THREATS-OPPORTUNITIES-WEAKNESSES-STRENGTHS (TOWS) MATRIX:WT Strategies

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Strategic Management MGT603

Lesson 24

THREATS-OPPORTUNITIES-WEAKNESSES-STRENGTHS (TOWS) MATRIX

Learning object

After understanding this chapter you are able to understand TWOS matrix and also understand how to scan

internal and external environment of the organization

The Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix

The Threats-Opportunities-Weaknesses-Strengths (TOWS) is also named as SWOT analysis. A TWOS Analysis is

a strategic planning tool used to evaluate the Threats, Opportunities and Strengths, Weaknesses, involved in

a project or in a business venture or in any other situation requiring a decision.

This is an important tool in order to formulate strategy. This Matrix is an important matching tool that

helps managers develops four types of strategies: SO Strategies (strength-opportunities), WO Strategies

(weakness- opportunities), ST Strategies (strength-threats), and WT Strategies (weakness-threats).The most

difficult part of TOWS matrix is to match internal and external factor.

Once the objective has been identified, TOWS are discovered and listed. TOWS are defined precisely as

follows:

Strengths are attributes of the organization that are helpful to the achievement of the objective.

Weaknesses are attributes of the organization that are harmful to the achievement of the objective.

Opportunities are external conditions that are helpful to the achievement of the objective.

Threats are external conditions that are harmful to the achievement of the objective.

Strengths and weaknesses are internal factors. For example, strength could be your specialist marketing

expertise. A weakness could be the lack of a new product.

Opportunities and threats are external factors. For example, an opportunity could be a developing

distribution channel such as the Internet, or changing consumer lifestyles that potentially increase demand

for a company's products. A threat could be a new competitor in an important existing market or a

technological change that makes existing products potentially obsolete.

it is worth pointing out that SWOT analysis can be very subjective - two people rarely come-up with the

same version of a SWOT analysis even when given the same information about the same business and its

environment. Accordingly, SWOT analysis is best used as a guide and not a prescription. Adding and

weighting criteria to each factor increases the validity of the analysis.

SO Strategies: Every firm desires to obtain benefit form its resources such benefit can only be obtained if

utilize its strength to take external opportunity. Resources (Assets) an important firm's strength to get

opportunity for external resources. For example the firm enjoying a good financial position which is

strength for a firm and externally opportunity to expand business. The strong financial position provides an

opportunity to expand the business. The matched strategy is known as SO strategy.

WO Strategies:

WO Strategies developed to match weakness with opportunities of the firm. WO strategy is very useful if

the firm take advantage to external resources in order to overcome the weakness. For example the firm is in

the critical financial problems that is weakness and firm is availing merger with Multinational Corporation.

ST Strategies

ST Strategies is an important strategy to overcome external threats. This does not mean that a strong

organization should always meet threats in the external environment head-on. This strategy is adopted by

various colleges by opening new branches in order to overcome competitive thereat. These threats also

explain by the Porter in its competitive model.

Strategic Management MGT603

WT Strategies

Every firm has a desire to overcome its weakness and reducing threats. This type of strategy helpful when

weaknesses are removed to overcome external threats. It is difficult to target WT strategy. For example

weak distribution network creating many problems for the firm if it strong many external threats can be

removed.

Steps for developing strategies:

There are eight steps involved in constructing a TOWS Matrix:

1. Rank external opportunities

2. Rank external threats

3. Rank internal strength

4. Rank internal weaknesses.

5. Match internal strengths with external opportunities and mention the result in the SO Strategies

cell.

6. Match internal weaknesses with external opportunities and mention the result in the WO Strategies

cell..

7. Match internal strengths with external threats and mention the result in the ST Strategies cell.

8. Match internal weaknesses with external threats and mention the result in the WT strategies cell.

StrengthsS

Weaknesses W

List Weaknesses

List Strengths

Blank

Opportunities O

SO-Strategies

WO-Strategies

List Opportunities

Use strength to obtain

Overcome weaknesses by

opportunities

taking advantage of

opportunities

Threats T

ST-Strategies

WT-Strategies

List Threats

Use strengths to avoid

Minimize weaknesses and

threats

avoid threats

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