Developing Strategic Options based on TOWS Analysis
For each of the businesses the company should do the SWOT
analysis of its position to understand its own competitive position.
Corporate top-level managers should consider their company's
group or mix of businesses as a portfolio of core competencies. As they attempt to create value by
selecting and implementing corporate-level strategy, managers will be challenged
to achieve strategic competitiveness and earn above-average returns while
competing in a highly competitive global environment that is characterized by
high degrees of risk, complexity, uncertainty, and ambiguity.
COMPETITIVE POSITION
|
MARKET GROWTH RATE
|
RAPID
|
WEAK
|
STRONG
|
|
STRATEGY OPTIONS
(in probable order
of attractiveness)
§
Reformulate
single-business concentration strategy (to achieve turnaround).
§
Acquire another
company in the same business (to strengthen competitive position).
§
Vertical
integration (forward or backward if it strengthens competitive position).
§
Diversification.
§
Be acquired
by/sell out to a stronger rival.
§
Abandonment (a
last resort in the event all else fails).
|
STRATEGY OPTIONS
(in probable order
of attractiveness)
§
Continue
single-business concentration
-International expansion (if market
opportunities exist).
§
Vertical
integration (if it strengthens the company’s competitive position).
§
Related
diversification (to transfer skills and expertise built up in the company’s
core business to adjacent businesses).
|
|
SLOW
|
STRATEGY OPTIONS
(in probable order
of attractiveness)
§
Reformulate
single-business concentration strategy (to achieve turnaround).
§
Merger with a
rival company (to strengthen competitive position).
§
Vertical
integration (only if it strengthens competitive position substantially).
§
Diversification.
§
Harvest/divest.
§
Liquidation (a
last resort in the event all else fails).
|
STRATEGY OPTIONS
(in probable order
of attractiveness)
§
International
expansion (if market opportunities exist).
§
Related
diversification.
§
Unrelated
diversification.
§
Joint ventures
into new areas.
§
Vertical
integration (if it strengthens competitive position).
§
Continue
single-business concentration (achieve growth by taking market share from
weaker rivals).
|
Figure : Options for an Undiversified Company
As you can see from the figure above, the primary approach
to corporate-level strategy is diversification, a strategy that requires
top-level managers to develop and implement a multi-business effort encompassing
a variety of industry environments. Diversification strategy is supported by an assumption that
managers of diversified companies possess unique management skills that can
effectively be used to craft multi-business strategies and improve a company's
strategic competitiveness in the process.
This leads to the prevailing theory that companies diversify when they
have excess resources, capabilities, and core competencies that have multiple
uses.