TOWS Matrix Analysis | TOWS Matrix Analysis Example
What is TOWS Analysis?
The TOWS analysis Matrix was first developed by Heinz Weihrich, a Global Leadership and Management Professor at the University of San Francisco, in the year1999. A TOWS analysis is a variant of a SWOT analysis and is an acronym for Threats, Opportunities, Weaknesses, and Strengths. TOWS matrix analysis is a strategic analysis tool that involves a systematic and comprehensive assessment of internal and external factors that determine both the company’s current competitive position and future potential.
Difference Between SWOT And TOWS
TOWS Analysis has strong similarities to the SWOT analysis tool. One would use a SWOT at the beginning of the planning process and TOWS later to decide how to take your company forward.
The connection between TOWS analysis and SWOT analysis is briefly reviewed here.
The two fields’ strengths and weaknesses in the internal part of the SWOT analysis are the same at the top of the TOWS analysis.
The two fields, Opportunities, and Threats in the SWOT analysis’s external part, are the same as the TOWS Analysis’s left side. This clarifies the connection between SWOT analysis on TOWS analysis.
TOWS Matrix Analysis in Strategic Management
The TOWS Matrix Analysis tool aims to create strategic options from an external-internal company analysis based on the SWOT Analysis.
The TOWS Analysis helps organizations pursue key strategic options by exploiting identified opportunities and making the most out of their strengths. Again, the company works around its internal weaknesses by planning on how to deal with them.
The TOWS Analysis is also key development of great ideas generated through brainstorming sessions. This brings out the best and effective marketing strategies and tactics.
Additionally, the TOWS analysis model goes beyond merely identifying organizational weaknesses and strengths, opportunities, and threats and identifying key and relevant strategies.
In TOWS analysis, there are two main divisions. The Internal Division, which is divided into two categories; Strengths and weaknesses.
The external division, which is divided into the two categories; Opportunities and threats
These two times two subcategories create a model with four fields. The fields in this model are called strategies. These strategies are
- Strength Oblique Opportunities called SO strategies.
- Weaknesses Oblique Opportunities called WO strategies.
- Strength Oblique Threats called ST strategies
- Weakness oblique threats are called WT strategies.
Purpose of TOWS Matrix Analysis
The main purpose of a TOWS matrix Analysis is to:
- Tows Analysis help reduces threats.
- Take advantage of opportunities.
- Tows Analysis help in exploiting strengths
- Remove weaknesses
The 4 TOWS strategies are; SO strategies, WO strategies, ST strategies, and WT strategies.
Strength Opportunity Strategy /Maxi-Maxi strategy (SO Strategies).
Here we combine the strengths with the opportunities, and we get some robust and realistic strategies for the company to consider.
This is also called Maxi Maxi Situation.
Weakness Opportunities Strategies/Mini-Maxi strategy( WO Strategies)
The second combination is WO strategies, where we combine weak aspects inside the company with opportunities from its external surroundings. This means that the company looks at the opportunities in the society, which up till now it has not taken advantage of.
Perhaps because it had lacked competencies in the company or other matters internally, that may have caused it, for instance, a sub-optimal organizational structure.
In this situation, the company has three opportunities to take action, for example, by educating the employees or changing the structure of the organization into a more agile one.
This strategy is called Mini -Maxi Strategy.
Strength Threat Strategy /Maxi-Mini strategy(ST strategies)
These are strategies where we combine the company’s strong sides with the threats in society and its external surroundings.
The strategy here is to avoid the threats as much as possible while still taking advantage of the company’s strengths. For instance, to try to go for a market leadership position if, at present, the company is a market follower,
This could require an aggressive marketing strategy; this strategy we call a Maxi -Mini Situation.
Weakness Threat Strategies/Mini-Mini strategy (WT Strategies )
Here we combine the weak side of the company with the threats that it faces. This is a situation that the company does well to avoid on and therefore, we call it a Mini-Mini Situation.
TOWS Analysis Example of a Footwear Company
A Danish company, Hummel is a well-known company that produces and sells sportswear, clothes, and shoes, etcetera.
In certain sports, the big brands Adidas and Nike are some of Hubble’s biggest competitors, especially in sportswear for football oblique soccer.
Start by filling the SWOT analysis into the four outer fields. These are strengths, weaknesses, opportunities, and threats. Then you move to inner fields and brainstorm the TOWS strategies. TOWS strategies are; SO strategies, WO strategies, ST strategies, and WT strategies.
Strength Opportunities Strategies
Hummel’s SO strategies combined strengths and opportunities. This gives rise to the following strategies.
- To explore the wide range of products and further develop Hummel’s sportswear for handball, handball is a growing sport in many countries.
- To be more active on social media, where young people are active many hours a day.
- To benefit from CRS on Hummel’s company vision because society increasingly expects social responsibility on sustainability.
Weakness Opportunities Strategies
WO strategies combined the weaknesses and the opportunities. Here we get the following strategic moves;
- To find opinion leaders from the young people who play team’s sport. Somebody that the young people consider as idols or role models
- To exploit the foreign production facilities much more in order to expand the product range,
Strengths Threats Strategies
Hummel’s ST strategies combined strengths and threats. Hummel will have the following strategic goals;
- Exploiting the famous Danish brand on team sports to differentiate it from Nike and Adidas’s larger brands. They have more focus on individual performance and individual sports, such as tennis and golf.
- Differentiate on a wide product range to reach a larger target audience.
Weakness Threat Strategies
Hummel should avoid the WT strategies, which combined the weaknesses and threats they can’t win in this position.
- It must avoid competing directly with the large brands Nike, Adidas, and Puma and stick to team sports.
In this way, we have devised the following TOWS for Hummel, including a list of strategic initiatives. This list is not at all a finished list but to illustrate an example.
This strategic work has to be carried out many times during the year as a society, technology, and people change over time and more rapidly than earlier due to technology changes and globalization.
Disadvantages /Criticism of TOWS Matrix Analysis
- Like many tools, models, concepts, and frameworks, the TOWS model is subjective. It is only as robust as the data, which you include within the model.
- TOWS is a strategic tool that helps the management and leaders of companies to make strategic decisions. It is important, though, to understand that by working on a TOWS, we get some input to our strategic analysis but not a solution of what is the best way to go forward.
- The leaders must decide from their knowledge of the market and business they are operating in. Sometimes good decisions are made, and sometimes not; that is the life of the business.
- The model provides a useful framework for discussing the company’s position. The model forces the management to work with both negative and positive aspects of the company as well as external surroundings. If they don’t do it properly, there will be fields in the framework with very little or no information.
- Like many other frameworks and models, the TOWS Analysis model supports other strategic frameworks like Ansoff’s Matrix, Porters’ Generic Strategies, etc.