Strategic Management: Formulation and Implementation

The Tows Matrix : A Conceptual Model

The TOWS Matrix, proposed by Heinz Weihrich, has a wider scope and has different emphases than the ones described above. It does not replace either the Business Portfolio Matrix, The GE Business Screen, or other matrixes, but its is proposed as a conceptual framework for a systematic analysis that facilities matching the external threats and opportunities with the internal weaknesses and strengths of the organization.

The TOWS Matrix indicates four conceptually distinct alternative strategies, tactics and actions. The process of strategy formulation and the TOWS analysis is shown in Figure 4-16 in which 'T' stands for threats, 'O' for opportunities, 'W' for weaknesses and 'S' for strengths.

This process includes seven steps:

- Step 1, deals with some basic questions pertaining to the internal and external environments (the kind of business, geographic domain, competitive situation, top management orientation).

- Step 2, concerns primarily the present situation in respect external environment factors (social, political, demographic, product technology, market and competition).

- Step 3, deals with future situation in respect to the external environment (forecast, predictions and assessment of the future).

- Step 4, concerns activities to develop alternatives.

- Step 5, deals wit activities necessary to develop strategies, tactics and more specific actions in order to achieve the enterprise's purpose and overall objectives.

- Step 6, concerns consistency of these decisions with the other steps in the strategy formulation process.

- Step 7, deals with prepare contingency plans.

The analysis starts with the external environment. The external threats should be listed in box "T" in Figure 14, and opportunities should be shown in box '0'. Threats and opportunities may be found in different areas, such as economic, social, political and demographic factors, products and services, technology, markets, and competition.