TOWS OR SWOT Matrix of TOYOTA

TOWS analysis is the complement for the SWOT analysis; because without SWOT analysis TOWS analysis will not be completed. The strengths-weaknesses-opportunities-threats (SWOT) Matrix gives a set of strategies by analyzing internal capacity of the company and external environment of the industry. It is a matching tool for constructing four types of strategies which are: SO, WO, ST, and WT. Here it should be noted that there is no best set of matching external and internal factors due to which analysis becomes difficult to some extent. The explanation of SO, WO, ST, and WT strategies is given below:

SO Strategies

Firms use such strategies to grab the external opportunities by using the internal strengths. For example, A firm has a strong financial position but it is loosing its market share; now with the help of strong financial position it can introduce innovative products by investing in research and development sector. Organizations always try to overcome major weaknesses and make them strengths. Similarly, organizations try to avoid threats and concentrate on opportunities.

WO Strategies

These strategies are used for the purpose of improving internal weaknesses by using external opportunities. It is possible that a firm has good external opportunity but can not avail it due to internal weakness. For example, A firm may find an opportunity of increasing its production by introducing new technology but the firm may lack the skilled workers required for the production. In such case, a possible WO Strategies would be to hire and train people with the essential technical skills. 

ST Strategies

Such strategies are used by the organization for the purpose of reducing the impact of external threats by using its internal strengths. For example, a firm with strong legal department (strength) can avoid external threats such as copying ideas, innovations, and patented products. Similarly, an organization with strong line of quality products may face the threat of low priced products of rivals. In such case the organization can apply ST Strategy of mass production to reduce the unit cost of production.

WT Strategies

WT Strategies are mainly used by those firms which are not in a good and stable position. Basically, these strategies are defensive because organizations try to reduce internal weaknesses while avoiding the external threats. For example, if an organization has weak financial position (weakness) and the demand for its products is reducing (threat) then the possible WT Strategies would be to retrench or merge.

Steps in the construction of SWOT Matrix

1. List down the important strengths of the firm
2. List down the important weaknesses of the firm
3. List down the important threats of the firm
4. List down the important opportunities of the firm
5. Now match internal strength with external opportunity and type the appropriate SO strategy in the SO cell.
6. Similarly, match the internal weaknesses with external opportunities and type the appropriate WO strategy in WO cell.
7. Match internal strengths with external threats and type the appropriate ST strategy in ST cell.
8. Match internal weaknesses with external threats and type the appropriate WT strategy in WT cell.