TOWS analysis poses complementation of SWOT analysis. This approach is called “from the outside towards the inside”. While in case of SWOT analysis you need to base on strong and weak sides of the organization, and use them in a given environment, in case of TOWS analysis, the contrary assumption is taken. Strategy of the company embraces skillful adjustment of the company towards signals flowing from its environment.
The name itself suggests that the TOWS analysis consists in inversion of the SWOT analysis. It was created through rearranging letters in “SWOT”. In the TOWS analysis we start with consideration of opportunities and threats that a company needs to face, which are then confronted with one’s own predispositions to use those opportunities and fight threats.
From a technical side, performance of SWOT/TOWS analysis looks similarly as in case of the already discussed SWOT analysis. Therefore, you need to identify strong and weak sides, opportunities and threats, and then choose their significance. Choose those that are crucial, and describe them in details.
During identification, you may use a list of basic fields of SWOT/TOWS analysis (Muhlemann 2001: 42):
- planning procedure;
- technology of production;
- evaluation of the product;
- after-sales maintenance and service;
- price policy;
- HR management;
- finances of the company;
- distribution;
- marketing strategy (of promotion and advertisement);
- fixed assets, costs of operation and others.
Afterwards, relationships between strong and weak sides and opportunities and threats are examined. This includes fulfilling a table that you dealt with at evaluation of the strategic position of a company. As a reminder, in the SWOT analysis it was about filling the matrix in:
Matrix of the SWOT strategic analysis – identification of dependencies
| Environment | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Opportunities | Threats | |||||||||
| 1 … | 2 … | 3 … | n … | 1 … | 2 … | 3 … | n … | |||
| Company | Strengths | 1 … | 2 … | 3 … | n … | |||||
| Weaknesses | 1 … | 2 … | 3 … | n … | ||||||
While filling the above matrix in, you answered the following questions:
- Do the identified strong sides allow to take the opportunities?
- Do the identified strong sides allow to fight the threats?
- Do the identified weak sides hinder application of opportunities?
- Do the identified weak sides strengthen influence of the threats?
When it comes to TOWS analysis, there is the following collection of questions:
- Do the opportunities multiply the strong sides?
- Do the threats weaken the strong sides?
- Do the opportunities allow to fight the weak sides?
- Do the threats multiply the weak sides?
Place answers for these questions into the matrix, in an analogical manner as you did it in case of the SWOT analysis. Fill the table in by putting X or 1 when there is a relation, and “0” when there is no relation. If you do not remember how to do it, go back to the article entitled Evaluation of a strategic position.
Matrix of the TOWS strategic analysis – identification of dependencies
| Company | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Strengths | Weaknesses | |||||||||
| 1 … | 2 … | 3 … | n … | 1 … | 2 … | 3 … | n … | |||
| Environment | Opportunities | 1 … | 2 … | 3 … | n … | |||||
| Threats | 1 … | 2 … | 3 … | n … | ||||||
While performing the SWOT/TOWS analysis, you need to examine the present relationships in a parallel manner. It means that you fill the two above mentioned tables in (separately for SWOT and TOWS analyses), placing proper questions for each of them. Choice of a strategy is not only limited to development of conclusions from SWOT analysis, but it also takes into account the TOWS analysis.
You should notice that particular fields from both analyzes correspond to each other. You may limit yourself to add the present correspondences and point a strategy, or additionally perform evaluation of rank and weighs, which is most complicated. The necessary materials are presented in the article entitled Strategic SWOT/TOWS analysis, step by step. Choice of strategy.
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