Although the TOWS matrix may look very similar to the SWOT analysis at first sight, it is yet a very different tool for strategy generation. While the SWOT analysis is usually completed during the planning process of the strategy formulation, the TOWS analysis is often used at a later stage. Another difference is that the SWOT analysis starts with internal analysis while the TOWS matrix is initiated by examining the external environment first.
The acronym TOWS was developed by the business professor Heinz Weirich and stands for Threats, Opportunities, Weaknesses and Strengths. The TOWS matrix is divided into four quadrants along two dimensions; internal factors which are strengths (S) and weaknesses (W) and external factors which are the opportunities (O) and threats (T). According to these dimensions there are four potential strategies that can be derived:
This strategy focuses on the company’s strength in order to exploit opportunities. The question here is how a firm’s strengths can be used in order to benefit from opportunities in the external environment? Let’s take this example: A brand with an enhanced brand reputation could use an external opportunity in order to initiate a partnership or launch a new product in the market. The SO strategy has the greatest potential for success since strengths and opportunities are used in conjunction to generate a profit-yielding strategy.
On the contrary, the WO strategy focuses on the opportunities within the external environment in order to overcome the firm’s weak points at an internal level. For instance, if economic conditions are favoring your company, you could use it for your advantage in order to address internal weaknesses such as your weak financial position.
Moreover, the strategy ST shifts attention to the company’s internal strengths in order to minimize the negative impact of external threats. For example, if a main threat is the increasing global competition in the business landscape you could use your suitable strengths such as strong R&D and marketing in order to counteract this threat.
Finally, the WT strategy loos into how the internal weaknesses of the organization can be reduced in order for potential threats within the external environment to be avoided at the least possible cost. The WT strategy is the least appealing strategy and has a more defensive nature.
Like many tools within the strategic marketing theory, the TOWS matrix can often be subjective and not provide accurate strategic options. In order to avoid this scenario from occurring, it is advised that this model is used in conjunction with other frameworks such as the Ansoff Matrix and Porter’s Generic strategies. Moreover, in order to reduce the threat of subjectivity it is important to be as specific and detailed as possible. The more detail you input into this model, the more precise the results are going to be. In the case that some information is missing it is better to state it in the assumptions.