The Strategic Process

Objectives
Formulate and re-formulate strategy based on continued analysis of situation.

Situation

Strategy

Re-assess situation based on tentative strategy

A Continuous Process of Situational Analysis

SWOT & TOWS

Pluses to SWOT
holistic approach that takes into account both internal and

external aspects of situation. recognizes interdependence of various attributes

Minus to SWOT
offers little guidance in how to determine strengths,

weaknesses, opportunities, & threats.

Utilizing TOWS
SWOT evaluates situation, doesnt directly help formulate strategy. The TOWS analysis should be used to assist in formulating strategy.

SWOT

Organizational Analysis
Strengths Weaknesses

Environmental Analysis
Opportunities Threats

The Situation Strategy

SWOT

Organizational Analysis
Strengths Weaknesses

Environmental Analysis
Opportunities Threats

The Situation
= mutually define & affect

Strategy

SWOT: Strengths & Weaknesses

Strengths
aspects of the organization that provide an

advantage. e.g., a highly efficient distribution system. aspects of the organization that forestall entry. e.g., a proprietary customer database.

Weaknesses are the opposite

SWOT: Opportunities & Threats

Opportunities
market niches in which have advantage open market niches in which further entry will be

slow or preventable

Threats
potential adverse moves by competitors potential for entry or emulation

SWOT Matrix:

Strengths

Weaknesses

Opportunities

Threats

S.W.O.T. Putting it all Together

(Creating the TOWS Matrix)

Gather and interpret SWOT information Create Matrix Arranged in Quadrants:

1.

Internal strengths with external opportunities: ideal match between firms resources and opportunities. Internal weaknesses relative to external opportunities: creates tradeoffs in where investments will be made or where you will abdicate to a rival. Internal strengths matched with external threats: transforming threats into opportunities is one option to explore. Internal weaknesses relative to external threats: this is the worst position for the firm and thus, an area to avoid.

2.

3.

4.

ee TOWS sample in next slide ----

TOWS Matrix:

Strengths Opportunities S-O strategies

[pursue opportunities that are a good fit to strengths]

Weaknesses W-O strategies

[overcome weaknesses to pursue opportunities]

Threats

S-T strategies
[use strengths to reduce vulnerability to external threats]

W-T strategies
[establish defensive plan to prevent weaknesses susceptible to external threats]

TOWS (Threats, Opportunities, Weaknesses, and Strengths) Matrix

The TOWS Matrix is a relatively simple tool for generating strategic options. By using it, you can look intelligently at how you can best take advantage of the opportunities open to you, at the same time that you minimize the impact of weaknesses and protect yourself against threats. Used after detailed analysis of your threats, opportunities, strength and weaknesses, it helps you consider how to use the external environment to your strategic advantage, and so identify some of the strategic options available to you. At a practical level, the only difference between TOWS and SWOT is that TOWS emphasizes the external environment whilst SWOT emphasizes the internal environment.

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