Retrenchment, divestiture, liquidation

		Weighted IFE Score
		Strong 3.0- 4.0	Average 2.0 to 2.99	Weak 1.0 to 1.99
Weighted EFE Score	High 3.0- 4.0	A	A	B
	Medium 2.0 to 2.99	A	B	C
	Low 1.0 to 1.99	B	C	C

	Implied Strategies-
	A	Grow and Build	Integration strategies, intensive strategies
	B	Hold and Maintain	Market penetration, product development, joint venture
	C	Harvest or divest	Retrenchment, divestiture, liquidation