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Internal factor evaluation matrix can be used to examine the strengths and weaknesses of a business. Some of the important strengths which can be included in the matrix are: powerful strategy, strong financial condition, economies of scale, strong advertising and promotion, lower cost, product quality and innovation, good customer service, strong brand name, etc. Similarly weaknesses include low market share, narrow product line, lack of alliances and joint ventures,  weak financial position, higher cost of production, lower quality products, lack of innovation,  poor management etc. Step by step construction of internal factor evaluation matrix is given for Harrah’s Entertainment (largest gaming company in the world that owns and operates over 50 casinos, hotels, and seven golf courses under several brands).

Steps in the Construction of IFE Matrix

1. In the first column, lists down all the strengths and weaknesses. IFE matrix should include 10 to 20 key internal factors.
2. In the second column, assign weights to each factor ranging from 0.0 (not important to 1 (most important). Greater weights should be given to those internal factors which have grater influence on the organizational performance. The sum of all weights must equal 1.
3. In the third column, rate each factor ranging from 1 to 4. Here, rating 1 represents major weakness, rating 2 shows minor weakness. Similarly, rating 3 indicates minor strength whereas rating 4 shows major strength. It means that weakness must receive 1 or 2 rating while strength must get 3 or 4 rating.
4. In the fourth column, calculate weighted score by multiplying each factor’s score by its rating.
5. Find the total weighted score by adding the weighted scores for each variable.
6. In the fifth column, (Comments) provide rationale used for each factor.

Internal Factor Evaluation Matrix Harrah’s Entertainment

The total weighted score ranges from 1 to 4 (where 1 is low, 4 is high and 2.5 is average) regardless of the total number of internal factors used in the analysis. If the total weighted score is less than 2.5 it indicates that the organization is weak internally. On the other hand, the scores above 2.5 show strong internal position. An internal factor could be included twice in the IFE Matrix if the factor is both strength and weakness. In case of Harrah’s Entertainment the total weighted score is above than average, it means that the company is strong internally.