TOWS analysis matrix

TOWS analysis is extension of SWOT analysis. TOWS analysis is conducted after conducting the SWOT analysis. In one hand, Swot analysis shows what you are. And on the other, TOWS says what you should do ?

Let me be clear with an example: Say your company is in good financial conditions and has a  potential to compete in the market but labour cost is going up where it is operating.

In this situation, TOWS guides you how to minimize the labour cost despite the fact that labour cost is increasing. Then, you have to find the lower cost from anywhere.

Now, what can you do? It is obvious that since you have a good financial position, you can transfer your business place where you can access the same in lower cost or procure labours from where it can obtained on relatively cheap rate.

SWOT is  just there to think about internal and external environment separately. It helps make strategy analyzing factors affecting an organization as a whole.

It is therefore TOWS is not just understanding of environment. It guides in strategy formulation considering the environmental factors. Thus it provides with the how to utilize your strength in order to be in  one step ahead than the what others does.

What is TOWS analysis ?

TOWS matrix was developed by Heinz Weihrich which matches the strengths and weaknesses of an organization with external opportunities and threats. It systematically creates relationship between environmental factors and helps in strategy formulation. Thus TOWS matrix has a wider scope when compared to SWOT analysis.

It is a relatively simple tool for generating strategic options. Based on the TOWS matrix, four different strategic choices can be identified as…..

SO(Maxi-Maxi): It is a situation which every organization wants to achieve.It suggest that the strengths can be used to create or capitalize opportunities. Organisations can take lead from their strengths and utilize the resources to take the competitive advantage.

ST(Maxi-Mini):This implies that you should convert your weakness into strength and utilizing the same grab the opportunity on the environment and convert threats which have bearing on the operation.

WO(Mini-Maxi): It states that firstly you should identify your weaknesses and convert it into strength. Then, you have to use your strength to minimize the threats. For example: Suppose organisation is facing deficiency of fund and The strategies developed need to overcome organizational weaknesses if existing or emerging opportunities are to be exploited to maximum.

WT(Mini-Mini): WT is a position that any firm will try to avoid. An organization facing external threats and internal weaknesses may have to struggle for its survival. WT strategy is a strategy which pursued to minimize or overcome weaknesses and as far as possible, cope with existing or emerging threats.

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