TOWS Matrix Analysis - Dr. Emmanuel Dotong.pdf

The TOWS Matrix Analysis is a strategic management tool that enables businesses to evaluate their internal and external environments. It focuses on identifying the organization's Strengths, Weaknesses, Opportunities, and Threats. Strengths are the internal factors that provide a competitive edge, such as a strong brand reputation, proprietary technology, or a loyal customer base. Conversely, weaknesses are internal factors that may hinder a company's progress, which could include lack of patent protection, a weak brand image, poor customer perception, or a high cost structure. On the other hand, opportunities are external factors that the organization can leverage for its benefit. These could encompass unmet customer needs, emergence of new technologies, relaxation of regulations, or elimination of international trade barriers. Finally, threats are external factors that pose potential challenges for the organization. These threats could arise from new competitors entering the market, price wars with existing competitors, or innovative products or services introduced by competitors.

1. MODULE 8:
STRATEGY FORMULATION:
TOWS MATRIX ANALYSISSTRATEGIC
MANAGEMENT
DR. EMMANUEL DOTONGAssociate Professor of Business
[email protected]
STRATEGIC TOOLS AND MODELS

2. Module
Coverage
01
02
03
TOWS Matrix Analysis
TOWS Matrix Procedure
TOWS Matrix in action
MODULE 8:
STRATEGY FORMULATION:
TOWS MATRIX ANALYSIS

3. 01TOWS Matrix Analysis
Definition, Goal, and Approaches

4. The goal of TOWS Matrix Analysis is
to identify strategic options: SO
strategies (using strengths to take
advantage of opportunities), ST
strategies (using strengths to avoid
threats), WO strategies (overcoming
weaknesses by taking advantage of
opportunities), and WT strategies
(minimizing weaknesses and avoiding
threats).
GOAL
A strategic planning tool used to
evaluate the Threats, Opportunities,
Weaknesses, and Strengths involved
in a business venture or project. It's
essentially an extended version of
SWOT analysis, but with a focus on
examining how the identified
elements can be connected to each
other to develop strategic actions.
DEFINITION
TOWS MATRIX ANALYSIS
WO STRATEGY
ST STRATEGYSO STRATEGY
WT STRATEGY
DEFINITION AND GOAL

5. TOWS VARIABLES
These are external
factors that could
potentially harm the
organization or project.
They could be economic,
social, political,
technological, or
environmental.
These are external
factors that the
organization or project
could exploit for its
advantage. They also
could be economic,
social, political,
technological, or
environmental.
These are internal factors
that could potentially
harm the organization or
project. They could
relate to resources,
processes, capabilities,
etc.
These are internal factors
that give the
organization or project
an advantage. They also
could relate to resources,
processes, capabilities,
etc.
TOWS
THREATSOPPORTUNITIESWEAKNESSESSTRENGTHS
DEFINITION AND FACTORS

6. TOWS MATRIX
WT STRATEGY (WEAKNESSES – THREATS)
This strategy is about minimizing weaknesses and avoiding threats. It is largely defensive
and is about risk management and damage control.
ST STRATEGY (STRENGTHS-THREATS)
This strategy focuses on using strengths to avoid or mitigate threats. It's about leveraging
what you're good at to navigate potential challenges
WO STRATEGY (WEAKNESSES-OPPORTUNITIES)
This strategy aims to overcome weaknesses by taking advantage of opportunities. It's about
turning negatives into positives.
SO STRATEGY (STRENGTHS-OPPORTUNITIES)
This strategy involves using strengths to take advantage of opportunities. It's about
capitalizing on positives.
STRATEGIC APPROACHES

7. 02TOWS Matrix Procedures
Step-by-Step Process

8. TOWS MATRIX
01
02
03
Identify Strengths, Weaknesses, Opportunities, and Threats of your
organization or project.
Create a 3x3 grid with SWOT variables and SO, WO, ST, and WT quadrants.
Fill in with elements from your SWOT analysis.
Formulate business strategies for each quadrant: SO (use strengths to
leverage opportunities), WO (overcome weaknesses using opportunities),
ST (use strengths to mitigate threats), and WT (minimize weaknesses and
avoid threats). Compile and summarize the developed strategies.
SWOT ANALYSIS
TOWS MATRIX CONSTRUCTION
STRATEGY DEVELOPMENT
PROCEDURES

9. TOWS
MATRIX
Use Strengths to
take advantage of
Opportunities
STRENGTHS
List strengths
1.
2.
3.
4.
5.
WEAKNESSES
List weaknesses
1.
2.
3.
4.
5.
OPPORTUNITIES
List weaknesses
1.
2.
3.
4.
5.
THREATS
List weaknesses
1.
2.
3.
4.
5.
SO STRATEGIES
1.
2.
3.
4.
5.
WO STRATEGIES
1.
2.
3.
4.
5.
ST STRATEGIES
1.
2.
3.
4.
5.
WT STRATEGIES
1.
2.
3.
4.
5.
Overcome
Weaknesses by
taking advantage of
Opportunities
Use Strengths to
mitigate Threats
Minimize
Weaknesses to
avoid Threats S
W
O
T

10. 03TOWS Matrix in Action
Application

11. SWOT ANALYSIS
INTERNAL FACTORSEXTERNAL FACTORS
POSITIVE
NEGATIVE
S1 High Customer Traffic (SM)
S2 Hybrid Service Offerings (OP)
S3 High Revenue Growth Rate (AF)
STRENGTHS
W1 Low Table Turnover Rate (OP)
W2 Limited Sitting Capacity (OP)
W3 Poor Social Media Presence (SM)
WEAKNESSES
O1 Partnership with Online Delivery Services (S2,T2)
O2 Potential Increase in Productivity (T2, T3, S2)
O3 Develop Local Events Sales Promotion (S3, T1)
OPPORTUNITIES
T1 Potential Increase in Production Cost (E1, E2, E3)
T2 Potential Decrease in Demand (P1, P2, P3, E2)
T3 Potential Increase in Product Price (E1, E2, E3)
THREATS
MATRIX

12. TOWS
MATRIX
Use Strengths to
take advantage of
Opportunities
STRENGTHS
List strengths
1.
2.
3.
4.
5.
WEAKNESSES
List weaknesses
1.
2.
3.
4.
5.
OPPORTUNITIES
List weaknesses
1.
2.
3.
4.
5.
THREATS
List weaknesses
1.
2.
3.
4.
5.
SO STRATEGIES
1.
2.
3.
4.
5.
WO STRATEGIES
1.
2.
3.
4.
5.
ST STRATEGIES
1.
2.
3.
4.
5.
WT STRATEGIES
1.
2.
3.
4.
5.
Overcome
Weaknesses by
taking advantage of
Opportunities
Use Strengths to
mitigate Threats
Minimize
Weaknesses to
avoid Threats S
W
O
T

13. STRENGTHSWEAKNESSES
OPPORTUNITIES
THREATS
SO STRATEGIESWO STRATEGIES
ST STRATEGIESWT STRATEGIES
S1 High Customer Traffic
S2 Hybrid Service Offerings
S3 High Revenue Growth Rate
W1 Low Table Turnover Rate
W2 Limited Seating Capacity
W3 Poor Social Media Presence
O1 Partnership with Online
Delivery Services
O2 Potential Increase in
Productivity
O3 Develop Local Events Sales
Promotion
T1 Potential Increase in
Production Cost
T2 Potential Decrease in
Demand
T3 Potential Increase in
Product Price
MP - Drive high customer traffic towards
online platforms to increase productivity
(S1,O2)
HD - Promote hybrid service offerings at
local events to differentiate from
competitors (S2, O3)
FI - Partner with online delivery services
to extend reach and boost sales (S1, O1)
BUSINESS
STRATEGIES
INTEGRATION STRATEGIES
HI – Horizontal Integration
BI – Backward Integration
FI – Forward Integration
INTENSIVE STRATEGIES
PD – Product Development
MD – Market Development
MP – Market Penetration
DIVERSIFICATION STRATEGIES
RD – Concentric Diversification
HD – Horizontal Diversification
CD – Conglomerate
Diversification
DEFENSIVE STRATEGIES
RE – Retrenchment
CL – Cost Leadership
DV – Divestiture
LI - Liquidation
MD - Expand online services to offset
limited seating capacity and reach a
wider market
(W2, O1)
HD - Launch a new engaging social
media campaign unrelated to current
operations to enhance online presence
and increase productivity (W3, O2)
RE– Use high revenue growth to invest in
cost-efficient technologies or practices to
counter potential increases in production
costs (S3, T1)
MP - Enhance and extend social media
presence of the business to increase the
potential demand of the company (W2,
T2).
BI- Consider possibilities for physical
expansion or restructuring This allows the
company to control more of our supply
chain, ensuring consistent supply and
potentially reducing costs (W2,T1)
TOWS
MATRIX

14. INTENSIVE STRATEGIES (Market Penetration, Market Development)
Market Penetration - Leverage our strong online platforms to drive high customer traffic, thereby increasing productivity and market share.
This can be achieved through targeted marketing campaigns and promotions to attract more users to our platforms (S1,O2).
Market Penetration - Enhance and extend social media presence of the business to increase the potential demand of the company (W2, T2).
Market Development - To counteract our limited seating capacity, expand our online services to reach a wider market. By offering more
online services, we can cater to more customers without physical space constraints, tapping into new customer segments and geographical
areas (W2,O1).
INTEGRATION STRATEGIES (Forward and Backward)
Forward Integration - To extend our reach and boost sales, partner with online delivery services. This forward integration strategy allows us
to tap into the existing customer base of these services, increasing our market penetration (S1,O1).
Backward Integration - To address our limited seating capacity and potential supply chain disruptions, consider possibilities for physical
expansion or restructuring. This vertical integration strategy allows us to control more of our supply chain, ensuring consistent supply and
potentially reducing costs (W2,T1) .
DIVERSIFICATION STRATEGIES (Concentric and Horizontal)
Concentric Diversification - Stand out from competitors by promoting our hybrid service offerings at local events. This related
diversification strategy leverages our existing strengths and resources while introducing a new dimension to our services (S2,O3)
Horizontal Diversification - To counter our limited online presence, launch a new engaging social media campaign that's unrelated to
current operations. This unrelated diversification strategy will help increase our online visibility, attract more customers, and ultimately increase
productivity (W3,O2)
DEFENSIVE STRATEGIES (Retrenchment)
Retrenchment - Utilize our high revenue growth to invest in cost-efficient technologies or practices. This proactive measure will help us
counter potential increases in production costs, ensuring we maintain profitability and competitiveness (S3,T1)
BUSINESS STRATEGIES SUMMARY

15. ENDThank you for Listening!
ASSOC. PROF. EMMANUEL DOTONG
Management Consultant
[email protected]