How To Do TOWS Analysis
Updated by Xtensio
The TOWS Matrix is a variation of the SWOT Analysis designed to uncover your company’s strengths, weaknesses, opportunities and threats. Taking the traditional SWOT Analysis a step further, the TOWS analysis specifically looks at the relationships between the different factors and categories to help you develop strategic solutions for your organization. Use this step-by-step guide to create your user TOWS Analysis, easily.
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Both startups and large enterprises use the TOWS analysis approach as a primary strategic planning tool to match internal and external factors. This can help your organization understand how to take advantage of opportunities, reduce threats, overcome weaknesses and exploit your team’s strengths. You can use this tool for a variety of purposes:
- Identify core values and opportunities that your organization excels at, and where you can improve.
- Define your whole organization’s strategic roadmap, or break it down to identify strategies for each department or team.
- Use it to analyze a process – marketing campaign. fundraising efforts, development workflow, etc.
With Xtensio, you can easily generate a TOWS analysis tailored to fit your specific requirements. You can work hand-in-hand with your team on a live doc, leave feedback, or share a link to maintain visibility across your organization.
How To Do TOWS Analysis | Step 1
Create your TOWS Analysis header and identify opportunities in the market.
When identifying your company’s opportunities, focus on some of the external factors that can have a huge impact on reaching your business goals. Here’s how:
- What are some external sources that could potentially be used in your company’s favor?
- What could be the next best move for your company’s growth?
- Did you consider entering into any new markets? Your product or service might not be performing the best in the current market you’re putting efforts into, but you may want to consider a more cost-efficient market that could end up being a game-changer.
- What do your customers want? A new product, feature or service to be considered?
- Any possible partnerships? Look into who/what can help your company make an impact.
Example: Well-established position with a well-defined market niche. Identified market for consultancy in areas other than HRM.
How To Do TOWS Analysis | Step 2
Uncover your company’s strengths.
The strengths of your company are the positive internal factors. Ask yourself the following questions to define these factors:
- What makes your service the top tool for addressing consumer needs?
- Which are your cutting-edge features, your novel capabilities that set your company apart?
- Can I describe what your competitive advantage is? To find out, take advantage of Xtensio’s competitive analysis template.
- What assets does your company have?
- Can I identify what customers like about the company?
- What are the features that help your company make a difference?
Example: Reputation in the marketplace. Expertise at partner level in HRM consultancy. While listing your company’s strengths, focus on the core elements that brought your company to the point it’s at. These core values will help you overcome future risks and threats. Plus, understanding what your company does well will guide you while outlining effective business and marketing strategies.
How To Do TOWS Analysis | Step 3
Determine your weaknesses.
On the other end of the spectrum, understanding your company’s limitations is just as crucial in determining where you stand in the market and how you can enhance your business and marketing efforts. It’s not easy to see and accept your company’s flaws, but the better you communicate these issues, the faster you’ll be able to address them.
- What aspect of your company has room for growth?
- Which part of your business could be improved to strengthen your services?
- What elements have prompted feedback?
Example: Shortage of consultants at operating level rather than partner level. Unable to deal with multi-disciplinary assignments because of size or lack of ability.
How To Do TOWS Analysis | Step 4
Generate strategic options from your opportunities.
There are four strategic alternatives that can be developed from the TOWS analysis, the first two will highlight strengths and weaknesses in relation to the market opportunities. Depending on your objectives and other environmental factors within the organization, use the strategies that best fit your situation.
- Strength/Opportunities Situation or Maxi-Maxi Strategy : This strategy has the greatest potential for success because it focuses on using your organization’s internal strengths to maximize external opportunities. Leverage your strengths to maximize your opportunities.
What strategies can you use to best utilize your strengths and opportunities? How can your team’s skills, knowledge or tools work together with the opportunities in the market? For example, if you have a cost advantage over competitors you could combine that with an opportunity to expand into another market.
- Weaknesses/Opportunities Situation or Mini-Maxi Strategy: In this case, you can consider how market opportunities can be used to compensate for your organization’s deficiencies. Take advantage of market opportunities to overcome your organization’s limitations. How can your deficiencies help you capitalize on market opportunities? Consider what aspects of your business could be improved. If you own a branding design firm but your team lacks the development abilities to make your work stand out, you can utilize this as an opportunity to outsource to a more specialized team.
How To Do TOWS Analysis | Step 5
Understand threats and challenges that could affect your company’s success.
Certainly, this is one of the most difficult steps to identify. Threats are also external factors that you will have to acknowledge and analyze for your company’s success. Many companies fail to consider the threats to their business, whether it’s a threat caused by the market, competitor or simply a financial threat as a result of increased resource costs in relation to revenue. Here’s how you can identify your company’s threats.
- What obstacles do you foresee challenging your company’s success?
- Which competitors have the potential to threaten your business?
You might be doing everything right, but a step your competitor takes can turn things upside down. Consider your competitors as a potential threat to your success in the market and make sure to stay up-to-date on the competition.
- Are there any political or economic risks in the market you’re operating in? Ignoring these risks can cause a big and unexpected failure. In fact, this is why TOWS Analysis is important- to help you to identify and consider them in advance.
- Is your consumer market evolving in a way that poses a risk to your company’s future? Or are there emerging industries that threaten to take over your market?
- What is the cost of your resources? Is it increasing?
Example: Large consultancies operating at a minor level. Other small consultancies looking to invade the marketplace.
How To Do TOWS Analysis | Step 6
Generate strategic options from possible threats.
After understanding the possible threats that may come your way, you can generate strategic options related to these as well.
- Strengths/Threats Situation or Maxi-Mini Strategy: Here, you’ll look at your company’s strengths to understand how you can avoid real and potential threats in the market. Leverage your strengths to avoid threats. What strategies can you use to best utilize your strengths to overcome obstacles? Let´s say you have a cost advantage. However, there’s a possible threat of lost profit margins due to external factors like seasonal trends or market fluctuations. Therefore, you may want to develop strategies to leverage your product or service’s affordability to prevent slumps.
- Weaknesses/Threats Situation or Mini-Mini Strategy In this defensive strategy, you’ll look at both your internal weaknesses and external threats to find ways to minimize both. Counter threats with your organization’s strengths. How can your strengths combat the threats in the market? Think of what elements of your business need improvement and utilize opportunities in the market. This may mean you need to develop strategic partnerships or possibly rethink your business idea altogether.
Share your TOWS Matrix analysis as a link, monitor and evaluate
When you’ve finished creating your user TOWS Analysis with Xtensio’s editor, you can send the live link to your folio to share it as a responsive webpage (and add password protection), export a PDF and post it on your bulletin board and continuously optimize with new learnings. The TOWS Matrix template is adaptable just like other Xtensio tools, it can and should be repurposed, revisited, and revised regularly.