The TOWS Matrix and SWOT Analysis have both the aim of addressing and understanding the strategic market landscape. Yet, the TWOS matrix is a variation of the SWOTanalysis to enhance it by trying to understand the relationships between the various forces of the SWOTanalysis for a more holistic picture.
Aspect
SWOT Analysis
TOWS Matrix
Purpose
SWOT Analysis is a strategic planning tool used to identify an organization’s internal strengths and weaknesses and external opportunities and threats. It helps in strategic decision-making and goal setting.
The TOWS Matrix, also known as the TOWS Strategic Alternatives Matrix, is an extension of SWOT analysis. It helps organizations develop specific strategies by matching internal strengths and weaknesses with external opportunities and threats.
Components
SWOT Analysis involves four main components: – Strengths: Internal factors that give an organization an advantage. – Weaknesses: Internal factors that hinder an organization’s performance. – Opportunities: External factors that could benefit the organization. – Threats: External factors that could negatively impact the organization.
The TOWS Matrix combines the internal factors (Strengths and Weaknesses) from SWOT analysis with the external factors (Opportunities and Threats) to generate four types of strategies: – SO Strategies (Strengths-Opportunities): Leverage strengths to capitalize on opportunities. – WO Strategies (Weaknesses-Opportunities): Improve weaknesses to take advantage of opportunities. – ST Strategies (Strengths-Threats): Use strengths to mitigate threats. – WT Strategies (Weaknesses-Threats): Address weaknesses to avoid or counter threats.
Focus
SWOT Analysis provides a comprehensive overview of an organization’s internal and external factors but doesn’t prescribe specific strategies. It’s more focused on analysis.
The TOWS Matrix goes beyond analysis to suggest specific strategies. It focuses on generating actionable insights and helping organizations make decisions on how to leverage strengths, address weaknesses, seize opportunities, and mitigate threats.
Decision-Making Process
SWOT Analysis is often the initial step in the decision-making process. It provides a foundation for understanding the organization’s position but doesn’t offer direct strategic guidance.
The TOWS Matrix follows SWOT Analysis and translates its findings into actionable strategies. It guides organizations in selecting the most appropriate strategies based on their internal and external factors.
Strategic Objectives
SWOT Analysis helps identify strategic objectives by highlighting areas where the organization excels (Strengths) and where improvements are needed (Weaknesses).
The TOWS Matrix refines strategic objectives by specifying how strengths can be leveraged to exploit opportunities, how weaknesses can be improved to seize opportunities, how strengths can address threats, and how weaknesses can be addressed to mitigate threats.
Risk Assessment
SWOT Analysis assesses risks indirectly by identifying threats. It does not explicitly consider the organization’s strengths in risk mitigation.
The TOWS Matrix explicitly addresses risk by proposing strategies that use strengths to mitigate threats, which can be a proactive approach to risk management.
Innovation and Creativity
SWOT Analysis may inspire innovative thinking but does not prescribe specific creative strategies.
The TOWS Matrix encourages creative thinking by challenging organizations to generate new strategies based on the combination of internal and external factors.
Alignment with Goals
SWOT Analysis provides insights into alignment issues but doesn’t directly align strengths and weaknesses with opportunities and threats.
The TOWS Matrix ensures that strategies are aligned with the organization’s goals and mission by explicitly connecting internal factors with external factors in a structured manner.
Resource Allocation
SWOT Analysis may inform resource allocation decisions by highlighting areas where resources are needed.
The TOWS Matrix helps organizations allocate resources more effectively by guiding them to prioritize strategies that leverage existing strengths or address critical weaknesses in the context of opportunities and threats.
Flexibility
SWOT Analysis offers flexibility in terms of interpretation and use but may lack specificity in strategy development.
The TOWS Matrix adds a structured layer of specificity to strategy development, making it a valuable tool for organizations looking for more actionable insights.
Continuous Improvement
SWOT Analysis can be a starting point for continuous improvement efforts, but it may not prescribe improvement strategies.
The TOWS Matrix fosters a continuous improvement mindset by guiding organizations to create strategies that capitalize on strengths and address weaknesses in response to changing opportunities and threats.
A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.
The ADKAR model is a management tool designed to assist employees and businesses in transitioning through organizational change. To maximize the chances of employees embracing change, the ADKAR model was developed by author and engineer Jeff Hiatt in 2003. The model seeks to guide people through the change process and importantly, ensure that people do not revert to habitual ways of operating after some time has passed.
You can use the Ansoff Matrix as a strategic framework to understand what growthstrategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growthstrategy can be derived from whether the market is new or existing, and whether the product is new or existing.
The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.
The lean startup canvas is an adaptation by Ash Maurya of the business model canvas by Alexander Osterwalder, which adds a layer that focuses on problems, solutions, key metrics, unfair advantage based, and a unique value proposition. Thus, starting from mastering the problem rather than the solution.
The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is valueinnovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.
Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.
First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is valueinnovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.
A gap analysis helps an organization assess its alignment with strategic objectives to determine whether the current execution is in line with the company’s mission and long-term vision. Gap analyses then help reach a target performance by assisting organizations to use their resources better. A good gap analysis is a powerful tool to improve execution.
The GE McKinsey Matrix was developed in the 1970s after General Electric asked its consultant McKinsey to develop a portfolio managementmodel. This matrix is a strategy tool that provides guidance on how a corporation should prioritize its investments among its business units, leading to three possible scenarios: invest, protect, harvest, and divest.
The McKinsey 7-S Model was developed in the late 1970s by Robert Waterman and Thomas Peters, who were consultants at McKinsey & Company. Waterman and Peters created seven key internal elements that inform a business of how well positioned it is to achieve its goals, based on three hard elements and four soft elements.
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.
The McKinsey Horizon Model helps a business focus on innovation and growth. The model is a strategy framework divided into three broad categories, otherwise known as horizons. Thus, the framework is sometimes referred to as McKinsey’s Three Horizons of Growth.
Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing them through five forces.
According to Michael Porter, a competitive advantage, in a given industry could be pursued in two key ways: low cost (cost leadership), or differentiation. A third generic strategy is focus. According to Porter a failure to do so would end up stuck in the middle scenario, where the company will not retain a long-term competitive advantage.
In his 1985 book Competitive Advantage, Porter explains that a value chain is a collection of processes that a company performs to create value for its consumers. As a result, he asserts that value chain analysis is directly linked to competitive advantage. Porter’s Value Chain Model is a strategic management tool developed by Harvard Business School professor Michael Porter. The tool analyses a company’s value chain – defined as the combination of processes that the company uses to make money.
Porter’s Diamond Model is a diamond-shaped framework that explains why specific industries in a nation become internationally competitive while those in other nations do not. The model was first published in Michael Porter’s 1990 book The Competitive Advantage of Nations. This framework looks at the firm strategy, structure/rivalry, factor conditions, demand conditions, related and supporting industries.
A SWOT Analysis is a framework used for evaluating the business‘s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.
Businesses use scenario planning to make assumptions on future events and how their respective business environments may change in response to those future events. Therefore, scenario planning identifies specific uncertainties – or different realities and how they might affect future business operations. Scenario planning attempts at better strategic decision making by avoiding two pitfalls: underprediction, and overprediction.
The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical.
A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
