SWOT/TOWS/PEST

Originated by Albert S Humphrey in the 1960s. SWOT Analysis is a useful technique for understanding your Strengths and Weaknesses, and for identifying both the Opportunities open to you and the Threats you face. Used in a business context, a SWOT Analysis helps you carve a sustainable niche in your market.

SWOT

Strengths and weaknesses are often internal to your organization, while opportunities and threats generally relate to external factors. For this reason the SWOT Analysis is sometimes called Internal-External Analysis

SWOT

Strengths: What advantages does your organization have? What do you do better than anyone else? What unique or lowest-cost resources can you draw upon that others can't? What do people in your market see as your strengths? What factors mean that you "get the sale"? What is your organization's Unique Selling Proposition (USP)?

SWOT

Weaknesses: What could you improve? What should you avoid? What are people in your market likely to see as weaknesses? What factors lose you sales? Again, consider this from an internal and external basis: Do other people seem to perceive weaknesses that you don't see? Are your competitors doing any better than you? It's best to be realistic now, and face any unpleasant truths as soon as possible.

SWOT

Opportunities: What good opportunities can you spot? What interesting trends are you aware of? Useful opportunities can come from such things as:
Changes in technology and markets on both a broad and narrow scale. Changes in government policy related to your field. Changes in social patterns, population profiles, lifestyle changes, and so on. Local events.

SWOT

Threats What obstacles do you face? What are your competitors doing? Are quality standards or specifications for your job, products or services changing? Is changing technology threatening your position? Do you have bad debt or cash-flow problems? Could any of your weaknesses seriously threaten your business?

SWOT

Strengths: We are able to respond very quickly as we have no red tape, and no need for higher management approval. We are able to give really good customer care, as the current small amount of work means we have plenty of time to devote to customers. Our lead consultant has strong reputation in the market. We can change direction quickly if we find that our marketing is not working. We have low overheads, so we can offer good value to customers.

Example SWOT

(for a start up small consultancy business)

Weaknesses: Our company has little market presence or reputation. We have a small staff, with a shallow skills base in many areas. We are vulnerable to vital staff being sick, and leaving. Our cash flow will be unreliable in the early stages.

Example SWOT

(for a start up small consultancy business)

Opportunities: Our business sector is expanding, with many future opportunities for success. Local government wants to encourage local businesses. Our competitors may be slow to adopt new technologies.

Example SWOT

(for a start up small consultancy business)

Threats: Developments in technology may change this market beyond our ability to adapt. A small change in the focus of a large competitor might wipe out any market position we achieve.

Example SWOT

(for a start up small consultancy business)

As a result of their SWOT Analysis, the consultancy may decide to specialize in rapid response, good value services to local businesses and local government. Marketing would be in selected local publications to get the greatest possible market presence for a set advertising budget, and the consultancy should keep up-to-date with changes in technology where possible.

Example SWOT

(for a start up small consultancy business)

TOWS Analysis is a variant of the classic business tool, SWOT Analysis. TOWS and SWOT are acronyms for different arrangements of the words Strengths, Weaknesses, Opportunities and Threats. By analyzing the external environment (threats and opportunities), and your internal environment (weaknesses and strengths), you can use these techniques to think about the strategy of your whole organization, a department or a team. You can also use them to think about a process, a marketing campaign, or even your own skills and experience.

TOWS

This helps you identify strategic alternatives that address the following additional questions: Strengths and Opportunities (SO) How can you use your strengths to take advantage of the opportunities? Strengths and Threats (ST) How can you take advantage of your strengths to avoid real and potential threats? Weaknesses and Opportunities (WO) How can you use your opportunities to overcome the weaknesses you are experiencing? Weaknesses and Threats (WT) How can you minimize your weaknesses and avoid threats?

TOWS

Strengths and Opportunities (SO) How can you use your strengths to take advantage of these opportunities? Strengths and Threats (ST) How can you take advantage of your strengths to avoid real and potential threats? Weaknesses and Opportunities (WO) How can you use your opportunities to overcome the weaknesses you are experiencing? Weaknesses and Threats (WT) How can you minimize your weaknesses and avoid threats?

TOWS

TOWS Strategic Alternatives Matrix

External Opportunities (O) 1. 2. 3. 4. Internal Strengths (S) 1. 2. 3. 4. Internal Weaknesses (W) 1. 2. 3. 4. SO "Maxi-Maxi" Strategy Strategies that use strengths to maximize opportunities.

External Threats (T) 1. 2. 3. 4. ST "Maxi-Mini" Strategy Strategies that use strengths to minimize threats.

WO WT "Mini-Maxi" Strategy "Mini-Mini" Strategy Strategies that minimize Strategies that minimize weaknesses by taking advantage weaknesses and avoid threats. of opportunities.

Identifying "Big Picture" Opportunities and Threats

PEST

It helps you to spot business or personal opportunities, and it gives you advanced warning of significant threats. It reveals the direction of change within your business environment. This helps you shape what you're doing, so that you work with change, rather than against it. It helps you avoid starting projects that are likely to fail, for reasons beyond your control. It can help you break free of unconscious assumptions when you enter a new country, region, or market; because it helps you develop an objective view of this new environment.

PEST

Political Factors to Consider When is the country's next local, state, or national election? How could this change government or regional policy? Who are the most likely contenders for power? What are their views on business policy, and on other policies that affect your organization? Depending on the country, how well developed are property rights and the rule of law, and how widespread are corruption and organized crime? How are these situations likely to change, and how is this likely to affect you? Could any pending legislation or taxation changes affect your business, either positively or negatively? How will business regulation, along with any planned changes to it, affect your business? And is there a trend towards regulation or deregulation? How does government approach corporate policy, corporate social responsibility, environmental issues, and customer protection legislation? What impact does this have, and is it likely to change? What is the likely timescale of proposed legislative changes? Are there any other political factors that are likely to change?

PEST

Economic Factors to Consider How stable is the current economy? Is it growing, stagnating, or declining? Are key exchange rates stable, or do they tend to vary significantly? Are customers' levels of disposable income rising or falling? How is this likely to change in the next few years? What is the unemployment rate? Will it be easy to build a skilled workforce? Or will it be expensive to hire skilled labor? Do consumers and businesses have easy access to credit? If not, how will this affect your organization? How is globalization affecting the economic environment? Are there any other economic factors that you should consider?

PEST

Socio-Cultural Factors to Consider What is the population's growth rate and age profile? How is this likely to change? Are generational shifts in attitude likely to affect what you're doing? What are your society's levels of health, education, and social mobility? How are these changing, and what impact does this have? What employment patterns, job market trends, and attitudes toward work can you observe? Are these different for different age groups? What social attitudes and social taboos could affect your business? Have there been recent socio-cultural changes that might affect this? How do religious beliefs and lifestyle choices affect the population? Are any other socio-cultural factors likely to drive change for your business?

PEST

Technological Factors to Consider Are there any new technologies that you could be using? Are there any new technologies on the horizon that could radically affect your work or your industry? Do any of your competitors have access to new technologies that could redefine their products? In which areas do governments and educational institutions focus their research? Is there anything you can do to take advantage of this? How have infrastructure changes affected work patterns (for example, levels of remote working)? Are there existing technological hubs that you could work with or learn from? Are there any other technological factors that you should consider?

PEST

Source: www.mindtools.com