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Developing Strategic Options by Performing an External-Internal Analysis
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JensHN
USE a TOWS matrix to take advantage of your external opportunities and minimize threats.
TOWS Analysis is an extension of the classic analytics tool, SWOT Analysis.
TOWS and SWOT are acronyms for different arrangements of the words: Strengths, Weaknesses, Opportunities and Threats. But, while SWOT tends to focus on brainstorming all points that fall under these four headings, TOWS takes it to the next step.
You can use both tools in combination to assess and refine your organizational or departmental strategy. You can also use them to think about a process, a marketing campaign, or even your own career.
In this article, we look at the differences between SWOT and TOWS, and how you can use both to assess, refine and improve your current strategy.
What is a TOWS Analysis?
A TOWS analysis is very similar to SWOT, however there is a key difference between the two, other than a reshuffling of a few letters!
While SWOT analysis, puts the emphasis on the internal environment (your strengths and weaknesses), TOWS forces you to look at your external environment first (your threats and opportunities).
Doing this allows you to gain better understanding of the strategic choices that you face. (Remember that "strategy" is the art of determining how you'll "win" in business and life.) It helps you ask, and answer, the following questions:
- How can we make the most of our strengths?
- How do we circumvent our weaknesses?
- How can we capitalize on external opportunities?
- How should we best manage threats?
Once you've answered these questions, the next step is to match external opportunities and threats with your internal strengths and weaknesses, as illustrated in the matrix below:
TOWS Strategic Alternatives Matrix
SO "Maxi-Maxi Strategy" Strategies that use strengths to maximize opportunities. | ST "Maxi-Mini Strategy" Strategies that use strengths to minimize threats. |
WO "Mini-Maxi Strategy" Strategies that minimize weaknesses by taking advantage of opportunities. | WT "Mini-Mini Strategy" Strategies that minimize weaknesses and avoid threats. |
TOWS Matrix © 1982 Heinz Weihrich, Ph.D.
How to Use a TOWS Matrix
Step 1: Do a SWOT Analysis
Print off our free SWOT Worksheet and perform a TOWS/SWOT analysis, recording your findings in the space provided. This will help you to understand what your strengths and weaknesses are, as well as identifying the opportunities and threats that you should be looking at.
Step 2: Translate Your Findings Using a TOWS Matrix
Print off our free TOWS Strategic Options Worksheet, and copy the key conclusions from your SWOT Worksheet into the area provided (shaded in blue).
Step 3: Link and Assess Your Strategic Options
For each combination of internal and external environmental factors, consider how you can use them to create good strategic options:
- Strengths and Opportunities (SO) – How can you use your strengths to take advantage of these opportunities?
- Strengths and Threats (ST) – how can you take advantage of your strengths to avoid real and potential threats?
- Weaknesses and Opportunities (WO) – how can you use your opportunities to overcome the weaknesses you are experiencing?
- Weaknesses and Threats (WT) – how can you minimize your weaknesses and avoid threats?
The options you identify are your strategic alternatives, and these can be listed in the appropriate quadrant of the TOWS worksheet.
Note:
The WT quadrant – weaknesses and threats – is concerned with defensive strategies. Put these into place to protect yourself from loss, however don't rely on them to create success.
Tip:
When you have many factors to consider, it may be helpful to construct a matrix to match individual strengths and weaknesses to the individual opportunities and threats you've identified. To do this, you can construct a matrix such as the one below for each quadrant (SO, ST, WO, and WT).
| SO Matrix | S1 | S2 | S3 | S4 |
| O1 | ||||
| O2 | ||||
| O3 | ||||
| O4 |
This helps you to carry out a detailed analysis of the options that hold the greatest promise. Note any new alternatives you identify on the TOWS Strategic Alternatives worksheet.
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Step 4: Evaluate Your Strategic Options
Evaluate the options you've generated, and identify the ones that will have the greatest benefit, and that best achieve the mission and vision of your organization. Add these to the other strategic options that you're considering.
Key Points
The TOWS Matrix is a relatively simple tool for generating strategic options. It stands for:
- Threats.
- Opportunities.
- Weaknesses.
- Strengths.
It's a variation of SWOT analysis, but differs because SWOT focuses on internal factors (strengths and opportunities), while TOWS focuses on external factors (threats and opportunities).
By using it, you can look intelligently at how you can best take advantage of the opportunities open to you, and minimize any weaknesses that might result in threats. It can also help you to consider how to use the external environment to your strategic advantage and identify some of the strategic options available to you.
Download Worksheet