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.
- Understanding the TOWS Matrix
- Benefits of the TOWS Matrix
- Key takeaways
- Connected strategic frameworks
Understanding the TOWS Matrix
While the SWOT Analysis identifies Strengths, Weaknesses, Opportunities, And Threats, it does not make any attempt to make links between them. For example, a business with a perceived weakness may then see it as a threat. Another business that identifies an opportunity may be able to match it to one of their existing strengths.
The TOWS Matrix, then, is a much more useful graphical representation of a SWOT Analysis. Internal strengths and weaknesses are compared to external opportunities and threats. Every one of the four individual factors can influence and impact each other.
The four strategy combinations of a TOWS Matrix
In this quadrant of the TOWS Matrix, a business must assess its strengths on a case by case basis to determine if it can use them to capitalize on opportunities. For example, a car manufacturer operating in a luxury car market (opportunity) with a strong R&D culture (strength) may design a feature-packed line of premium vehicles.
Here, the business should assess each strength based on its ability to counteract or avoid external threats. Returning to the car manufacturer example, unfavorable exchange rates (the threat) may be counteracted by the company using its R&D expertise to build a factory in a country with a better-valued currency.
In the WO quadrant, an organization must determine how its weaknesses can be eliminated or offset by external opportunities. For example, inexperience in dealing with foreign labor unions (weakness) can be overcome by hiring managers with the relevant experience (external opportunity).
In the final strategy combination, the business assesses each weakness and threat and determines if they can be avoided. The car manufacturer with little experience operating in foreign markets (weakness) can avoid entering that market altogether. Another maker with a heavy reliance on a single car model (weakness) can reduce the threat of competition by developing a range of different models.
Benefits of the TOWS Matrix
The benefits of creating a TOWS Matrix include:
- A more versatile option than some other techniques that are glorified brainstorming sessions. It allows a business to link external and internal factors and their potential impact on business operations.
- Simple to understand through all levels of management and is relatively simple to execute. This increases employee focus and cohesiveness.
- The TOWS Matrix also facilitates the discovery of unknown aspects of a business. Whether they are unquantified strengths or hidden threats, newfound insights into operations help a company plan for the future, and facilitate growth.
- The TOWS Matrix builds on the success of the SWOT Analysis by allowing a business to identify appropriate strategic actions.
- The TOWS Matrix consists of four strategies that help a business understand, plan, and prepare for the possible interaction between threats and weaknesses with strengths and weaknesses.
- The TOWS Matrix creates cohesion in the workforce and helps a business unearth hidden strengths or weaknesses that will influence future decision making.
Connected strategic frameworks
Other related business frameworks:
- AIDA Model
- Ansoff Matrix
- Business Analysis
- Business Model Canvas
- Business Strategy Frameworks
- VRIO Framework