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.
Understanding a TOWS matrix
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 SWOTanalysis 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Weaknesses – is IP outdated?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.
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.
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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.
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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.
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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.
