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The Strategic Process

Situation

Strategy

Formulateand re-formulatestrategy based

on continuedanalysis ofsituation.

Re-assesssituation based

on tentative strategy

Objectives

A Continuous Process of Situational Analysis

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SWOT & TOWS

Pluses to SWOT holistic approach that takes into account both internal and

external aspects of situation. recognizes interdependence of various attributes

Minus to SWOT offers little guidance in howto determine strengths,weaknesses, opportunities, & threats.

Utilizing TOWS SWOT evaluates situation, doesnt directly help

formulate strategy.

The TOWS analysis should be used to assist informulating strategy.

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SWOT

Strengths

Weaknesses

Opportunities

Threats

OrganizationalAnalysis

EnvironmentalAnalysis

The SituationStrategy

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SWOT

Strengths

Weaknesses

Opportunities

Threats

OrganizationalAnalysis

EnvironmentalAnalysis

The SituationStrategymutually define &affect

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SWOT: Strengths & Weaknesses

Strengths aspects of the organization that provide an

advantage.e.g., a highly efficient distribution system.

aspects of the organization that forestall entry.e.g., a proprietary customer database.

Weaknesses are the opposite

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SWOT: Opportunities & Threats

Opportunities market niches in which have advantage

open market niches in which further entry will beslow or preventable

Threats potential adverse moves by competitors

potential for entry or emulation

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SWOT Matrix:

Strengths Weaknesses

Opportunities Threats

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S.W.O.T. Putting it all Together(Creating the TOWS Matrix)

1. Internal strengths with external opportunities:ideal match between firms resources and opportunities.

2. Internal weaknesses relative to externalopportunities: creates tradeoffs in where investmentswill be made or where you will abdicate to a rival.

3. Internal strengths matched with external threats:transforming threats into opportunities is one option toexplore.

4. Internal weaknesses relative to external threats:this is the worst position for the firm and thus, an areato avoid.

Gather and interpret SWOT informationCreate Matrix Arranged in Quadrants:

e TOWS sample in next slide ----

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TOWS Matrix:

Strengths WeaknessesOpportunities S-O strategies[pursue opportunities that are a good fit to strengths] W-O strategies

[overcome weaknesses to pursue opportunities]

Threats S-T strategies[use strengths to reduce vulnerability to external threats]

W-T strategies[establish defensive plan to prevent weaknesses susceptible toexternal threats]

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TOWS (Threats, Opportunities, Weaknesses, and Strengths)Matrix

The TOWS Matrix is a relatively simple tool for generating strategic options. By using it, you can

look intelligently at how you can best take advantage of the opportunities open to you, at the same

time that you minimize the impact of weaknesses and protect yourself against threats.

Used after detailed analysis of your threats, opportunities, strength and weaknesses, it helps you

consider how to use the external environment to your strategic advantage, and so identify some of

the strategic options available to you.

At a practical level, the only difference between TOWS and SWOT is that TOWS emphasizes the

external environment whilst SWOT emphasizes the internal environment.

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