Within strategic business planning, few approaches are as well-established as the SWOT analysis. Unfortunately, this planning tool does have its drawbacks. The analysis doesn’t lend itself well to turning the items under each heading into an action plan, one the company can adopt and measure over time.
Typically with the SWOT analysis, you're left with a long list of items under some headings, not enough under others, and an unclear path as to how the company should move forward. However, a TOWS analysis can move the SWOT analysis into an action plan, a plan that links the company’s internal strengths with its external opportunities, and one that accounts for the company’s internal weaknesses, while addressing its external threats.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. TOWS takes these same headings and reconfigures them according to internal and external influences. For instance, a company’s strengths and weaknesses are viewed as internal to its operations, while the company’s opportunities and threats are viewed as external to its market. In this case, TOWS is used to move the SWOT into an action plan.
It accomplishes this by empowering the company to use its internal strengths to capitalize on external opportunities and confront external threats. Next, it allows the company to determine which internal weaknesses must be addressed in order to protect its external opportunities and keep its external threats from capitalizing on the company’s errors and weaknesses. So, what are the steps to using these two strategic business planning tools together?
This video is from the post: Assessing the Company’s Supply Chain with a SWOT Analysis
Step 1. Start With Your SWOT analysis
Start by doing a standard SWOT analysis, except keep your strengths and weaknesses internal and your opportunities and threats external. Keep items under each heading to a minimum of 5 to 10. Be precise and to the point. Don’t go overboard. The intention is to provide an outline of how to proceed and to use the TOWS to provide a guideline to your strategic plan.
Step 2. Reconfigure the SWOT to a TOWS Grid
Once you’ve finished your analysis, you’ll now need to reconfigure it to a TOWS grid. Now, there are different strategies to using the grid. However, the simplest way to do this is to put your internal factors up top and your external factors on the left-hand side.
Step 3. Match Internal to External Items
In this third step, you must provide an overview of strategies that match internal strengths to external opportunities & external threats and match internal weaknesses to external opportunities & external threats. The questions you want to answer include the following:
- What strengths can you use to capitalize on your opportunities?
- What strengths can you use to better handle your threats?
- What weaknesses must be mitigated to capitalize on your opportunities?
- What weaknesses can be used by your external threats?
An Example of the TOWS Analysis
The following is an example of what a TOWS analysis might look like for a fictitious company. I’ve approached this example from the mindset of a Telecom company servicing the SATCOM and Wireless markets. In this case, the company has the largest market share and is renowned for its engineering and design capabilities. However, these strengths also contribute to its weaknesses as its smaller competitors are making inroads into the market by providing custom-made designs, faster turn times on integrations, and quicker turn times on products. The company has first completed its analysis by sticking to five main points under each heading. Next, they reconfigured the layout to accommodate the new analysis. Finally, they’ve linked their internal issues to their external ones.
Looking at the TOWS analysis above, it's easy to notice how the links are established between the internal and external factors. For instance, the first action item listed under Strengths/Opportunities shows S1 (large market share 40%+) & S3 (Engineering capabilities = market leader) as tools to capitalize on O1( competitor quality issues). By aligning these internal strengths and weaknesses against external opportunities and threats, the company is better able to identify the outline of a strategic plan to better its business.
The intention is not to substitute the SWOT analysis with the TOWS analysis. Instead, it’s to use both together in order to improve your company’s overall approach to strategic business planning. Stick to easily quantifiable items under each heading within your SWOT analysis. Again, don’t go overboard. Next, reconfigure the parameters. Finally, match internal issues to external ones. Most importantly, link these parameters under codes that specify their destination and location.
Use the TOWS analysis as the outline of your future strategic plan. It will ease you into the action items that must be pursued to reach your overall goal. SWOT itself is a fantastic tool to get ideas down on paper. In this case, many see it as an excellent brainstorming tool. However, it's difficult to move items within the grid to action items. TOWS makes it a much easier process.
Comments