tows-matrix

What Is The TOWS Matrix And How To Use It

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

The TOWS Matrix was developed by management consultant Heinz Weihrich. He recognized that the SWOT Analysis – although highly successful in its own right – had significant shortcomings. 

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

Strengths/Opportunities (SO)

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.

Strengths/Threats (ST)

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.

Weaknesses/Opportunities (WO)

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).

Weaknesses/Threats (WT)

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.

Key takeaways

  • 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

SWOT Analysis

swot-analysis
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.

PESTEL Analysis

pestel-analysis
The PESTEL analysis is a framework that can help marketers assess whether macro-economic factors are affecting an organization. This is a critical step that helps organizations identify potential threats and weaknesses that can be used in other frameworks such as SWOT or to gain a broader and better understanding of the overall marketing environment.

Porter’s Five Forces

porter-five-forces
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

Blue Ocean Strategy

blue-ocean-strategy
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 value innovation, 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.

BCG Matrix

bcg-matrix
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.

Balanced Scorecard

balanced-scorecard
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.

Scenario Planning

scenario-planning
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.

Other related business frameworks:

Additional resources:

Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which target is to reach over two million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get in touch with Gennaro here