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IFE Matrix for Retail Computer Store

Read the example IFE Matrix on p. 116 of your textbook and then look at Table 4-11.

1. Choose two factors (either strengths or weaknesses) that you feel the company needs to pay more attention to in their strategic planning. Explain why?

An Example IFE Matrix the the two most important factors to be successful in the retail computer store business (as indicated and Weakness #1: Location of store negatively impacted by new Highway 34. Note that amon the strengths, the store's strategies are not responding well rating is 2) to two factors: "Average customer purchase increased from $97 to $128" and "Debt-to-total assets ratio declines to 34% as indicated by the assigned 2 ratings. Regarding the store's weaknesses, note that the owner's strategies are responding "superior to two factors: (1) "Location of store negatively impacted by new Highway 34" as indicated by the rating of 4 (because plans are underway to perhaps relocate the store) and (2) "Bathroom needs refurbishing." as indicated by the rating of 4 (because the bathroom is in the process of being remodeled). Note that the store's IFE Matrix overall contains numerous dollars, numbers, percentages, and ratios, rather than vague statements, this is excel- lent. This store receives a 2.73 total weighted score, which on a 1- to 4-scale, indicates some suc. cess but there is room for improvement in store operations, strategies, policies, and procedures. Coupled with the EFE Matrix, the IFE Matrix provides important information for strategy formulation. For example, this retail computer store might want to hire another checkout person and repair its carpet and paint. Also, the store may want to increase advertising for its repair/ser- vices, because that is a really important (weight 0.15) factor to being successful in this business. In multidivisional firms, each autonomous division or strategic business unit should con- struct their own IFE Matrix (and their own EFE Matrix). Divisional matrices then can be inte grated to develop an overall corporate IFE Matrix. Be as divisional as possible when developing a corporate IFE Matrix. Also, in developing an IFE Matrix, do not allow more than 30 percent of the key factors to be financial ratios. Financial ratios are generally the result of many fac- tors, so it is difficult to know what particular strategies should be considered based on financial ratios. For example, a firm would have no insight on whether to sell in Brazil or South Africa to take advantage of a high corporate ROI ratio. TABLE 4.11 Sample Internal Factor Evaluation Matrix for a Retail Computer Store Key Internal Factors Weight Rating Weighted Score Strengths 1. Revenues from repair/service in the store up 16%. 0.15 3 0.45 2. Employee morale is excellent. 0.10 3 0.30 3. Average customer purchase increased from $97 to $128. 0.07 2 0.14 4. In-store promotions resulted in 20% increase in sales. 0.05 3 0.15 5. In-store technical support personnel have MIS college 0.05 4 0.20 degrees. 6. Inventory turnover increased from 5.8 to 6.7. 0,05 3 0.15 7. Debt-to-total assets ratio declines to 34% 0.03 2 0.06 8. Newspaper advertising expenditures increased 10%. 0.02 3 0.06 9. Revenues per employee up 19%. 0.02 3 0.06 Weaknesses 0.60 2 1 2 1. Location of store negatively impacted by new Highway 34. 2. Revenues from software segment of store down 12%. 3. Often customers wait 15 minutes to check out, 4. Store has no website. 5. Revenues from service segment down 8%. 6. Supplier on-time delivery increased to 2.4 days. 7. Carpet and paint in store somewhat in disrepair. 8. Bathroom in store needs refurbishing, Total 0.15 0.10 0.05 0.05 0.04 0.03 0.02 0.02 1 0.20 0.05 0.10 0.04 0.03 0.06 0.08 1 3 4 1.00 2.73