Developing Strategic Options From an External-Internal Analysis
TOWS Analysis is a variant of the classic business tool, SWOT Analysis. TOWS and SWOT are acronyms for different arrangements of the words Strengths, Weaknesses, Opportunities and Threats.
By analyzing the external environment (threats and opportunities), and your internal environment (weaknesses and strengths), you can use these techniques to think about the strategy of your whole organization, a department or a team. You can also use them to think about a process, a marketing campaign, or even your own skills and experience.
Our article on SWOT Analysis helps you perform a thorough SWOT/TOWS Analysis. At a practical level, the only difference between TOWS and SWOT is that TOWS emphasizes the external environment whilst SWOT emphasizes the internal environment. In both cases, this analysis results in a SWOT (or TOWS) Matrix like the one shown below:
| Strengths | Weaknesses |
| Opportunities | Threats |
In this article, we look at how you can extend your use of SWOT and TOWS to think in detail about the strategic options open to you. While this approach can be used just as well with SWOT as TOWS, it’s most often associated with TOWS.
Identifying Strategic Options
SWOT or TOWS analysis helps you get a better understanding of the strategic choices that you face. (Remember that “strategy” is the art of determining how you’ll “win” in business and life.) It helps you ask, and answer, the following questions: How do you:
- Make the most of your strengths?
- Circumvent your weaknesses?
- Capitalize on your opportunities?
- Manage your threats?
A next step of analysis, usually associated with the externally-focused TOWS Matrix, helps you think about the options that you could pursue. To do this you match external opportunities and threats with your internal strengths and weaknesses, as illustrated in the matrix below:
TOWS Strategic Alternatives Matrix
|
External Opportunities (O) 1. 2. 3. 4. |
External Threats (T) 1. 2. 3. 4. | |
| Internal Strengths (S) 1. 2. 3. 4. | SO “Maxi-Maxi” StrategyStrategies that use strengths to maximize opportunities. | ST “Maxi-Mini” StrategyStrategies that use strengths to minimize threats. |
| Internal Weaknesses (W) 1. 2. 3. 4. | WO “Mini-Maxi” Strategy Strategies that minimize weaknesses by taking advantage of opportunities. | WT “Mini-Mini” StrategyStrategies that minimize weaknesses and avoid threats. |
This helps you identify strategic alternatives that address the following additional questions:
- Strengths and Opportunities (SO) – How can you use your strengths to take advantage of the opportunities?
- Strengths and Threats (ST) – How can you take advantage of your strengths to avoid real and potential threats?
- Weaknesses and Opportunities (WO) – How can you use your opportunities to overcome the weaknesses you are experiencing?
- Weaknesses and Threats (WT) – How can you minimize your weaknesses and avoid threats?
Using the Tool
Step 1: Print off our free SWOT Worksheet and perform a TOWS/SWOT analysis, recording your findings in the space provided. This helps you understand what your strengths and weaknesses are, as well as identifying the opportunities and threats that you should be looking at.
Step 2: Print off our free TOWS Strategic Options Worksheet, and copy the key conclusions from the SWOT Worksheet into the area provided (shaded in blue).
Step 3: For each combination of internal and external environmental factors, consider how you can use them to create good strategic options:
- Strengths and Opportunities (SO) – How can you use your strengths to take advantage of these opportunities?
- Strengths and Threats (ST) – How can you take advantage of your strengths to avoid real and potential threats?
- Weaknesses and Opportunities (WO) – How can you use your opportunities to overcome the weaknesses you are experiencing?
- Weaknesses and Threats (WT) – How can you minimize your weaknesses and avoid threats?
Note: The WT quadrant – weaknesses and threats – is concerned with defensive strategies. Put these into place to protect yourself from loss, however don’t rely on them to create success.
The options you identify are your strategic alternatives, and these can be listed in the appropriate quadrant of the TOWS worksheet.
Tip: When you have many factors to consider, it may be helpful to construct a matrix to match individual strengths and weaknesses to the individual opportunities and threats you’ve identified. To do this, you can construct a matrix such as the one below for each quadrant (SO, ST, WO, and WT).
SO Matrix
S1
S2
S3
S4
O1
O2
O3
O4
This helps you analyze in more depth options that hold the greatest promise. Note any new alternatives you identify on the TOWS Strategic Alternatives worksheet.
Step 4: Evaluate the options you’ve generated, and identify the ones that give the greatest benefit, and that best achieve the mission and vision of your organization. Add these to the other strategic options that you’re considering.
Tip: See the Mind Tools Strategy and Creativity Sections for other useful techniques for understanding your environment, and analyzing your strategic options. And see our Problem Solving and Decision Making Sections for techniques for understanding these options in more detail, and deciding between them.
Key Points:
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.
