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Lesson#24

THREATS-OPPORTUNITIES-WEAKNESSES-STRENGTHS

Learning object
After understanding this chapter you are able to understand TWOS matrix and also understand how to scan
internal and external environment of the organization

The Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix

The Threats-Opportunities-Weaknesses-Strengths (TOWS) is also named as SWOT analysis. A TWOS Analysis is
a strategic planning tool used to evaluate the Threats, Opportunities and Strengths, Weaknesses, involved in
a project or in a business venture or in any other situation requiring a decision.
This is an important tool in order to formulate strategy. This Matrix is an important matching tool that
helps managers develops four types of strategies: SO Strategies (strength-opportunities), WO Strategies
(weakness- opportunities), ST Strategies (strength-threats), and WT Strategies (weakness-threats).The most
difficult part of TOWS matrix is to match internal and external factor.
Once the objective has been identified, TOWS are discovered and listed. TOWS are defined precisely as
follows:

Strengths
are attributes of the organization that are helpful to the achievement of the objective.

Weaknesses
are attributes of the organization that are harmful to the achievement of the objective.

Opportunities
are external conditions that are helpful to the achievement of the objective.

Threats
are external conditions that are harmful to the achievement of the objective.

Strengths and weaknesses are internal factors.
For example, strength could be your specialist marketing
expertise. A weakness could be the lack of a new product.

Opportunities and threats are external factors.
For example, an opportunity could be a developing
distribution channel such as the Internet, or changing consumer lifestyles that potentially increase demand
for a company's products. A threat could be a new competitor in an important existing market or a
technological change that makes existing products potentially obsolete.
it is worth pointing out that SWOT analysis can be very subjective - two people rarely come-up with the
same version of a SWOT analysis even when given the same information about the same business and its
environment. Accordingly, SWOT analysis is best used as a guide and not a prescription. Adding and
weighting criteria to each factor increases the validity of the analysis.

SO Strategies: Every firm desires to obtain benefit form its resources such benefit can only be obtained if
utilize its strength to take external opportunity. Resources (Assets) an important firm’s strength to get
opportunity for external resources. For example the firm enjoying a good financial position which is
strength for a firm and externally opportunity to expand business. The strong financial position provides an
opportunity to expand the business. The matched strategy is known as SO strategy.

WO Strategies:

WO Strategies developed to match weakness with opportunities of the firm. WO strategy is very useful if
the firm take advantage to external resources in order to overcome the weakness. For example the firm is in
the critical financial problems that is weakness and firm is availing merger with Multinational Corporation.

ST Strategies

ST Strategies is an important strategy to overcome external threats. This does not mean that a strong
organization should always meet threats in the external environment head-on. This strategy is adopted by
various colleges by opening new branches in order to overcome competitive thereat. These threats also
explain by the Porter in its competitive model.

WT Strategies
Every firm has a desire to overcome its weakness and reducing threats. This type of strategy helpful when
weaknesses are removed to overcome external threats. It is difficult to target WT strategy. For example
weak distribution network creating many problems for the firm if it strong many external threats can be
removed.

Steps for developing strategies:

There are eight steps involved in constructing a TOWS Matrix:
1. Rank external opportunities
2. Rank external threats
3. Rank internal strength
4. Rank internal weaknesses.
5. Match internal strengths with external opportunities and mention the result in the SO Strategies
cell.
6. Match internal weaknesses with external opportunities and mention the result in the WO Strategies
cell..
7. Match internal strengths with external threats and mention the result in the ST Strategies cell.
8. Match internal weaknesses with external threats and mention the result in the WT strategies cell.

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