Study Notebook: SWOT vs.
TOWS Analysis
Introduction to SWOT and TOWS
• Key Concept: While SWOT analysis identifies strengths, weaknesses, opportunities, and threats,
it falls short in planning future actions. TOWS analysis adds actions to the traditional SWOT
framework, making it more useful for strategic planning.
SWOT Analysis
• Definition: SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
• Purpose: Helps companies identify their internal and external factors affecting their business.
• Limitations:
• Lacks actionable insights.
• Managers often question "what next" after a SWOT analysis.
Example SWOT Analysis for an Engine Component Manufacturer
• Strengths:
• Technical superiority
• Well-financed
• Weaknesses:
• Higher costs than competitors
• Losing key staff to startups
• Opportunities:
• Growing existing markets
• Potential new market in automotive engines
• Threats:
• Cheap imports from overseas
• Automotive manufacturers fitting components as standard, reducing aftermarket sales
TOWS Analysis
• Definition: Expands on SWOT by adding actions to leverage strengths, compensate for
weaknesses, exploit opportunities, and challenge threats.
• Purpose: Provides a detailed action plan, making the analysis more practical and actionable.
• Structure: Uses the SWOT components as axes to create a matrix, allowing for action planning at
the intersections.
TOWS Matrix Structure
• Strengths-Opportunities (SO):
• Actions to use strengths to exploit opportunities.
• Weaknesses-Opportunities (WO):
• Actions to overcome weaknesses to exploit opportunities.
• Strengths-Threats (ST):
• Actions to use strengths to mitigate threats.
• Weaknesses-Threats (WT):
• Actions to minimize weaknesses to address threats.
Example TOWS Analysis for the Engine Component Manufacturer
SO Strategies
• Action: Use technical superiority to target the automotive market.
• Action: Leverage strong financial position to offer favorable purchasing terms (e.g., longer credit
terms, smaller deposits).
WO Strategies
• Action: Launch a value campaign to justify higher prices in new and existing markets.
• Action: Implement initiatives to retain key staff, emphasizing pride in working for a market
leader.
ST Strategies
• Action: Differentiate products through technical superiority to combat cheap imports.
• Action: Develop a channel strategy to partner with automotive manufacturers, turning a threat
into an opportunity.
WT Strategies
• Action: Explore new manufacturing techniques or materials to reduce costs.
• Action: Launch a loyalty program to reward existing customers and maintain their business.
• Alternative Action: Initiate a campaign highlighting the disruption of switching suppliers to
discourage customers from moving to competitors.
Benefits of TOWS Over SWOT
• Actionable Insights: Provides clear actions to address each combination of internal and external
factors.
• Strategic Planning: Links current situation with future plans in a single, informative chart.
• Holistic View: Shows how strengths can be leveraged, weaknesses mitigated, opportunities
exploited, and threats challenged in a coherent manner.
Conclusion
• SWOT vs. TOWS: While SWOT is useful for identifying key factors, TOWS enhances it by adding
strategic actions, making it a powerful tool for planning and decision-making.
• Application: Use TOWS to develop actionable strategies and ensure a comprehensive approach
to addressing business challenges and opportunities.
