knowing the position of your company is very important in ensuring success. The TOWS Matrix is a particularly strong tool for ascertaining a company’s internal and external advantages and threats. Using this tool would enable management to come up with the right strategies for growth and management of any difficulty that a business may encounter. It is worth specifying that one of the advanced yet quite simple techniques we use is the TOWS Matrix, an expanded version of SWOT Analysis. This matrix assists businesses to take advantage of similarities between internal and external factors that affect its operations.
Through the systematic identification of these factors, the TOWS Matrix also ensures that the companies come up with the best strategies that will improve their performance. In this post, we will explain what the TOWS Matrix is?
What is the TOWS Matrix?
TOWS is a strategic planning tool that is developed on top of the well-known SWOT matrix, where the four letters stand for Tactical Options Weighed against Strengths, Weaknesses, Opportunities, and Threats. Whereas SWOT merely points out these factors, TOWS Matrix proceeds to analyze the prospective relationships between them.
The matrix is divided into four quadrants, each representing a unique strategic approach:
SO (Strengths-Opportunities):
It seeks to build the firm’s internal capabilities for exploiting external opportunities especially by using forward-looking and creation-oriented activities.
WO (Weaknesses-Opportunities):
There are many internal considerations essential for executives to work on to build a firm that could more capably exploit opportunities at the local or global level, and this strategy is concerned with enhancing internal strengths to effect suitable change.
ST (Strengths-Threats):
This strategy leverages on key internal strengths to deal or neutralize external threats that may be well resembling risks to the company.
WT (Weaknesses-Threats):
This strategy aims at avoiding a company’s internal vulnerabilities and limiting impacts from the outside environment, as often it uses a protective approach.
Understanding these relationships indicates a business properly balanced approach, which strengthens its advantages, hides its drawbacks, fully utilizes opportunities, and eliminates threats.
Applying the TOWS Matrix:
Suppose a mid-sized manufacturing firm XYZ that develops as a company that produces high-end industrial equipment. Due to these dynamics, the company has sought services from Udjat Agency to prepare a strategic map to operate in the new environment.
Internal Factors
Strengths:
- Another factor that is found is brand recognition of being established for delivering quality as well as being reliable.
- A very experienced and qualified professional worker, otherwise called an engineering team.
- High production efficiency, operations management as well as supply chain management.
- Sound financial health and ready access to credit, in case that is needed.
Weaknesses:
- Lack of product differentiation especially the over dependence on a few product lines.
- Some production areas still use old technologies and equipments..
- Inability to secure and maintain the best human resource talent in the job market rife with lots of competition.
- Relatively low experience with using the digital environment and, as a result, the absence of a properly developed channel of e-commerce.
External Factors
Opportunities:
- Rising need for environment-friendly and power saving industrial devices and machinery.
- Market development activities, which include the extension of company operations across more regions in the country, and globally.
- Opportunities to partner and hence create strategic alliances with other similar established businesses.
- Incentives and policy initiatives of the government towards green technology.
Threats:
- New competitors from lower-cost producing countries.
- Volatility in the price of raw material and in the availability of resources in the production chain.
- Customers’ preferences are constantly evolving and the raised demand for individual approaches.
- Higher standard of air, water and soil quality as well as norms of emissions and discharges.
Applying the TOWS Matrix.
SO (Strengths-Opportunities) Strategy:
Reliant on the company’s well-established brand image and engineering knowledge, to establish a range of energy-saving industrial products, in compliance with the global trends towards environmental conservation.
Again it involves venturing into new geographical locations, both national and global employing the firm’s capital and effectively organized production systems.
Seek affiliate opportunities with product and service related businesses as a way of expanding in product lines and clientele.
WO (Weaknesses-Opportunities) Strategy:
Upgrade the production equipment and technology in the organization for better efficiency and quality products’ production, so as to enable the organization to serve the market end users.
Implement an efficient online business image and effective e-commerce site for delivering existing and new products to the existing and potential consumers at the national and global level.
Introduce the conditions for employees’ further education and the compensation policy considering the need for the company’s personnel increase, focused on engineering and the development of innovation solutions.
ST (Strengths-Threats) Strategy:
Leverage on the fact that the company enjoys a good reputation thanks to its financial clout and appeal to customer consciousness by touting products as not being made from cheap overseas competitors, but as products that are of high quality, reliability and can be customized as per the market’s demand.
Management should strive to minimize the volatility of its supply costs on its raw materials through finding better ways to manage its supplies as well as the processes of production that would help reduce the effects of supply disruptions.
It’s crucial to closely cooperate with regulatory agencies and organizations of industries to adhere to environmentally friendly rules and present the company as a pioneer in environmentally friendly production.
WT (Weaknesses-Threats) Strategy:
Expand the product list to balance the demand of the few primary products and thus cushion the firm from fluctuations in the market, high competition.
Sustain the investments into improved offerings for better specifications and in more adaptable production layouts to respond to customers’ requirements.
External growth: aim at becoming a strategic ‘partner’ or ‘acquirer’ in order to expand the technological development, new skills, and market opportunity that the company could not build alone.
That indicates, by applying the TOWS Matrix, businesses can contribute to the further development of the effective and balanced strategy for XYZ and cover strengths, weaknesses, opportunities, and threats. The strategic approach can help the company to understand the market circumstances and environment, produce competitive advantages, and achieve growth.
Conclusion
The TOWS Matrix is a strong model that can assist corporations like XYZ in view and create proper strategies for achievement. When internal and external sources are scanned in a sequential and systematic approach, an organization discovers the right course of action towards achieving its objectives and doing what is within its capacity.
Learn more about Fab model before 2025.
You can also read about The Gap Analysis by Udjat Agency!
