The TOWS Matrix --A Tool for Situational Analysis
Heinz Weihrich*, Professor of Management, University of San Francisco This article has two main purposes One is to review general considerations in strategic planning and the second to introduce the TOWS Matrix for matching the environmental threats and opportunities with the company's weaknesses and especially its strengths. These factors per se are not new; what is new is systematically identifying relationships between these factors and basing strategies on them. There is little doubt that strategic planning will gain greater prominence in the future. Any organization—whether military, product oriented, service-oriented or even governmental—to remain effective, must use a rational approach toward anticipating, responding to and even altering the future environment.
Situational Analysis: A New Dimension in Strategic Planning
Today most business enterprises engage in strategic planning, although the degrees of sophistication and formality vary considerably Conceptually strategic planning is deceptively simple: analyze the current and expected future situation, determine the direction of the firm and develop means for achieving the mission. In reality, this is an extremely complex process, which demands a systematic approach for identifying and analyzing factors external to the organization and matching them with the firm's capabilities. The purpose of this article is twofold: first, the concept of strategy and a model showing the strategic process are introduced. This part not only provides an overview of strategic planning, but also alerts the reader to the various alternatives available for formulating a strategy. The second purpose of the article is to propose a conceptual framework for identifying and analyzing the threats (T) and opportunities (O) in the external environment and assessing the organization's weaknesses (W) and strengths (S) For convenience, the matrix that will be introduced is called TOWS, or situational analysis. Although the sets of variables in the matrix are not new, matching them in a systematic fashion is. Many writers on strategic planning suggest that a firm uses its strengths to take advantage of opportunities, but they ignore other important relationships, such as the challenge of overcoming weaknesses in the enterprise to exploit opportunities. After all, a weakness is the absence of strength and corporate development to overcome an existing weakness may become a distinct strategy for the company. Although efforts are now being made to gain greater insights into the way corporate strengths and weaknesses are defined, much remains to be done.1 The TOWS matrix, discussed later in detail, also serves as a conceptual framework for future research about the combination of external factors and those internal to the enterprise, and the strategies based on these variables. The author is Professor of Management, School of Business and Management, University of San Francisco, San Francisco, CA 94117, U.S.A. He has had many years of business and consulting experience in the United States and Europe, working with such companies as Volkswagen, Hughes Aircraft Company, etc. *
Long Range Planning © Heinz Weihrich
Equally important, the matrix 'forces' practicing managers to analyze the situation of their company and to develop strategies, tactics, and actions for the effective and efficient attainment of its organizational objectives and its mission.
The term 'strategy' (which is derived from the Greek word 'strategos', meaning 'general') has been used in different ways. Authors differ in at least one major aspect, Some, such as Kenneth Andrews,2 Alfred D. Chandler3 George A. Sterner/John B. Miner,4 and Richard Vancil,5 focus on both the end points (purpose, mission, goals, objectives) and the means of achieving them (policies and plans). But other writers such as Igor H. Ansoff 6 and Charles W. Hofer/Dan...