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MGT603 - Strategic Management - Lecture Handout 28

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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:
    • Requires more information about the divisions
    • Strategic implications of each matrix are different
  • Based on two key dimensions
    • The IFE total weighted scores on the x-axis
    • The EFE total weighted scores on the y-axis
  • 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

Internal-External (IE) Matrix

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

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