TOWS analysis is an acronym for Threats, Opportunities, Weaknesses and Strengths (TOWS Analysis: A Step by Step Guide, n.d.). TOWS analysis is a method of strategic analysis used to study the environment of the organization and company situation analysis. TOWS concept is closely related to the SWOT analysis. TOWS analysis involving systematic and comprehensive assessment of external and internal factors that determine current competitive position and growth potential of the company (Krzysztof Wozniak, 2018).
Similar to a SWOT, a TOWS analysis will involve the identification of an organisation’s strengths, weaknesses, opportunities and threats; however, often a key criticism of a SWOT analysis is that it doesn’t show the relationships between the different factors and categories. For example, a particular threat might make a weakness much more significant. Whereas a TOWS analysis will look to match internal factors to external factors to help identify relevant strategic options that an organisation could pursue. It can help an organisation to see how it can take advantage of opportunities, reduce threats, overcome weaknesses and exploit any strengths (TOWS Analysis: A Step by Step Guide, n.d.).
Analytical Categories in TOWS Analysis
1. Strengths
Strengths are the internal factors, positive characteristics of the organization, which distinguish it in the environment and from the competition, they are often called: key success factors. They enable adaptation to changing conditions of the market environment (Krzysztof Wozniak, 2018).
Analysis of the strengths of the organization should include at least the following areas (Krzysztof Wozniak, 2018):
- Area of knowledge and human resources
- Area of logistics, production, technology, research and development
- Area of sales and customer service
- Area of finance and capacity development
- Area of management systems and business processes
2. Weaknesses
Weaknesses (internal negative factors) - mostly consequences of resource constraints and insufficient skills. Each organization has limits to its fitness, but the rapid and objective diagnosis and definition can reduce their negative impact (Krzysztof Wozniak, 2018).
Analysis of the weaknesses of the organization should include at least the following areas (Krzysztof Wozniak, 2018):
- Area of knowledge and human resources
- Area of logistics, production, technology, research and development
- Area of sales and customer service
- Area of finance and capacity development
- Area of management systems and business processes
3. Opportunities
Opportunities (external positive) - phenomena and trends in the environment that if used appropriately could stimulate the development of company and weaken the threat (Krzysztof Wozniak, 2018).
The most distinguished sources of opportunities in the environment of the company are (Krzysztof Wozniak, 2018):
- Political factors,
- Economical factors
- Social and cultural factors
- Technological factors affecting business
- Legal factors
- Environmental factors
- Ethical factors
4. Threats
Threats (external negative) - all the external factors, which is perceived as barriers to the development of the company, inconveniences causing additional costs of the action (Krzysztof Wozniak, 2018).
Steps of TOWS Analysis
Basic steps of TOWS analysis procedure are as follows:
- Identification of enterprise profile (industry, customers, needs, trends), strategic goals (mission and vision of managers) and resources of organization (financial, material, employee, knowledge and information) (Krzysztof Wozniak, 2018)
- Identification of the external environment to the organization (external factor influencing its strategy, political, legal, economics, technology, social and cultural, ethical) (Krzysztof Wozniak, 2018)
- Forecasting possible changes of environment and its influence on organization (scenario analysis, trends, perspectives) (Krzysztof Wozniak, 2018)
- Audit and assessment of internal resources of the organization to identify weaknesses and strengths (Krzysztof Wozniak, 2018)
- Preparation of interaction matrix between TOWS factors, and indicating best alternative strategies (Krzysztof Wozniak, 2018)
- Evaluation of alternative strategies, evaluating feasibility of various possible actions, choice of best strategies (Krzysztof Wozniak, 2018)
- Testing internal consistency of identified portfolio of strategies (in relation to competition and environment) (Krzysztof Wozniak, 2018)
- Preparation of contingency plans in case of failure of the undertaken actions (Krzysztof Wozniak, 2018).
The 4 TOWS Matrix Strategies
For the purpose of formulation of strategy, TOWS analysis is an important tool. There are four basic strategies depending on the prevalence of the analysed group of factors (positive or negative) in the environment and within the company:
A TOWS analysis enables an organisation to match its internal strengths, and external opportunities (SO) to develop ‘maxi-maxi’ strategies – those with the greatest potential for success. You could use your strengths to take advantage of the opportunities. For example, strengths such as high brand recognition or customer loyalty could be combined with the opportunity to launch a new product or service (TOWS Analysis: A Step by Step Guide, n.d.).
At the other extreme, it highlights the organisation’s vulnerability to threats based on its weaknesses and facilitates the development of strategies that minimise these and avoid threats (WT) – ‘mini-mini’ strategies. For example, such strategies could include developing strategic alliances or a more drastic strategy could be to withdraw from a specific market altogether (TOWS Analysis: A Step by Step Guide, n.d.).
In between, mini-maxi (WO) and maxi-mini strategies (ST) are designed to strengthen weaknesses, utilising opportunities, and minimise threats utilising strengths. An example mini-maxi strategy (WO) is that an organisation may have identified an opportunity to outsource some aspects of its business operations, overcoming the weakness of lack of specific skills within the organisation (TOWS Analysis: A Step by Step Guide, n.d.).
TOWS Matrix Example
(Patty Mulder, 2017)
Read more:
1. What's SWOT Analysis?
2. SWOT Analysis: How to Identify Strengths
3. SWOT Analysis: How to Identify Weaknesses
4. SWOT Analysis: How to Identify Opportunities
5. SWOT Analysis: How to Identify Threats
6. Turning Your SWOT Analysis Into Actionable Strategies
Similar to a SWOT, a TOWS analysis will involve the identification of an organisation’s strengths, weaknesses, opportunities and threats; however, often a key criticism of a SWOT analysis is that it doesn’t show the relationships between the different factors and categories. For example, a particular threat might make a weakness much more significant. Whereas a TOWS analysis will look to match internal factors to external factors to help identify relevant strategic options that an organisation could pursue. It can help an organisation to see how it can take advantage of opportunities, reduce threats, overcome weaknesses and exploit any strengths (TOWS Analysis: A Step by Step Guide, n.d.).
Analytical Categories in TOWS Analysis
1. Strengths
Strengths are the internal factors, positive characteristics of the organization, which distinguish it in the environment and from the competition, they are often called: key success factors. They enable adaptation to changing conditions of the market environment (Krzysztof Wozniak, 2018).
Analysis of the strengths of the organization should include at least the following areas (Krzysztof Wozniak, 2018):
- Area of knowledge and human resources
- Area of logistics, production, technology, research and development
- Area of sales and customer service
- Area of finance and capacity development
- Area of management systems and business processes
2. Weaknesses
Weaknesses (internal negative factors) - mostly consequences of resource constraints and insufficient skills. Each organization has limits to its fitness, but the rapid and objective diagnosis and definition can reduce their negative impact (Krzysztof Wozniak, 2018).
Analysis of the weaknesses of the organization should include at least the following areas (Krzysztof Wozniak, 2018):
- Area of knowledge and human resources
- Area of logistics, production, technology, research and development
- Area of sales and customer service
- Area of finance and capacity development
- Area of management systems and business processes
3. Opportunities
Opportunities (external positive) - phenomena and trends in the environment that if used appropriately could stimulate the development of company and weaken the threat (Krzysztof Wozniak, 2018).
The most distinguished sources of opportunities in the environment of the company are (Krzysztof Wozniak, 2018):
- Political factors,
- Economical factors
- Social and cultural factors
- Technological factors affecting business
- Legal factors
- Environmental factors
- Ethical factors
4. Threats
Threats (external negative) - all the external factors, which is perceived as barriers to the development of the company, inconveniences causing additional costs of the action (Krzysztof Wozniak, 2018).
Steps of TOWS Analysis
Basic steps of TOWS analysis procedure are as follows:
- Identification of enterprise profile (industry, customers, needs, trends), strategic goals (mission and vision of managers) and resources of organization (financial, material, employee, knowledge and information) (Krzysztof Wozniak, 2018)
- Identification of the external environment to the organization (external factor influencing its strategy, political, legal, economics, technology, social and cultural, ethical) (Krzysztof Wozniak, 2018)
- Forecasting possible changes of environment and its influence on organization (scenario analysis, trends, perspectives) (Krzysztof Wozniak, 2018)
- Audit and assessment of internal resources of the organization to identify weaknesses and strengths (Krzysztof Wozniak, 2018)
- Preparation of interaction matrix between TOWS factors, and indicating best alternative strategies (Krzysztof Wozniak, 2018)
- Evaluation of alternative strategies, evaluating feasibility of various possible actions, choice of best strategies (Krzysztof Wozniak, 2018)
- Testing internal consistency of identified portfolio of strategies (in relation to competition and environment) (Krzysztof Wozniak, 2018)
- Preparation of contingency plans in case of failure of the undertaken actions (Krzysztof Wozniak, 2018).
The 4 TOWS Matrix Strategies
For the purpose of formulation of strategy, TOWS analysis is an important tool. There are four basic strategies depending on the prevalence of the analysed group of factors (positive or negative) in the environment and within the company:
A TOWS analysis enables an organisation to match its internal strengths, and external opportunities (SO) to develop ‘maxi-maxi’ strategies – those with the greatest potential for success. You could use your strengths to take advantage of the opportunities. For example, strengths such as high brand recognition or customer loyalty could be combined with the opportunity to launch a new product or service (TOWS Analysis: A Step by Step Guide, n.d.).
At the other extreme, it highlights the organisation’s vulnerability to threats based on its weaknesses and facilitates the development of strategies that minimise these and avoid threats (WT) – ‘mini-mini’ strategies. For example, such strategies could include developing strategic alliances or a more drastic strategy could be to withdraw from a specific market altogether (TOWS Analysis: A Step by Step Guide, n.d.).
In between, mini-maxi (WO) and maxi-mini strategies (ST) are designed to strengthen weaknesses, utilising opportunities, and minimise threats utilising strengths. An example mini-maxi strategy (WO) is that an organisation may have identified an opportunity to outsource some aspects of its business operations, overcoming the weakness of lack of specific skills within the organisation (TOWS Analysis: A Step by Step Guide, n.d.).
TOWS Matrix Example
Read more:
1. What's SWOT Analysis?
2. SWOT Analysis: How to Identify Strengths
3. SWOT Analysis: How to Identify Weaknesses
4. SWOT Analysis: How to Identify Opportunities
5. SWOT Analysis: How to Identify Threats
6. Turning Your SWOT Analysis Into Actionable Strategies
Edited by: 浪子
Bibliography
Krzysztof Wozniak. (2018). TOWS Analysis. Retrieved from https://ceopedia.org/index.php/TOWS_analysis
Bibliography
Krzysztof Wozniak. (2018). TOWS Analysis. Retrieved from https://ceopedia.org/index.php/TOWS_analysis
TOWS Analysis: A Step by Step Guide. (n.d.). Retrieved from
https://blog.oxfordcollegeofmarketing.com/2016/06/07/tows-analysis-guide/
Patty Mulder. (2017). TOWS Matrix. Retrieved from https://www.toolshero.com/strategy/tows-matrix/
https://blog.oxfordcollegeofmarketing.com/2016/06/07/tows-analysis-guide/
Patty Mulder. (2017). TOWS Matrix. Retrieved from https://www.toolshero.com/strategy/tows-matrix/
What's TOWS Analysis ?
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November 14, 2018
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Reviewed by 浪子
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November 14, 2018
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