SWOT and TOWS Analysis

SWOT Analysis

SWOT analysis is a technique for assessing the performance, competition, risk, and potential of a business, as well as part of a business such as a product line or division, an industry, or other entity.

Internal Factors: Strengths (S) and Weaknesses (W)

These are the resources and experiences readily available to the business proponents. These factors include:

• Financial resources such as money and source of funds for investment.
• Physical resources such as the company’s location, facilities, machinery, and equipment.
• Human resources consisting of employees.
• Access to natural resources, trademarks, patents, and copyrights.
• Current processes, such as employee programs, sales, and distribution capabilities, marketing programs, etc.

Strengths

Describe what an organization excels at and what separates it from the competition:

• Strong brand
• Loyal customer base
• Strong balance sheet
• Unique technology

Weaknesses

Stop an organization from performing at its optimum level. Areas needing improvement include:

• Lack of raw materials
• Personnel attitude
• Poor location
• Lack of budget for product promotion

External Factors: Opportunities (O) and Threats (T)

These factors affect a company, an organization, an individual, and those outside their control. These factors include:

• Economic trends such as stock market, economic performance, etc.
• Market trends such as new products or technology, changes in tastes and lifestyle of society.
• National and local laws and regulations.
• Relationship with suppliers.
• Competitive threats.

Opportunities

Favorable external factors that could give an organization a competitive advantage. Examples include:

• Larger market
• Company expansion
• New customer trends

Threats

Factors that have the potential to harm an organization. Examples include:

• Changes in government policy
• Changes in consumer tastes and preferences
• Inflation and recession

Activity: SWOT Analysis

Identify if the following situations are under Strengths, Weaknesses, Opportunities, or Threats:

• (T) New costly business registration bill.
• (S) More customers like the barbecue sauces.
• (T) Competitor added grilled meals.
• (O) Customers want pre-orders via text.
• (O) Steady supply of meals in the market.
• (W) Poor sanitation practices.
• (O) New building under construction.
• (W) Only two helpers for growing customers.

TOWS Matrix

TOWS Analysis is an extension of SWOT Analysis that emphasizes external factors first.

Steps in TOWS Analysis

1. Conduct a SWOT Analysis.
2. Translate findings using a TOWS Matrix.
3. Assess strategic options:
   • (SO) Use strengths to leverage opportunities.
   • (ST) Use strengths to mitigate threats.
   • (WO) Use opportunities to overcome weaknesses.
   • (WT) Minimize weaknesses and avoid threats.
4. Evaluate strategic options.

TOWS Matrix Example

Internal Factors	External Factors
Strengths	Opportunities
1. Profitability	1. New Markets
2. Brand Recognition	2. New Products and Services
3. Global Presence	3. Purchasing Companies