IFE, RBV, Porter's

Internal Factor Evaluation Matrix
Resource-Based View
Porter's Competitive Strategies

1. IFE Matrix

2. What is the IFE Matrix? Internal Factor Evaluation Matrix A summary step in conducting internal strategic management audit. Summarizes and evaluates the major strengths and weaknesses in the functional areas of a business.

3. Components Internal Factors – list of all strengths and weaknesses Weights – Scale of 0 to 1 Rating – Scale of 1 to 4 Strengths – 4-major strength; 3- minor strength Weaknesses – 1-major weakness; 2-minor weakness Total Weighted Score

4. Construction of IFE Matrix Make a table. In the first column, list down all the strengths and weaknesses. In the second column, assign weights to each factor ranging from 0.0 (not important) to 1 (most important). The sum of all weights must be equal to 1 .

5. Construction of IFE Matrix In the third column, rate each factor ranging from 1 to 4 (where: 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4 = major strength.)

6. Construction of IFE Matrix In the fourth column, calculate weighted score by multiplying each factor’s score by its rating. Find the total weighted score by adding the weighted scores for each variable.

7. Resource-Based View

8. What is RBV? The resource-based view focuses on internal resources, the firm's strengths and weaknesses, in contrast to the positional or environmental models of competitive advantage which focuses on opportunities and threats.  (Barney, 1991)

9. The Language of Resources and Capabilities Resources Inputs into a firm’s production process Capability capacity of an integrated set of resources to integratively perform a task or activity

10. Rents A surplus of revenue over cost. Strategic Assets/Core Competencies Resources and capabilities that can earn rents.

11. Types of Resources Tangible Resources – include all plant and equipment, location, technology, raw materials and machines Intangible Resources - include all employees, training, experience, intelligence, knowledge, skills, abilities Organizational Resources - include firm structure, planning processes, information systems, trademarks, copyrights, databases.

12. Resources and capabilities lead to Competitive Advantage when they are: Valuable allow the firm to exploit opportunities or neutralize threats in its external environment. Rare possessed by few, if any, current and potential competitors

13. Costly to imitate when other firms either cannot obtain them at a much higher cost Non-substitutable the firm must be organized appropriately to obtain the full benefits of the resources in order to realize a competitive advantage

14. Criteria for Sustainable Competitive Advantage and Strategic Implications

15. Porter’s Competitive Strategies

16. Who is Michael Porter? Described a category scheme consisting of three general types of strategies that are commonly used by businesses to achieve and maintain competitive advantage.

17. Three Generic Strategies 1. Cost Leadership a firm sets out to become the low cost producer in its industry. Targets a broad market

18. Competitive Advatages : by reducing production costs and therefore increasing the amount of profit made on each sale as the business believes that its brand can command a premium price or by reducing production costs and passing on the cost saving to customers in the hope that it will increase sales and market share

19. Example: Southwest Airlines The airline industry has typically been an industry where profits are hard to come by without charging high ticket prices. Southwest Airlines challenged this concept by marketing itself as a cost leader.

20. Risk: other firms may be able to lower their costs as well. As technology improves, the competition may be able to leapfrog the production capabilities, thus eliminating the competitive advantage.

21. DIFFERENTIATION a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers . It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs.

22. Example: For the health and wellness section... PROCTOR AND GAMBLE - Differentiation of health and hygiene products bet Johnson and Johnson with variants in product and price sufficient though not leader in this segment

23. Risk: The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes.

24. FOCUS rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others.

25. Two Variants FOCUSED COST LEADERSHIP In cost focus a firm seeks a cost advantage in its target segment

26. Example: VENDING MACHINES -This strategy allows the firm to offer large demand at very low prices and still remain profitable.

27. FOCUSED DIFFERENTIATION differentiation focus a firm seeks differentiation in its target segment. Both variants of the focus strategy rest on differences between a focuser's target segment and other segments in the industry. 

28. Example: One example is Breezes Resorts, a company that caters to couples without children. The firm operates seven tropical resorts where vacationers are guaranteed that they will not be annoyed by loud and disruptive children.

29. Focus (Niche) Strategy Under a focus strategy a business focuses its effort on one particular  segment of the market  and aims to become well known for providing products/services for that  segment .

30. Key Points: Cost leadership can benefit either by gaining market share through lowering prices or by maintaining average prices and therefore increasing profits.

31. DIFFERENTIATION STRATEGY win market strategy offering unique features that are valued by their customers

32. FOCUS STRATEGY involves achieving cist leadership of differentiation within niche market in ways that are not available to more focused players.

33. “STUCK IN THE MIDDLE” (Best Cost Strategy) attempt to adopt all three strategies; cost leadership, differentiation and niche (focus). A business adopting all three strategies is known as "stuck in the middle". They have no clear business strategy and are attempting to be everything to everyone.

34. STEPS IN CHOOSING THE RIGHT GENERIC STRATEGY 1.) Carry out SWOT Analysis 2.) Use Five Forces Analysis 3.) Compare SWOT Analysis f the viable strategic options with the results of your five forces analysis

35. References (IFE Matrix): https:// managementmania.com/en/ife-matrix http:// en.wikipedia.org/wiki/IFE_matrix http:// www.soopertutorials.com/business/strategic-management/478-how-to-develop-internal-factor-evaluation-matrix-ife-matrix.html http:// www.zeepedia.com/read.php?ife_matrix_the_internal_factor_evaluation_ife_matrix_internal_audit_strategic_management&b=58&c=12 http:// www.maxi-pedia.com/IFE+EFE+matrix+internal+factor+evaluation http://mba-lectures.com/management/strategic-management/1097/ife-matrix-of-coca-cola-company.html

36. References (RBV): http:// en.wikipedia.org/wiki/Resource-based_view https://www.boundless.com/management/strategic-management/internal-analysis-inputs-to-strategy/resource-based-view / http://www.businessdictionary.com/definition/resource-based-view.html

37. References (Porter’s): http:// en.wikipedia.org/wiki/Porter's_generic_strategies http:// www.mindtools.com/pages/article/newSTR_82.htm http:// www.slideshare.net/dipalij07/porters-generic-strategies-with-examples http:// www.slideshare.net/dipalij07/porters-generic-strategies-with-examples http:// en.wikipedia.org/wiki/Michael_Porter https://www.boundless.com/management/strategic-management/internal-analysis-inputs-to-strategy/porter-s-competitive-strategies/