TOWS MATRIX
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A SWOT analysis helps assessing a company’s current internal
and external situation, but does not provide concrete strategic
actions to take. One way to map out the strategic options a
company has, is by using the so-called TOWS matrix (or
TOWS analysis).
Developed by management consultant Heinz Weihrich.
The TOWS Matrix, then, is a much more useful graphical
representation of a SWOT Analysis. Internal strengths and
weaknesses are compared to external opportunities and threats.
Every one of the four individual factors can influence and impact
each other.
It is a conceptual framework for a systematic analysis that
facilitates matching the external threats and opportunities with
the internal weaknesses and strengths of the organization.
Steps of TOWS analysis
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Identification of enterprise profile (industry, customers, needs,
trends), strategic goals(mission and vision of managers) and
resources of organization (financial, material, employee,
knowledge and information),
Identification of the external environment to the organization
(external
factor
influencing
its strategy, political, legal, economics, technology, social
and
cultural, ethical),
Forecasting possible changes of environment and its influence on
organization (scenario analysis, trends, perspectives),
Audit and assessment of internal resources of the organization
to identify weaknesses and strengths,
Preparation of interaction matrix between TOWS factors, and
indicating best alternative strategies,
Evaluation of alternative strategies, evaluating feasibility of
various possible actions, choice of best strategies,
Testing internal consistency of identified portfolio of strategies (in
relation to competition and environment),
Preparation of contingency plans in case of failure of the
undertaken actions.
SO situation: Maxi-Maxi strategy
Strengths (S)
Weaknesses (W)
Opportunities SO STRATEGIES
(O)
How can you use
your strengths to
take advantage of
the opportunities?
WO STRATEGIES
ST STRATEGIES
WT STRATEGIES
Threats (T)
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In this quadrant of the TOWS Matrix, a business must assess its
strengths on a case-by-case basis to determine if it can use them
to capitalize on opportunities.
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This situation applies to the company for which dominates
strengths in the environment and opportunities within. This
situation corresponds to the maxi-maxi strategy: strong
expansion and diversified development.
ST situation: Maxi-Mini strategy:
Strengths (S)
WO situation: Mini-Maxi strategy
Weaknesses (W)
Opportunities
Opportunities
(O)
Strengths (S)
Weaknesses (W)
SO STRATEGIES
WO STRATEGIES
(O)
SO STRATEGIES
How can you use
your opportunities to
overcome
the
weaknesses you are
experiencing?
WO STRATEGIES
Threats (T)
Threats (T)
ST STRATEGIES
How can you take
advantage of your
strengths to avoid real
and potential threats?
ST STRATEGIES
WT STRATEGIES
WT STRATEGIES
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Here, the business should assess each strength based on its
ability to counteract or avoid external threats.
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The source of development difficulties for the company are
unfavorable external conditions (prevalence of threats). The
company may use large internal strengths in attempt to
overcome threats from environment.
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In the WO quadrant, an organization must determine how its
weaknesses can be eliminated or offset by external
opportunities.
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In this situation company has more vulnerabilities - weaknesses,
but its environment gives more opportunities. The strategy
should include the use of these opportunities while reducing or
correcting weaknesses within the organization
WT situation: Mini-Mini strategy
Strengths (S)
Weaknesses (W)
SO STRATEGIES
WO STRATEGIES
Opportunities
(O)
Threats (T)
WT STRATEGIES
ST STRATEGIES
How can you
minimize your
weaknesses and
avoid threats?
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The company in this case has little development opportunities. It
operates in a hostile environment and its potential for change is
small.
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Mini-Mini strategy boils down to a pessimistic scenario such as
the liquidation of a company or in an optimistic situation – to
strive for survival by merging with another organization.