Page 86 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Strategic Management

Notes TOWS analysis poses a number of questions:
What actions should a company take? Should it focus on using company’s strengths to capitalize
on opportunities, or acquire strengths in order to be able to capture opportunities? Or should it
actively try to minimize weaknesses and avoid threats?
TOWS matrix illustrates how internal strengths and weaknesses can be matched with external
opportunities and threats to generate four sets of possible alternative strategies. This matrix can
be used to generate corporate as well as business strategies. An example of TOWS matrix is
shown below:
Internal factors/ Strengths(S) Weaknesses(W)
External factors
Opportunities(O) SO strategies: strategies that use WO strategies: strategies that
strengths to take advantage of take advantage of opportunities
opportunities. by over -coming weaknesses
Threats(T) ST strategies: strategies that use WT strategies: strategies that
strengths to avoid threats. minimize weaknesses and avoid
threats.

To generate a TOWS matrix, the following steps are to be followed:
1. List external opportunities available in the company’s current and future environment, in
the ‘opportunities block’ on the left side of the matrix.

2. List external threats facing the company now and in future in the “threats block” on the
left side of the matrix.
3. List the specific areas of current and future strengths for the company, in the “strengths
block” across the top of the matrix.
4. List the specific areas of current and future weaknesses for the company in the “weaknesses
box” across the top of the matrix.
5. Generate a series of possible alternative strategies for the company based on particular
combinations of the four sets of factors.

The four sets of strategies that emerge are:

SO Strategies

SO strategies are generated by thinking of ways in which a company can use its strengths to take
advantage of opportunities. This is the most desirable and advantageous strategy as it seeks to
mass up the firm’s strengths to exploit opportunities. For example, Hindustan Lever has been
augmenting its strengths by taking over businesses in the food industry, to exploit the growing
potential of the food business.

ST Strategies

ST strategies use a company’s strengths as a way to avoid threats. A company may use its
technological, financial and marketing strengths to combat a new competition. For example,
Hindustan Lever has been employing this strategy to fight the increasing competition from
companies like Nirma, Procter & Gamble etc.

80 LOVELY PROFESSIONAL UNIVERSITY