David and David (2017) report that developing vision and mission statements along with both internal and external audit provide the basis for strategy formulation. These strategies help a company to capitalize on its strengths while overcoming weaknesses (p. 90). Internal assessments work best when representatives from across the company come together to identify the 20 most important internal strengths and weaknesses of the organization (p. 92), which should include an evaluation of the core elements of the company:
For each of these areas of evaluation, audit checklists can be used to examine each factor with a set of questions designed to uncover the set of strengths and weaknesses. Once these areas have been evaluated and the 20 top strengths and weaknesses identified, they can be summarized and evaluated using an internal evaluation (IFE) matrix. Similar to the EFE and CPM, the IFE uses importance weightings and ratings to determine the weighted score for each variable and provides an overall score for the organization when summed. The IFE is valuable because the weighted factors can help organizations know where to focus when formulating their strategies (David & David, 2017, p. 116-117).
David, F. R., & David, F. R. (2017). Strategic management: Concepts and cases: A competitive advantage approach (Sixteenth edition). Harlow: Pearson Education Limited.