Based on our readings, there exists differences among BCG and IE portfolio matrices. On the contrary, firms use GE matrix to prioritize investment among various business units. Like the BCG matrix, the IE matrix outlines an organization's position in a 33 matrix. D. Also, the size of each circle represents the percentage sales contribution of each division, and pie slices reveal the percentage profit contribution of each division in both the BCG and IE Matrix. Describe the advantages and disadvantages of portfolio analysis as it pertains to the BCG Growth-Share Matrix. The evaluation facilitates finding ways to improve these conditions. , Make an order in advance and get the best price. In BCG and IE matrices, different cells have different interpretations and strategic implications. The BCG matrix is considered a simpler tool for strategic planning and is widely used in the industry, while the GE . The IE Matrix requires more information about the divisions than does the BCG Matrix. There are various models that companies and organizations have adapted to stay relevant in business. The IE matrix is based on the following two criteria: Score from the EFE matrix -- this score is plotted on the y-axis. Products in this quadrant should be analyzed frequently and closely to see if they are worth maintaining.. Required fields are marked *. September 8, 2022. https://academic.tips/question/how-are-the-swot-matrix-space-matrix-bcg-matrix-ie-matrix-and-grand-strategy-matrix-similar-how-are-they-different/. In BCG matrix only a single measure is used, whereas in GE matrix multiple measures are used. Industry attractiveness and Business strengths. How are mergers different from acquisitions? Answers provided by our specialists are only to be used for inspiration, generating ideas, or gaining insight into specific topics. what environmental factors influence a firms international strategy? Each quadrant is classified as low or high performance, depending on the relative market share and market growth rate. The IE matrix measures a calculated value that captures a group of external and internal factors. 3. The sizes of the circles and pie slices can vary. BCG matrix is used by the companies to deploy their resources among various business units. Compare and contrast the ideas of social obligation, social responsiveness, and social responsibility. The total weighted scores derived from the divisions allow construction of the corporate-level IE Matrix. These include white papers, government data, original reporting, and interviews with industry experts. contains values that are multi-factor figures on each of its axis. A cash cow is one of the four BCG matrix categories that represents a product or business with high market share and low market growth. Describe the matrix subtype of organizational design. Compare and contrast internal attributions with external attributions. In other words, TOWS is used to align the strength and weaknesses of a company (internal factors) to the . Effects of Leadership and Organizational Climate on Innovation, Resource-Based View (RBV) Strategy Formulation, Link Between Core Competency and Competitive Advantage, Resource Based View (RBV) and Sustainable Competitive Advantage, The Rational and Dynamic Approaches to Strategic Management, Business Excellence Implementation in Organizations, Stakeholder Theory and Corporate Governance, Intensive (market penetration, market development, and product development), The Strategic Position and Action Evaluation Matrix (SPACE). The internal external matrix (IE) is much similar to the Boston Consulting Group matrix but there are certain differences like the IE matrix needs much information about the divisions. (b). You can even attach screenshots or add additional instructions later. A problem child is one of the four categories in thegrowth-market share matrix describing a business with a small market share in a rapidly growing industry. The company uses to analyze business models and strategies that are valuable to the organization. QSPM matrix on business development strategy. calculated value which shows a group of internal and external factors. Organizations use the IE matrix (Internal and External) to evaluate their internal and external working conditions. Cash cows are the firms that have a high market position in a slow-growth industry. See full answer below. The matrix consists of 4 classifications that are based on two dimensions. BCG matrix represents two degrees of market growth and market share, i.e. Also, the size of each circle represents the percentage sales contribution of each division, and pie slices reveal the percentage profit contribution of each division in both the BCG and IE Matrix. It offers easy access to different solutions to the business model. What are its advantages and disadvantages? What is the problem with using only financial measures. (2022) 'How are the SWOT Matrix, SPACE Matrix, BCG Matrix, IE Matrix, and Grand Strategy Matrix similar? Briefly explain the importance of group mechanisms that feature in the integrative model of organizational behavior. On the contrary, firms use GE matrix to prioritize investment among various business units. The latter expands upon this by interlinking the identified factors to assess the strategies available to companies. What will be an ideal response? If you like the writer, you can hire them again. 1 Portfolio Matrices- Difference Between IE and BCG Matrix. The SPACE Matrix stands for Strategic Position and Action Assessment Matrix. By combining these two variables into a matrix, a corporation can plot their . Learn how your comment data is processed. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). It is also called the Growth-Share Matrix Portfolio Analysis and The Boston Matrix. BCG is only a four cell matrix, while GE McKinsey is a nine cell matrix. incentive for the hub in the IE network is multifaceted. discontinue, develop products or invest. Firms often prepare a before and after IE (or BCG) Matrix to reveal the situation at present versus the expected situation after one year. It is also called the Growth-Share Matrix Portfolio Analysis and The Boston Matrix. How does a company s internal makeup affect the speed in which it goes global? How is a product team structure different from a matrix structure? What will be an ideal response? Further, the strategic implications of each matrix are different. You can learn more about the standards we follow in producing accurate, unbiased content in our. Matrix Definition - What is, Meaning and Concept. The Internal-External (IE) is a method of analysing the working methods and the strategic ideas for a firm using some basic management tools, which is just a basic analysis of the business phenomenon on the basis of both the internal and external factors. Enthusiastic to comment and discuss the articles, videos on our website by sharing your knowledge and experiences. What will be an ideal response? Explain the benefits and limitations of developing a Boston Consulting Group (BCG) Matrix. BCG matrix (also called Growth-Share Matrix) is a portfolio planning model used to analyse the products in the business's portfolio according to their growth and relative market share. Also, the IE Matrix requires more information about the divisions than the BCG Matrix. What are the similarities and differences between the matrix organization and the team organization? ", Boston Consulting Group. What are the tradeoffs between an internal and an external growth strategy? Compare and contrast multi-domestic, global and transnational strategies. These tools analyze the historical data and information to give future predictions and assist in developing strategies or action plans to achieve the desired goals and focus. Portfolio Matrices- Difference Between IE and BCG Matrix. Compare intrinsic and extrinsic value in business. Wahyuningtias, and Putranto, 2018). 1 This before-and-after analysis can be very effective in an oral presentation, enabling students (or strategists) to pave the way for (justify or give some rationale for) their recommendations across divisions of the firm. Management consultants at the Boston Consulting Group developed their matrix in the early 1970s. First, the axes are different. For, starters, the BCG matric measures a portion of market share and market growth of the company, to help the company decide what action to take and guide the direction of the company (David et, al., 2020). Region 2The prescription for divisions that fall into cells III, V, or VII can be described as hold and maintain strategies; market penetration and product development are two commonly employed strategies for these types of divisions. Can you think of an example of a successful first mover, early follower, and late entrant? In BCG matrix only a single measure is used, whereas in GE matrix multiple measures are used. The Internal-External (IE) Matrix can be divided into three major regions that have different strategy implications. What are the major advantages and disadvantages of an integrative strategy? The IE matrix measures the different values of its axes. Note that Division 1 has the largest revenues (as indicated by the largest circle) and the largest profits (as indicated by the largest pie slice) in the matrix. score from the EFE matrix that is plotted on the y-axis and that of IFE matrix on the x-axis. What are each of these frameworks that you have identified and how is each used? Another difference is that there are separate implications for every kind of matrix. Academic.Tips. NetMBA, explains the model is based on the market share values. "How are the SWOT Matrix, SPACE Matrix, BCG Matrix, IE Matrix, and Grand Strategy Matrix similar? MBA Knowledge Base 2021 All Rights Reserved, Boston Consulting Group(BCG) Growth-Share Matrix, Strategic Marketing Tools - Ansoff Matrix and BCG Matrix, Contemporary Forms of Organizational Design, TOWS Matrix - Threats Opportunities Weaknesses Strengths Matrix, Quantitative Strategic Planning Matrix (QSPM). Copyright 2006-2022 Academic.Tips website is operated by Grand Dominie Limited. Home Strategic Management Internal-External (IE) Matrix. Discuss the drawbacks of acquisitions over internal development. The company is registered at 4 Diagora Street, Kermia Building, Office 202, P.C. You can find out more about our use, change your default settings, and withdraw your consent at any time with effect for the future by visiting Cookies Settings, which can also be found in the footer of the site. Internal Factor Evaluation (IFE) Matrix is a strategy tool used to evaluate firm's internal environment and to reveal its strengths as well as weaknesses. I think other website proprietors should take this website as an model, very clean and wonderful user genial style and design, let alone the content. The BCG growth-share matrix is a tool used internally by management to assess the current state of value of a firm's units or product lines. Compare and discuss skill-based and competency-based systems of pay. The x and y axes are different. According to this site, each product has its product life cycle, and each stage in product's life-cycle represents a different profile of risk and return; in general a company should maintain a balanced portfolio of products; having a balanced product portfolio includes both high-growth products as well as low-growth products. You'll then be able to download it from your account and request a revision if needed. Organizations use the IE matrix (Internal and External) to evaluate their internal and external working conditions. The BCG matrix measures market growth and market share. This means it is a four-celled matrix. Products that are in low-growth areas but for which the company has a relatively large market share are considered cash cows, and the company should thus milk the cash cow for as long as it can. Why is external competitiveness so important? This button displays the currently selected search type. As soon as your work is ready, well notify you via email. The Internal-External (IE) Matrix is based on an analysis of internal and external business factors which are combined into one suggestive model. What cultures use each type? ", Boston Consulting Group. Difference between BCG Matrix and IE Matrix. How do you categorize various Monsanto's products/services into one of four categories of BCG matrix (Cash Cows, Stars, Question Marks, and Dogs)? as grow and build under cell I, II, and IV which can take intensive or integrative strategies as per Strategic Management: A Competitive Advantage Approach, Concepts and Cases, Whistle-Blowing, Bribery, and Workplace Romance, Guidelines for Effective Strategic Management, Social Science: meaning, nature and scope, A Comparison of R, Python, SAS, SPSS and STATA for a Best Statistical Software, Learn Programming Languages (JavaScript, Python, Java, PHP, C, C#, C++, HTML, CSS), Create your professional WordPress website without code, Doing Management Research: A Comprehensive Guide. high and low. The matrix is guided by four main principles stability, growth, combination, and retrenchment. References Critical thinking in strategic planning will help a team devise a plan and see it through to completion adequately. Mohajan, H. (2017). Causes are important, not effects. It is based on the comparison of IE Matrix and BCG Matrix. Explain the difference between internal and external growth strategies. The evaluation facilitates finding ways to improve these conditions. A BCG matrix is a model used to analyze a business's products to aid with long-term strategic planning. The key business strategy is the matrix of the Grand Strategy. The BCG matrix is a strategic management tool that was created by the Boston Consulting Group, which helps in analysing the position of a strategic business unit and the potential it has to offer. Student Name The matrix helps companies decide how to prioritize their various business activities. What will be an ideal response? There are different models that companies and organizations have adapted to in order to remain relevant in business. We also reference original research from other reputable publishers where appropriate. The BCG matrix is an example for a 2x2 decision matrix.