Using TOWS Analysis to Develop Strategic Action Plans: A Comprehensive Guide for Businesses

Table of Contents hide
1 SWOT vs TOWS
2 A SWOT Analysis step-by-step guide
2.1 Example – SWOT Analysis for a Retail Store
3 What is a TOWS Analysis
3.1 Why TOWS Analysis
3.2 Conducting TOWS Analysis: S/O
3.3 Conducting TOWS Analysis: W/O
3.4 Conducting TOWS Analysis: S/T
3.5 Conducting TOWS Analysis: W/T
3.6 Summarize SWOT and TOWS Findings and Actions
4 Summary

SWOT vs TOWS

SWOT and TOWS are both strategic analysis tools that are used to assess the internal and external factors that affect a business or objective. While they have similarities, there are some key differences between the two tools.

SWOT analysis is a tool that is used to assess a business’s Strengths, Weaknesses, Opportunities, and Threats. It is a simple and effective tool for identifying internal and external factors that impact the business. Strengths and weaknesses are internal factors that are within the control of the business, while opportunities and threats are external factors that are outside of the business’s control. SWOT analysis provides a comprehensive overview of the business’s current situation and helps to identify areas where it can improve and capitalize on opportunities.

On the other hand, TOWS analysis is an extension of SWOT analysis that provides a more focused and strategic approach to analyzing the internal and external factors. TOWS stands for Threats, Opportunities, Weaknesses, and Strengths. In TOWS analysis, the external factors (opportunities and threats) are analyzed first, followed by an analysis of the internal factors (strengths and weaknesses). This approach helps to identify potential strategies that leverage the strengths and opportunities while addressing the weaknesses and threats.

In essence, TOWS analysis is a more proactive approach to strategic planning than SWOT analysis. It emphasizes the importance of taking action to address weaknesses and threats while capitalizing on strengths and opportunities. By using TOWS analysis together with SWOT analysis, businesses can develop a more comprehensive and strategic approach to achieving their objectives.

While SWOT and TOWS analysis share some similarities, TOWS analysis is a more focused and strategic approach that emphasizes taking action to address weaknesses and threats while capitalizing on strengths and opportunities.

A SWOT Analysis step-by-step guide

  • Step 1: Determine the objective First, define the purpose of the analysis. What is the specific objective you want to achieve? It could be anything from evaluating a new business idea, assessing a current business strategy, or exploring potential market opportunities.
  • Step 2: Identify the strengths Identify the key strengths of the business, product, or idea. What makes it unique? What are its core competencies? Consider factors like resources, expertise, intellectual property, and customer loyalty.
  • Step 3: Identify the weaknesses Next, consider the potential weaknesses or areas for improvement. What are the company’s shortcomings, inefficiencies, or limitations? Identify factors like lack of resources, poor brand recognition, or outdated technology.
  • Step 4: Identify the opportunities What are the external opportunities that the business could capitalize on? Consider market trends, consumer preferences, industry changes, and technological advancements. These could include new markets, untapped customer segments, or emerging technologies.
  • Step 5: Identify the threats Finally, consider the external threats that could impact the business. These could include competitors, regulatory changes, economic shifts, or technological disruptions. Identify factors that could negatively impact the business and its operations.
  • Step 6: Evaluate and prioritize Once you have identified the strengths, weaknesses, opportunities, and threats, evaluate and prioritize them. Consider which factors are most critical to the success of the business or objective. Use this information to inform strategic planning and decision-making.
  • Step 7: Create an action plan Based on the evaluation and prioritization, create an action plan to address the weaknesses and threats, and capitalize on the strengths and opportunities. Identify specific initiatives or strategies that can be implemented to achieve the objective.
  • Step 8: Review and revise Finally, regularly review and revise the SWOT analysis to ensure it remains relevant and up-to-date. This will help to identify new opportunities and threats as they arise, and ensure that the action plan remains effective.

There are several benefits of conducting a SWOT analysis. Firstly, it provides a clear understanding of the current state of the business or objective, allowing for a more accurate assessment of its potential for success. Additionally, by identifying the key strengths and weaknesses, businesses can capitalize on their advantages and address their shortcomings. Furthermore, by identifying opportunities and threats, businesses can anticipate and prepare for external factors that may impact their operations. Overall, a SWOT analysis is a valuable tool for strategic planning and decision-making, helping businesses to stay competitive and adapt to changing market conditions.

Example – SWOT Analysis for a Retail Store

Imagine that you are the owner of a small retail store that sells handmade crafts and gifts. Your store has been in business for several years, but lately, you’ve noticed a decline in sales and foot traffic. You’re concerned that your business may not be able to survive the current economic climate and increasing competition from online retailers. You want to conduct a SWOT analysis to identify the key factors that are impacting your business and develop a plan to address them.

Strengths:

  • Wide variety of unique and high-quality handmade products
  • Established brand reputation within the local community
  • Personalized customer service and attention to detail

Weaknesses:

  • Limited online presence and e-commerce capabilities
  • Limited marketing and advertising efforts
  • Higher prices compared to similar products sold online

Opportunities:

  • Expanding product lines to appeal to a wider audience
  • Developing an online store and e-commerce platform
  • Partnering with local businesses and events to increase exposure

Threats:

  • Increasing competition from online retailers and larger chain stores
  • Economic downturns and changes in consumer spending habits
  • Evolving consumer preferences and trends

Using the SWOT analysis, the owner of the retail store can identify strategies to address the weaknesses and threats while capitalizing on their strengths and opportunities. For example, the owner could invest in developing an online store and improving their marketing efforts to reach a wider audience. They could also consider expanding their product lines to stay ahead of changing consumer preferences and partnering with local businesses to increase their exposure. Overall, a SWOT analysis can provide valuable insights and strategies for businesses looking to address challenges and improve their operations.

What is a TOWS Analysis

TOWS analysis is a strategic planning tool that is a variant of the SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. It is used to develop strategies for businesses to address their internal weaknesses and external threats while leveraging their strengths and capitalizing on opportunities.

TOWS stands for Threats, Opportunities, Weaknesses, and Strengths. The analysis involves matching external threats with internal weaknesses (WT), external threats with internal strengths (ST), external opportunities with internal weaknesses (OW), and external opportunities with internal strengths (SO).

TOWS Analysis: A Comprehensive Guide

The TOWS analysis helps businesses to identify the best strategies that they can employ to achieve their objectives, gain competitive advantages, and overcome challenges. It also helps businesses to develop contingency plans that can minimize the negative impact of external threats and internal weaknesses.

Why TOWS Analysis

When businesses conduct a SWOT analysis, they gain valuable insights into their internal strengths and weaknesses, as well as external opportunities and threats. However, simply identifying these factors is not enough. Businesses need to develop strategic action plans to capitalize on strengths, address weaknesses, take advantage of opportunities, and mitigate threats. That’s where TOWS analysis comes in.

TOWS analysis is an extension of SWOT analysis that helps businesses develop strategic action plans by analyzing the internal and external factors. By using TOWS analysis together with SWOT analysis, businesses can identify potential strategies that leverage their strengths and opportunities while addressing their weaknesses and threats.

Here’s how to use TOWS analysis together with SWOT analysis to formulate actions:

  1. Start with a SWOT analysis: Identify your business’s internal strengths and weaknesses, as well as external opportunities and threats.
  2. Prioritize your findings: Determine which strengths, weaknesses, opportunities, and threats are the most critical to address or capitalize on.
  3. Use TOWS analysis to develop strategic actions: Using the prioritized SWOT findings, identify potential strategies that leverage strengths and opportunities while addressing weaknesses and threats. For example, if a strength is a strong brand reputation and an opportunity is a growing market, a potential strategy could be to expand the business’s product line to capitalize on the growing market while leveraging the strong brand reputation.
  4. Evaluate and select strategies: Evaluate the potential strategies and select the ones that are most feasible and aligned with the business’s objectives.
  5. Develop an action plan: Once you have identified and selected the strategies, develop a detailed action plan that outlines the steps needed to implement the strategies.

By using TOWS analysis together with SWOT analysis, businesses can develop strategic action plans that are focused, proactive, and aligned with their objectives. This approach can help businesses improve their competitive position, increase market share, and achieve their goals.

Conducting TOWS Analysis: S/O

The SO quadrant of the TOWS matrix represents strategies that leverage internal strengths to take advantage of external opportunities. These strategies can help businesses capitalize on their advantages to achieve their objectives. Here are some potential strategies for the SO quadrant based on the problem scenario provided earlier:

  • Expand product line (Strength) to appeal to a wider audience (Opportunity): The retail store could consider expanding its product line to include items that appeal to a broader customer base. By leveraging its strength in offering unique and high-quality handmade products, the store can capitalize on the opportunity to attract more customers and increase sales.
  • Develop an online store and e-commerce platform (Strength) to reach a wider audience (Opportunity): The store could invest in developing an online store and e-commerce platform to expand its reach beyond the local community. By leveraging its strength in personalized customer service and attention to detail, the store can attract customers from a wider geographic area and increase sales.
  • Create partnerships with local businesses and events (Strength) to increase exposure (Opportunity): The store could form partnerships with other local businesses and participate in events to increase exposure and attract new customers. By leveraging its strength in offering unique and high-quality handmade products, the store can capitalize on the opportunity to showcase its products to a broader audience.

Overall, the SO quadrant of the TOWS matrix offers strategies that allow businesses to build on their strengths to take advantage of external opportunities. By implementing these strategies, businesses can improve their competitive position, increase market share, and achieve their objectives.

Conducting TOWS Analysis: W/O

In TOWS analysis, WO stands for “Weaknesses-Opportunities”. This quadrant of the analysis focuses on identifying weaknesses within a business that can be addressed by taking advantage of external opportunities. The WO analysis helps businesses to identify potential strategies that can leverage opportunities to address their weaknesses.

Here are some examples of WO strategies:

  1. Build partnerships with other businesses: If a weakness of a business is a limited product line, and an opportunity is a growing market, a potential WO strategy could be to build partnerships with other businesses that can help expand the product line and capitalize on the growing market.
  2. Expand the business’s customer base: If a weakness of a business is a narrow customer base, and an opportunity is a growing market, a potential WO strategy could be to expand the business’s marketing efforts to reach new customers and capitalize on the growing market.
  3. Develop new products: If a weakness of a business is an outdated product line, and an opportunity is a growing market, a potential WO strategy could be to develop new products that meet the needs of the growing market.
  4. Invest in new technology: If a weakness of a business is outdated technology, and an opportunity is a growing market, a potential WO strategy could be to invest in new technology that can improve the business’s operations and capitalize on the growing market.

By identifying and implementing WO strategies, businesses can address their weaknesses and take advantage of external opportunities. This can help them improve their competitive position, increase market share, and achieve their goals. However, it is important to note that WO strategies should be feasible and aligned with the business’s objectives and resources. A thorough analysis of the strengths, weaknesses, opportunities, and threats is necessary to develop effective WO strategies.

Conducting TOWS Analysis: S/T

In TOWS analysis, ST stands for “Strengths-Threats”. This quadrant of the analysis focuses on leveraging a business’s internal strengths to mitigate or eliminate external threats. The ST analysis helps businesses to identify potential strategies that can leverage their strengths to address external threats.

Here are some examples of ST strategies:

  1. Expand the business’s product line: If a strength of a business is a strong product line, and a threat is increased competition, a potential ST strategy could be to expand the product line to stay ahead of the competition and maintain market share.
  2. Build brand loyalty: If a strength of a business is a strong brand reputation, and a threat is negative publicity, a potential ST strategy could be to build brand loyalty among customers to mitigate the impact of negative publicity.
  3. Diversify revenue streams: If a strength of a business is a diverse range of revenue streams, and a threat is economic downturn, a potential ST strategy could be to focus on the revenue streams that are less vulnerable to economic downturns.
  4. Improve operational efficiency: If a strength of a business is efficient operations, and a threat is increased costs, a potential ST strategy could be to improve operational efficiency to reduce costs and maintain profitability.

By identifying and implementing ST strategies, businesses can leverage their strengths to mitigate or eliminate external threats. This can help them maintain their competitive position, increase market share, and achieve their goals. However, it is important to note that ST strategies should be feasible and aligned with the business’s objectives and resources. A thorough analysis of the strengths, weaknesses, opportunities, and threats is necessary to develop effective ST strategies.

Conducting TOWS Analysis: W/T

In TOWS analysis, WT stands for “Weaknesses-Threats”. This quadrant of the analysis focuses on minimizing or eliminating weaknesses that can be worsened by external threats. The WT analysis helps businesses to identify potential strategies that can mitigate their weaknesses to address external threats.

Here are some examples of WT strategies:

  1. Improve customer service: If a weakness of a business is poor customer service, and a threat is increased competition, a potential WT strategy could be to improve customer service to retain customers and compete effectively.
  2. Reduce costs: If a weakness of a business is high operating costs, and a threat is a recession, a potential WT strategy could be to reduce costs to stay profitable during economic downturns.
  3. Develop contingency plans: If a weakness of a business is a lack of contingency plans, and a threat is natural disasters, a potential WT strategy could be to develop contingency plans to minimize the impact of natural disasters.
  4. Enhance product quality: If a weakness of a business is poor product quality, and a threat is negative customer reviews, a potential WT strategy could be to enhance product quality to improve customer satisfaction and mitigate the impact of negative reviews.

By identifying and implementing WT strategies, businesses can mitigate their weaknesses and minimize the impact of external threats. This can help them maintain their competitive position, increase customer satisfaction, and achieve their goals. However, it is important to note that WT strategies should be feasible and aligned with the business’s objectives and resources. A thorough analysis of the strengths, weaknesses, opportunities, and threats is necessary to develop effective WT strategies.

Summarize SWOT and TOWS Findings and Actions

Here is an example table format that summarizes the SWOT and TOWS analysis in a single table:

Quadrant Strengths Weaknesses Opportunities Threats Possible Strategies
SO Increase market share Limited budget for marketing Growing demand for product Increasing competition Develop online marketing strategy to target new customers
ST Strong product line Lack of product differentiation High market demand Potential for increased regulation Expand product line to stay ahead of regulatory changes
WO Strong team with diverse skills Lack of brand recognition New market potential Economic downturn Invest in marketing to build brand awareness in new markets
WT Strong financial position Poor customer service Emerging market opportunities Intense competition Improve customer service to retain customers and increase competitiveness

 

Summary

The use of SWOT and TOWS analysis can help businesses gain a better understanding of their internal and external factors, and develop strategies that capitalize on their strengths and opportunities, while minimizing their weaknesses and threats. It is important to note that effective strategic planning requires ongoing evaluation and adjustment, as businesses must continuously adapt to changing internal and external environments.

By combining the two frameworks, businesses can create more effective strategic plans that take into account both internal and external factors. The TOWS analysis helps businesses identify potential strategies that can leverage their strengths to address external threats (ST), or minimize their weaknesses to address external threats (WT). Meanwhile, the SWOT analysis provides a comprehensive overview of a business’s internal and external environment, allowing businesses to identify the most critical issues they need to address.

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