The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. It’s a variation on the SWOT Analysis, and it tries to address some of the weaknesses of the SWOT Analysis. Both can be useful to assess the market context.
Aspect
TOWS Matrix
SWOT Analysis
Purpose
The TOWS Matrix is a strategic planning tool that helps organizations develop strategies by combining external opportunities and threats with internal strengths and weaknesses. It aims to generate specific strategic actions.
SWOT Analysis is a comprehensive framework for evaluating an organization’s internal strengths and weaknesses and external opportunities and threats. It is used to assess the overall strategic position and identify potential directions.
Focus
– Combines internal strengths with external opportunities (SO Strategies). – Combines internal strengths with external threats (ST Strategies). – Combines internal weaknesses with external opportunities (WO Strategies). – Combines internal weaknesses with external threats (WT Strategies).
– Identifies internal Strengths and Weaknesses. – Analyzes external Opportunities and Threats. – Identifies the key factors affecting the organization’s performance. – Does not generate specific strategies on its own.
Analysis
– Encourages a structured analysis of the organization’s internal and external factors. – Facilitates the generation of actionable strategies by considering different combinations of factors. – Promotes a forward-looking approach to strategic planning.
– Provides a comprehensive view of the organization’s current situation. – Helps in identifying critical areas that require attention or improvement. – Serves as a starting point for further strategic discussions and planning.
Advantages
– Generates specific strategies tailored to the organization’s unique situation. – Encourages a proactive approach to addressing challenges and opportunities. – Supports effective decision-making by considering all factors.
– Provides a holistic view of the organization’s internal and external factors. – Identifies areas for improvement and potential areas for growth. – Forms the foundation for strategic planning and decision-making.
Limitations
– Requires a thorough understanding of the organization’s internal and external factors. – The process can be time-consuming and complex. – The quality of generated strategies depends on the accuracy of the analysis.
– May not prioritize or generate specific strategies on its own. – Does not provide guidance on how to implement identified strategies. – The analysis is only as valuable as the actions taken based on it.
Similarities
– Both tools involve analyzing an organization’s internal and external factors. – Both help organizations understand their strategic position. – Both contribute to informed decision-making and planning.
– Both involve the evaluation of internal strengths and weaknesses. – Both consider external opportunities and threats. – Both are used in strategic management and planning processes.
Differences
– TOWS Matrix directly generates specific strategies. – TOWS Matrix combines internal and external factors to formulate strategies. – It is a more action-oriented tool.
– SWOT Analysis does not directly generate strategies; it provides a snapshot of the current situation. – SWOT Analysis separates internal and external factors for analysis. – It serves as a foundational analysis tool for various strategic frameworks.
When to Use
– Use the TOWS Matrix when you want to generate specific strategies that align internal strengths and weaknesses with external opportunities and threats. – It is suitable for action-oriented strategic planning.
– Use SWOT Analysis when you want to assess the overall strategic position of the organization by evaluating its internal strengths and weaknesses and external opportunities and threats. – It serves as a starting point for further strategic planning.
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 TOWS matrix was created by author and management consultant Heinz Weihrich in 1999.
While both the TOWS matrix and SWOT analysis consider the same four factors, the former is more of a strategic planning tool. It looks at the specific relationships between internal and external factors that help an organization remove weaknesses, exploit strengths, take advantage of opportunities, and reduce or remove threats.
Each relationship is represented by a 2×2 matrix with resultant strategic options occupying four quadrants:
Strengths to opportunities (SO) – the strategy with the greatest chance of success where the organization focuses on its internal strengths to “double down” on external opportunities and increase market share.
Strengths to threats (ST) – the second strategy calls on the organization to consider how its internal strengths could help it avoid real or potential market threats.
Weaknesses to opportunities (WO) – how can market opportunities compensate for an organization’s internal weaknesses?
Weaknesses to threats (WT) – this is a defensive strategy where the organization must seek to minimize the impacts of both its internal weaknesses and external threats. In some cases, this may force the organization to question whether it has a viable business.
Understanding a SWOT analysis
The SWOT analysis was created by American management consultant and businessman Albert Humphrey. The analysis is the result of a decade of work between 1960 and 1970 at Stanford University where Humphrey developed a team-based approach to planning.
The analysis can serve much like a questionnaire for each factor. For example:
Strengths – what does the organization do well? Does it own intellectual property or possess a unique skill?
Opportunities – are there changes to the external environment ripe for exploitation? How can the organization take advantage of a competitor’s weakness?
Weaknesses – is IP outdated? Does the workforce require extra training? Is the organization’s financial position sustainable?
Threats – what threat do the competition pose? Is a change of government likely to drive up costs? What about a fluctuation in the economic cycle?
The SWOT analysis is a simple but effective way for an organization to assess its strengths, weaknesses, opportunities, and threats. Unlike the TOWS matrix, however, it does not clarify how a strength may be maximized or a weakness avoided. As a result, it is often used in conjunction with another analysis.
Key Similarities between TOWS Matrix and SWOT Analysis:
Assessment of Internal and External Factors: Both TOWS Matrix and SWOT Analysis consider the internal strengths and weaknesses of the organization as well as the external opportunities and threats in the market or industry.
Strategic Planning Tools: Both tools are used in strategic planning to assess the market context and identify ways to leverage strengths, address weaknesses, capitalize on opportunities, and mitigate threats.
Complementary Nature: TOWS Matrix is a variation of the SWOT Analysis and aims to address some of the weaknesses of the original SWOT approach, making them complementary tools for strategic analysis.
Key Differences between TOWS Matrix and SWOT Analysis:
Relationships between Factors:
TOWS Matrix: Focuses on analyzing the specific relationships between internal and external factors to develop strategic options that align strengths with opportunities, weaknesses with opportunities, strengths with threats, and weaknesses with threats.
SWOT Analysis: Evaluates internal and external factors separately without explicitly showing the relationships between them.
Strategic Options:
TOWS Matrix: Provides four strategic options (SO, ST, WO, and WT) based on the relationships between strengths, weaknesses, opportunities, and threats, offering a more nuanced and actionable approach to strategy development.
SWOT Analysis: Identifies the organization’s strengths, weaknesses, opportunities, and threats but does not directly suggest specific strategic options.
Time of Origin:
TOWS Matrix: Created by Heinz Weihrich in 1999 as a variation of the SWOT Analysis.
SWOT Analysis: Developed by Albert Humphrey in the 1960s and 1970s during his work at Stanford University.
Focus:
TOWS Matrix: Primarily used as a strategic planning tool to guide decision-making and identify appropriate strategies.
SWOT Analysis: Often used as an initial assessment tool to gather information and insights, but may require further analysis to develop specific strategies.
Weaknesses: Unhealthy menu options, negative environmental impact due to excessive packaging.
Opportunities: Rising demand for healthier food options, potential for home delivery services.
Threats: Intense competition, changing consumer preferences, government regulations on unhealthy foods.
TOWS Strategies:
SO: Leverage strong brand recognition to introduce and promote healthier menu options.
WO: Introduce sustainable packaging solutions to address environmental concerns.
ST: Use established distribution channels to offer home delivery services, countering competition.
WT: Regularly update the menu to comply with government regulations and cater to changing consumer preferences.
E-commerce Industry:SWOT Analysis:
Strengths: Wide product range, 24/7 availability, global reach.
Weaknesses: Dependency on internet infrastructure, high return rates, logistical challenges.
Opportunities: Growth of internet users worldwide, potential for integration with augmented reality for better shopping experience.
Threats: Cybersecurity threats, stiff competition, changing government regulations on online trade.
TOWS Strategies:
SO: Expand product range and integrate augmented reality to cater to the growing internet user base.
WO: Invest in improving logistics and reduce return rates by providing accurate product descriptions and visuals.
ST: Enhance cybersecurity measures to ensure safe shopping for users.
WT: Stay updated with government regulations and adapt business operations accordingly to mitigate risks.
Publishing Industry:SWOT Analysis:
Strengths: Established authors and rich content libraries, strong relationships with distributors.
Weaknesses: Declining print sales, high production costs.
Opportunities: Rising demand for e-books and audiobooks, potential for online subscriptions.
Threats: Increasing self-publishing platforms, declining reading habits among younger generations.
TOWS Strategies:
SO: Leverage rich content libraries to produce e-books and audiobooks.
WO: Reduce dependency on print by focusing more on digital publications and online subscriptions.
ST: Collaborate with popular self-publishing platforms to reach a wider audience.
WT: Organize online workshops or reading events to engage younger audiences and promote reading habits.
Healthcare Industry:SWOT Analysis:
Strengths: Skilled professionals, advanced medical equipment.
Weaknesses: High treatment costs, long patient waiting times.
Opportunities: Growth in telemedicine, increasing health awareness among people.
Threats: Regulatory challenges, emergence of alternative medicines.
TOWS Strategies:
SO: Use advanced medical equipment to offer telemedicine services.
WO: Adopt technology solutions to streamline operations and reduce patient waiting times.
ST: Offer training programs for professionals to stay updated with regulatory changes.
WT: Organize awareness campaigns about the benefits of conventional medicine over alternative options.
Key Takeaways:
TOWS Matrix and SWOT Analysis are both strategic planning tools used to assess internal strengths and weaknesses and external opportunities and threats.
TOWS Matrix is a variation of the SWOT Analysis that specifically focuses on the relationships between these factors to develop strategic options (SO, ST, WO, WT).
TOWS Matrix offers a more structured and actionable approach to strategy development, while SWOT Analysis provides a broad overview of the organization’s internal and external factors.
Both tools can be used together to gain a comprehensive understanding of the organization’s market context and develop effective strategic plans.
Context
SWOT Analysis Example
TOWS Matrix Example
Retail Business
Strengths: Strong brand Weaknesses: High employee turnover Opportunities: New market entry Threats: Increased competition
SO Strategy: Leverage a strong brand to enter the new market. WO Strategy: Improve employee retention to seize market opportunities. ST Strategy: Use a strong brand to counter competition. WT Strategy: Mitigate weaknesses to address threats.
Technology Startup
Strengths: Innovative product idea Weaknesses: Limited funding Opportunities: Emerging tech trends Threats: Established competitors
SO Strategy: Harness innovation to capitalize on emerging tech trends. WO Strategy: Seek external funding to exploit market opportunities. ST Strategy: Innovate to compete effectively against established competitors. WT Strategy: Efficiently manage limited resources to mitigate competitive threats.
Marketing Campaign
Strengths: Strong social media presence Weaknesses: Limited budget Opportunities: Upcoming holiday season Threats: Competitor promotions
SO Strategy: Maximize social media presence during the holiday season. WO Strategy: Collaborate with influencers to expand reach. ST Strategy: Use social media to counter competitor promotions. WT Strategy: Optimize budget allocation to mitigate competitive pressures.
SO Strategy: Deploy experienced faculty for online courses. WO Strategy: Modernize infrastructure for online education. ST Strategy: Enhance traditional programs to retain students. WT Strategy: Reduce costs to address enrollment challenges.
Healthcare System
Strengths: Advanced medical equipment Weaknesses: Staff shortages Opportunities: Aging population Threats: Budget constraints
SO Strategy: Utilize advanced equipment for elderly care. WO Strategy: Address staff shortages to meet growing demand. ST Strategy: Promote advanced services for the aging population. WT Strategy: Streamline operations to manage within budget constraints.
E-commerce Startup
Strengths: User-friendly platform Weaknesses: Limited product range Opportunities: Increasing online shopping trends Threats: Competition from established giants
SO Strategy: Enhance the user-friendly platform to capture the online shopping trend. WO Strategy: Expand the product range to seize market opportunities. ST Strategy: Compete effectively with established giants using a user-friendly platform. WT Strategy: Leverage strengths to mitigate the impact of competition.
Manufacturing Company
Strengths: Efficient production processes Weaknesses: High energy costs Opportunities: Growing demand for eco-friendly products Threats: Supply chain disruptions
SO Strategy: Utilize efficient production processes to meet eco-friendly product demand. WO Strategy: Implement cost-effective energy solutions to seize opportunities. ST Strategy: Strengthen supply chain resilience to mitigate disruptions. WT Strategy: Mitigate high energy costs to reduce vulnerability to supply chain issues.
Restaurant Business
Strengths: Unique cuisine Weaknesses: Limited seating capacity Opportunities: Rising interest in exotic foods Threats: Seasonal fluctuations in customers
SO Strategy: Promote unique cuisine to cater to the exotic food trend. WO Strategy: Expand seating capacity to maximize opportunities. ST Strategy: Create special menus for seasonal fluctuations. WT Strategy: Address seating limitations to mitigate the impact of seasonality.
Financial Services Firm
Strengths: Experienced financial advisors Weaknesses: Limited digital presence Opportunities: Growing demand for online financial services Threats: Regulatory changes
SO Strategy: Utilize experienced advisors to offer online financial services. WO Strategy: Strengthen digital presence to meet the demand for online services. ST Strategy: Adapt to regulatory changes with the expertise of experienced advisors. WT Strategy: Enhance digital capabilities to navigate regulatory challenges.
Automobile Manufacturer
Strengths: Established brand reputation Weaknesses: High production costs Opportunities: Electric vehicle market growth Threats: Intense competition
SO Strategy: Leverage the established brand reputation to enter the electric vehicle market. WO Strategy: Reduce production costs to seize opportunities in EV manufacturing. ST Strategy: Compete effectively against intense competition using the strong brand. WT Strategy: Address cost issues to mitigate the impact of competition.
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 management model. 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.
