Free Strategy Analysis Essay Sample
The Internal-External (IE) Matrix is similar to the Boston Consulting Group (BCG) matrix in the sense that both tools are helpful in the analysis of corporate portfolio and entail plotting the firm’s divisions using a schematic diagram. They are both referred to as portfolio matrices (Grant, 2005). In addition, the size of each circle in the schematic diagram indicates the percentage sales distribution for each business divisions and the pie slices indicate the percentage profit contribution for the case of both IE and BCG Matrix. The IE matrix relies on two significant criteria: score from the EFE matrix plotted on the y-axis, and score from the IFE matrix plotted on the x-axis. The BCG matrix categorizes the performance the business division in terms of market share and growth (Haines, 2004).
There are some significant differences between the BCG and IE Matrix. The axes of the matrices are different. The BCG matrix helps in measuring market share and market growth; whereas the IE matrix measures a determined value that indicates a mix of internal and external factors implying that, the IE matrix needs more information regarding the organization than the BCG matrix. The values for every axis in the BCG matrix are mostly single-factor, whereas the values for the axes in IE matrix are mostly multi-factor (Schermerhorn & Holbrook, 2005). The third difference is that their strategic implications are different. The above differences imply that strategic decision-makers in multi-divisional organizations have to construct both the IE matrix and the BCG matrix during the formulation of alternative strategies. This is because of the definition of IE matrix is more extensive than BCG matrix. The conventional approach entails the development of the BCG matrix, followed by an IE matrix for the current needs and then formulates projected matrices to indicate future anticipations. The use of before-and-after analysis plays an integral role in forecasting the anticipated outcomes of strategic decisions on the firm’s portfolio of divisions (Haines, 2004).