What is TOWS Matrix?

TOWS Matrix

TOWS Matrix

TOWS Matrix can be defined as the tool to analyze, generate, compare, and select the business strategies to attain the overall goals and objectives of the company such as higher sales, increased profits, and enhanced brand value amongst other crucial ones.

Anatomy of TOWS Matrix

TOWS Matrix follows the roots of SWOT Analysis but is quite indifferent from the same as SWOT Analysis mainly focuses on the aspects of opportunities and threats whereas TOWS Matrix is the tool for strategy generation and selection.

SWOT Analysis is the tool for audit and analysis of the business and is used at the beginning of the planning process and TOWS Matrix opted at the later part of the planning process to decide the way forward is for the business.

It is the work of the trade-off between the internal and external factors of the company and the outside environment that affects the operations and overall objectives of the business.

The strengths and weaknesses are a part of the internal environment of the business that comprises of employees and staff, HR policies, work culture, nature, features, and attributes of the products and services offered to the target market, manufacturing processes and techniques, goals and objectives, core values, and fundamentals of the company. Most of the times, the internal factors are controllable in nature.

The opportunities and threats are a part of the external environment that comprises of government policies, direct and indirect competition in the market, evolving and changing tastes and preferences of the customers, dynamic nature of the market, and fluctuation rates of the raw materials required for the production along with other such extrinsic factors that are many a times not in control of the business and management of the company.

Rules of TOWS Matrix

1. The analytical methodology and approach of TOWS Matrix are quite subjective in nature like many other tools, frameworks, models, and concepts to come up with the business strategies that are edgy and outlandish in nature to accomplish the aims and objectives of the company. Depending on the merit of the situation and all the internal and external factors affecting the business, it is as robust as the data that is being included in the model.
2. It is quite mandatory to be very specific in the overall approach and process eliminating all the grey areas so that the strategies arrived is feasible, realistic, and functional in nature.
3. It is always advisable to second the final analysis of the TOWS Matrix with the other strategic models such as Porter’s Generic Strategies and others that provide competent results.
4. It is necessary that the strategy should include the internal growth and development of the company by the way of mergers, acquisitions, new product development, capturing new markets and target audience, and joint ventures.

The 4 TOWS Matrix Strategies

1. Strengths and Opportunities in TOWS Matrix / SO

The first and foremost strategy of the TOWS Matrix involves the using of internal strengths of the company to make optimum use of the external opportunities available to the company. Example: If the company has developed a niche and distinct brand image in the market and minds of the consumers and there is an opportunity to tap the new market locations or coming up with the new line of products and services for the same target market, it is one of the best options for the growth of the firm.

2. Weakness and Opportunities in TOWS Matrix / WO

The second strategy in the line of TOWS Matrix indicates that the management of the company will find various options and alternatives to overcome the weaknesses and take advantage of the opportunities that are coming in the way. It is the best way to diminish the weakness and exploit the opportunities. Example: If the company is not an expert in any of the business facet that is required for the growth and success and is presented with the opportunity for an alliance with the other company that has the required expertise, it works as a win-win situation for both the parties involved.

3. Strengths and Threats in TOWS Matrix / ST

This strategy of the TOWS Matrix implies that the management of the company would exploit all the internal strengths to overcome any of the potential threats that in the way of the business to accomplish the desired goals and objectives. Example: If the company is facing the astute competition for the existing players in the market or from the new entrants that are offering the new and innovative range of the products that are similar to the ones offered by the company, the company needs to harp on the internal strengths such as quality of the offerings, authentic manufacturing techniques, customer service, and rich legacy of the brand amongst others.

4. Weaknesses and Threats in TOWS Matrix / WT

This one is the least appealing strategy of the TOWS Matrix as which company would harp on its weaknesses to overcome the external threats on the business. It is always advisable to minimize the weaknesses to avoid the possible threats.

Limitations of TOWS Matrix 

1. It doesn’t follow the real steps that are mandatory to follow and achieve the competitive advantage in the market.
2. Many a time, the analytical approach of TOWS Matrix does not consider the changing competitive environment that is one of the biggest threats to the business in attaining its objectives of higher sales, elevated profits, and enhanced brand value.
3. It doesn’t show and highlight the interrelationship amongst the internal and external factors that affect the business operations and strategies.

Example of TOWS Matrix Strategies of Nokia: Increase the market share and the overall presence in the country of Germany by offering the innovative and reliable range of products. Elevate the presence in Asia-Pacific regions by having a customer-driven approach.

• Penetrate new markets with business alliances and new product lines.
• ST Strategies
• Target advertising
• Reduce the cost of the products due to the factor of the high level of competition in the market
• Offer customer-oriented products
• WO Strategies
• Work on the customer service experience and offer competitive prices
• Improve the brand position in Japan with paid partnerships
• Focus on the US market with a new line of products availing the joint venture opportunities
• Increase profit margins by penetrating in different markets offering customer-driven products.

Important links

• Management Discussion & Analysis (MD&A)- Meaning, Objectives
• Elements of MD&A Disclosure Framework
• Essentials while analysing Annual Report of MDA
• SWOT Analysis- Meaning, Use, Example
• Features of Good Governance- Top 10 Features
• Determinants of Corporate Governance- External & Internal
• Recommendations of Narayana Murthy Committee
• Corporate Governance- Structure, Objectives & Advantages

Disclaimer: wandofknowledge.com is created only for the purpose of education and knowledge. For any queries, disclaimer is requested to kindly contact us. We assure you we will do our best. We do not support piracy. If in any way it violates the law or there is any problem, please mail us on wandofknowledge539@gmail.com