TOWS Matrix Analysis
The Threats?Opportunities?Weaknesses?Strengths(TOWS) Matrix is an important matching tool that helps managers develop four types of strategies: SO Strategies, WO Strategies, ST Strategies, and WT Strategies. TOWS Matrix could be applied to the development of tactics necessary to implement the strategies, and to more specific actions supportive of tactics.
SO Strategies use a firm's internal strengths to take advantage of external opportunities. All managers would like their organizations to be in a position where internal strengths can be used to take advantage of external trends and events. For example, Mercedes Benz, with the technical know-how and the quality image (strength), can take advantage of the external demand for luxury cars (opportunity) by an increasingly affluent public.
WO Strategies aim at improving internal weaknesses by taking advantage of external opportunities. Sometimes key external opportunities exist, but a firm has internal weaknesses may prevent it from exploiting those opportunities.
For example, an auto accessory company with a great demand for electronic devices (opportunity) to control the amount and timing of fuel injection in automobile engine, may lack the technology required for producing these devices (weakness). One possible strategy would be to acquire this technology through cooperation with a firm having competency in this field.
ST Strategies use a firm's strengths to avoid or reduce the impact of external threats. For example, amazon.com an online market place for individuals and businesses across the world is trying to use their strong customer service (strength) to handle customer complaints and concerns on the confidentiality of the customer's transactions on the site in order to reduce negative publicity (threat), about problems the company is having with its systems.
WT Strategies are defensive tactics directed at reducing internal weaknesses and avoiding environmental threats. For example, a tobacco company may seek ownership and increased control over suppliers through backward integration to overcome the lack of cash outlay which is required on the front end for raw tobacco (weakness) and high bargaining of supplier's power.(threat)