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For many years, SWOT
Analysis has been used to
identify a company's
strengths, weeknesses,
opportunities, and threats

However, this kind of

analysis is static and
seldom leads to the
development of distinct
alternative strategies
based on it
TOWS Matrix
Tows Matrix has been
introduced for analyzing the
competitive situation of the
company or even of a nation
that leads to the development
of four distinct sets of strategic
alternatives

Tows Matrix has a wider scope

and a different emphasis from
the business portfolio matrix
 •

• • • •
• threats • opportunities • weaknesses • strengths

The TOWS model starts wih the threats (T in TOWS) because in many
situations, a company undertakes strategic planning as a result of a
perceived crisis, problem, or threat.
•

•

• WO strategy
WT strategy
•aims to minimize both
weaknesses and threats and
may be called the Mini-Mini
(for "minimize-minimize")
strategy. It may require that
the company, for example,
forms a joint venture,
retrenches, or even liquidates
•
•attempts to minimized the
weaknesses and maximize
the opportunities. Thus, a firm
with weaknesses in some
areas, may either develop
those areas within the
enterprises or acquire the
needed competencies from
outside in order to enable to
take advantage of
opportunities in the external
environment.
 • •
ST strategy
•is based on using the
organization's strengths to
deal with the threats in the
environment. The aim is to
maximize the former while
minimizing the latter. Thus, a
company may sue its
technological, financial,
managerial, or marketing
strengths to cope with the
threats of a new product
introduced by its competitor.
SO strategy
•capitalizes on a company's
strengths to take advantage
of opportunities, is the most
desirable. Indeed, it is the aim
of enterprises to move from
other positions in the matrix to
this one. If they have
weaknesses, they will strive to
overcome them, making them
strengths. If they face threats,
they will cope with them so
that they can focus on
opportunities.
•The factors dislplayed in the TOWS Matrix pertain to
analysis at a particular point in time. However, external
and internal environments are dynamic; some factors
change over time, while others change very little.

•Hence,strategy designers must prepare several matrices

at different points in time. Thus, one may start with a
TOWS analysis of the past, continue with an analysis of
the present, and perhaps most important, focus on
different time periods in the future.
•Whenever two partners consider joint activities, it is
prudent to analyze the strengths and weaknesses of
each partner as well as their opportunities and threats.

•The TOWS Matrices provide a better understanding of

the propective partners before the actual linkage.
 •W. Chan Kim and Renee Mauborgne specifically
suggest to focus on opportuities that explore
uncontested waters (opportunities) in the "blue ocean"
rather than trying to beat the competition in the
existing industry, or the "red ocean" as the authors
suggest.
•"red ocean" and "blue ocean"
• red ocean is illustrated by the "bloody" current competition in which companies try
to be a little better than their competitors
• in contrast, the blue ocean strategy may be illustrated by eBay's online auction by
entering a market without competitors

•Traditional competitive strategies

• operating in the red ocean, aimed at beating the competition in an existing market
• companies tried to be better than their competitors.
• example: companies have to make a strategic choice between differentiation by
offering the customers something special for which they're willing to pay a
premium price, or having a lower cost structure

•The blue ocean strategy

• focuses on the uncontested market by offering a product or service that is unique
in a market space where there is no competitor
• rather than competing in an existing demand situation, instead, attempt to create
and develop new demand for its products, or services
•Value Innovation
• it is a strategy that requires that the total company is the commitment of the
creation of value for the customer by offering something specialwith relatively low
cost and price

•The Strategic Canvas

• a diagnostic tool and framework for action
• identifies the important relevant factors in the industry in which companies
compete
• these factors vary from industry to industry

•For companies aiming for a blue ocean strategy

• Four actions to be considered
• identify and eliminate factors that may be unimportant to the buyer
• if elimination is not an option, consider reducing the factors
• raise or strengthen those factors that are ignored by the competitors
• create new or new and unique factors that are wanted by the buyers but are
ignored by the competitors
•WO strategy
• a company realizes a weakness and recognizes the one way to overcome the
weakness is to search for unique opportunities to overcome its weakness
• often, a company with weaknesses may be in distress and the may be motivated
to search intensely for opportunities that have not been exploited by competitors

•Summary of blue ocean strategy

• may pursue both SO and SW alternative strategies
• enterprises may be wise to first attempt to chart a blue ocean strategy to avoid the
"bloody" confrontation
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 •1. Corporate-level strategy
•Executives craft overall strategy for a diversified
•Corporate-level
company. Decisions are made as to the industries in
Strategy which the company wants to compete.

•2. Business Strategy

•Are usually developed by the general manager of a
business unit. These strategies are reviewed and
•Business Strategy approved or rejected by the chief executive. The aim of
the business strategy is to gain a competitive advantage
in a particular area of product line.

•3. Functional Strategies (or Policies)

•These strategies are devised for departments or other
•Functional Strategies
organizational units, such as finance, production,
marketing, service, and personnel. The aim is to support
the business and corporate strategies.
•Professor Michael Porter suggests that strategy
formulation requires an analysis of the attractiveness of
the industry and the company's position within that
industry. This analysis becomes the basis for formulating
generic strategies.
 INDUSTRY ANALYSIS
•Five forces:
• c. possibility of using substitute products
• a. competition among companies
or services
• b. threat of new companies entering
• d. bargaining power of suppliers
the market
e. bargaining power of buyers and customers.

OVERALL COST LEADERSHIP STRATEGY

• aims cost reduction in cost, based to a great extent on experience

• emphasis is on keeping close watch on costs in areas such as research and developments
operations, sales, and services
• the objective is for a company to have a low-cost structure as compared with its competitors
DIFFERENTATION STRATEGY

• attempts to offer something unique in the industry in terms of products and services

FOCUSED STRATEGY

• concentrates on special groups of customers, a particular product line, a specific geographic

region, or other aspects that become the focal point of the firm's efforts
• rathen than serving the entire market with its products or services, an enterprise may
emphasize a specific segment of the market
•
•

•
Environmental •Available

Forecasting
•Not Available

Values and areas of forecasting:

⚬ making of forecast compels
thinking ahead, looking to the
future, and providing for it
⚬ preparation of forecast may
disclose areas where necessary
control is lacking
⚬ helps unify and coordinate plans
⚬ environmental areas that are
frequently chosen for making
forecasts include the economical,
social, political/legal, and
technological environments
Forecasting with the
Delphi Technique
DEVELOPED BY OLAF HELMER

A typical Delphi technique is as follows:

• A panel of experts on a particular problem area is selected,
usually from both inside and outside the organization
• The experts are asked to make a forecast as to what they
think will happen, and when, in various areas of new
discoveries or developments
• The answers are compiled, and the composite results are fed
back to the panel members
• With current information, further estimates of the future are
made
• This process may be repeated several times
• When a convergence of opinion begins to evolve, the results
are then used as an acceptable forecast