Can the TOWS analysis help your company navigate the upcoming year so that it's well positioned to tackle whatever challenges await? No doubt you want to make your first quarter your best quarter, but how does the TOWS analysis go about laying the groundwork to start every year off on the right foot? More importantly, how does this planning tool help define last year in terms of what went well, what didn’t go well, what market changes occurred and what your enterprise must do to replicate success from your first quarter, and every quarter thereafter? We’ll answer each one of these questions in detail by providing insight into how your company can use the TOWS analysis to define action plans, set priorities and lay the foundation for a successful new year. So how can your company use this strategic planning tool?
Most business professionals are familiar with the time-tested SWOT analysis (Strengths, Weaknesses, Opportunities & Threats). This simple planning tool allows companies to assess their market, their product offering and a myriad of operational issues. However, while most are familiar with this universal planning tool, very few are aware of its limitations. First, the issues and items that are present under each of the aforementioned headings are entirely based on perception. For instance, a company may view its strengths & weaknesses differently from how its competition and customer base sees them. Second, individuals occupying the SWOT grid place too much emphasis on one subject, and not enough on others, which often makes the tool unworkable. Third, the tool only provides a high level view of strategies and doesn’t allow companies to turn those strategies into objectives, or develop action plans to reach those objectives.
- Issues tend to be based on perception
- Not enough clarity on all SWOT issues
- Difficult to move strategies to separate, individual objectives
The TOWS Analysis
The table below is taken from the post Strategic Business Planning: Use TOWS to Move SWOT to an Action Plan. The TOWS table forces companies to identify their external factors versus their internal factors. The external factors are those opportunities and threats within their market. Their internal factors include the company’s strengths and weaknesses. To simplify their analysis, the company has stuck to defining five unique characteristics under each heading. For instance, they have identified their internal strengths to be 1) their large market share, 2) their North American distribution channel, 3) their position as a market leader due to their engineering capabilities, 4) the position they enjoy as primary vendor status for their market and finally, 5) their strong sales channels across multiple territories.
The company repeats the above process and lists five internal weaknesses, five external market opportunities and five external market threats. Next, they align their internal grid strategies. They focus on those strengths that can be used to capitalize on opportunities under the “Strengths/Opportunities” section. They do the same by focusing on which internal strengths can be used to keep their threats away under the “Strengths/Threats” section. Again, they identify which weaknesses may inhibit their ability to close on their market opportunities under the “Weaknesses/Opportunities” section. Finally, they do the same exercise by identifying which internal company weaknesses can be further exposed by their market’s threats under their “Weaknesses/Threats” section.
Using the Information From TOWS for Your First Quarter
While you are setting the table for your first quarter, in reality, you’re really trying to lay the groundwork for the entire year. The strategies that come from the internal portion of the grid will allow your enterprise to outline its action plan going forward. By linking internal factors to your external factors, your enterprise will be able to isolate those areas that must be worked on, what areas to be aware of, and what strategies must be pursued in order to close on opportunities and grow market share. While the SWOT tool can be used across multiple business functions, the TOWS analysis tends to force you to assess your company’s strengths and weaknesses relative to your market’s threats and opportunities. This means you'll be able to develop unique action plans to attain the strategies outlined in your TOWS grid.
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