Internal Factor Evaluation (IFE) matrix for Lipton Yellow Label

Internal Factor Evaluation matrix is a strategic management tool for auditing or evaluating major
strengths and weaknesses in functional areas of a business. IFE matrix also provides a basis for
identifying and evaluating relationships among those areas. The
Internal Factor Evaluation matrix or short IFE matrix is used in strategy formulation. IFE shows
major internal strengths and weaknesses for the company and highlights its core competencies on
which strategy is going to be formulated. In case of Lipton, we highlighted Unilevers major
strengths such as, product quality, distribution channel, marketing and advertisement, market
share, customer loyalty, human capital, technology and revenue growth. As far as weaknesses are
concerned we came up with price competitiveness, market development, tea bag market as major
weaknesses. We assigned weight and rating to each factor and according to its importance to
come up with weighted score for each factor.

Key Internal Factors

weight

Ratin
g

Weighted
Score

0.1

0.4

0.06

0.24

0.08

0.24

0.1

0.3

0.1

0.3

0.06

0.18

0.08

0.32

0.05

0.15

0.05
0.04

2
3

0.1
0.12

Strengths
1.

2.

3.

4.

5.

6.
7.
8.
9.
10.

11.

Experience and quality management: excels its

commitment to matching the quality of Lipton tea with
excellent manufacturing practice.
Brand recognition: Lipton is a strong brand name, has
strong dominance in the market maximum sharing
shareholding overall and 54% market share.
Customer Preferences: Lipton focuses on its target
audience, keeping in mind the taste and preference of
market segments.
Financial Position: Lipton has gain great profit
throughout its run and still continues to do so through
international exports.
Customer Loyalty: Most loyal customers of Lipton
prefer using Yellow label because it has a sense of
trust and commitment in terms of taste.
Diversification: it has an integrated production process
and is highly innovative.
Distribution: it has a strong distribution network in
Punjab with respect to others provinces of Pakistan.
Packaging: Attractive packaging as well as gifts i.e.
Lipton on printed caps, cups, shirts etc.
Out-of-Home ( OOH) Advertising
It has strong advertising campaigns focusing on health
and inspiration.
Total weight:
Weaknesses:
High prices: since it is a market leader and offers a

0.77
0.05

2.35
2

0.1

12.
13.

premium brand, it sets the price in the market and

charges high price.
Some products like green tea and flavored tea needs
more promotional campaigns.
Distribution: distribution network is relatively weaker
in NWFP, Sindh and Baluchistan as consumers they
still prefer local teas over branded ones.

Total weight

0.03

0.09

0.2

0.2

2.74

EXTERNAL FACTOR EVALUATION MATRIX (EFE):

Key External factors

weight

rating

Weighted
score

0.08

0.32

0.11

0.22

0.09

0.09

0.09

0.27

0.14

0.56

0.09

0.36

0.08

0.24

0.08

0.32

0.05

0.15

0.07
0.06

4
1

0.28
0.06

0.06
0.49
1

0.18

Opportunities
1.

2.
3.
4.
5.

Reducing costs: instead of importing from other

countries, it is preferable to import from India to Sri
Lanka at cheaper cost
Producing: set up farms for cultivation instead of
importing, which further reduces input costs.
Out-of-home advertisements can be used to enhance
sales in Sindh and Baluchistan.
Have opportunity to sign contracts with commercial
sector i.e. universities, restaurants, offices etc.
Reduction in tariff and custom (import duty reduced
from 10% to 5%, sales tax 17%to 6%) in the recent of
2015 given great opportunity of increasing sales.
Total weight

0.51

Threats
6.

7.
8.
9.
10.
11.
12.

Threats of new entrants: due to cheaper tea imports

from Sri Lanka and India, new players are likely to
enter the industry.
Smuggling: increased smuggling of loose tea at
cheaper rates.
Substitutes: better quality and tastes of juices and soft
drinks.
Rise in international tea prices: due to popularity tea
prices have been increased internationally.
People thinking is changing about tea usage.
High market share of loose tea and Tapal in Sindh and
Baluchistan.
Long summer season affect the sale of tea.
Total weight
Total weight of opportunity and threats.

3.05