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TOWS Matrix
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A TOW is inverted SWOT systematic identification of the factors and the strategy that reflects the best match between them. based on the logic that an effective strategy maximizes the business’s strengths and opportunities but at the same time minimizes its weaknesses threats.
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framework to assess, create, compare, and finally decide upon the business strategies. TOWS Matrix helps in the generation of amazing ideas evaluation is done by amalgamating the external opportunities and threats with a company’s internal strengths and weaknesses
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Strengths and Weaknesses fall under internal factors and consist of HR policies, manufacturing processes, goals and objectives, attributes of the products and services offered to the target market, core values, work culture, staff, and fundamentals of the company.
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Opportunities, and Threats fall under external factors and consists of government policies, dynamic nature of the market, evolving tastes and preferences of the customers, competition in the market, fluctuation rates of the raw materials required for the production and etcetera
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the four potential strategies of the TOWS Matrix. Strength/Opportunity (SO) Weakness/Opportunity (WO) Strength/Threat (ST) Weakness/Threat (WT)
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Strengths and Opportunities (SO) / Maxi-Maxi Strategy a Maxi-Maxi Strategy is to utilize internal strengths to make optimum use of the external opportunities available to the company.
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Strengths and Threats (ST) / Maxi- Mini Strategy Maxi-Mini strategy is to maximize the strengths of a company while minimizing the threats with the support of these strengths. a company should take advantage of the internal strengths to avoid massive external threats
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Weakness and Opportunities (WO) / Mini-Maxi Strategy Mini-Maxi strategy attempts to minimize the weaknesses and to maximize the opportunities. aim is to revamp internal weaknesses by making use of external opportunities.
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Weakness and Threats (WT) / Mini- Mini Strategy aim of the Mini-Mini strategy is to minimize weaknesses and minimize threats the most defensive spot in the TOWS Matrix. The mini-mini strategy is nothing but a pessimistic style of liquidation of a company.
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SPACE MATRIX management tool used to analyze a company The Strategic Position & ACtion Evaluation matrix or short a SPACE matrix is a strategic management tool that focuses on strategy formulation especially as related to the competitive position of an organization.
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The SPACE matrix is broken down to four quadrants where each quadrant suggests a different type or a nature of a strategy: Aggressive Conservative Defensive Competitive
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The SPACE matrix is based on four areas of analysis. Internal strategic dimensions: Financial strength (FS) Competitive advantage (CA) External strategic dimensions: Environmental stability (ES) Industry strength (IS)
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financial strength There are many SPACE matrix factors under the internal strategic dimension. The financial strength factors often come from company accounting. These SPACE matrix factors can include for example return on investment, leverage, turnover, liquidity, working capital, cash flow, and others.
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Competitive advantage example the speed of innovation by the company, market niche position, customer loyalty, product quality, market share, product life cycle, and others.product life cycle
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SPACE matrix factors related to business external strategic dimension are for example overall economic condition, GDP growth, inflation, price elasticity, technology, barriers to entry, competitive pressures, industry growth potential, and others.
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The following are a few model technical assumptions: By definition,CA and IS values in SPACE matrix are plotted on X axis. CA values can range from -1 to -6. IS values can take +1 to +6. The FS and ES dimensions of the model are plotted on the Y axis. ES values can be between -1 and -6. FS values range from +1 to +6.
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How do I construct a SPACE matrix? The SPACE matrix is constructed by plotting calculated values for the competitive advantage (CA) and industry strength (IS) dimensions on the X axis. The Y axis is based on the environmental stability (ES) and financial strength (FS) dimensions. The SPACE matrix can be created using the following seven steps:
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Step 1: Choose a set of variables to be used to gauge the competitive advantage (CA), industry strength (IS), environmental stability (ES), and financial strength (FS).
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Step 2: Rate individual factors using rating system specific to each dimension. Rate competitive advantage (CA) and environmental stability (ES) using rating scale from -6 (worst) to -1 (best). Rate industry strength (IS) and financial strength (FS) using rating scale from +1 (worst) to +6 (best).
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Step 3: Find the average scores for competitive advantage (CA), industry strength (IS), environmental stability (ES), and financial strength (FS).
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Step 4 Plot values from step 3 for each dimension on the SPACE matrix on the appropriate axis.
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Step 5: Add the average score for the competitive advantage (CA) and industry strength (IS) dimensions. This will be your final point on axis X on the SPACE matrix.
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Step 5 Add the average score for the competitive advantage (CA) and industry strength (IS) dimensions. This will be your final point on axis X on the SPACE matrix.
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Step 6: : Add the average score for the SPACE matrix environmental stability (ES) and financial strength (FS) dimensions to find your final point on the axis Y.
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Step 7 Find intersection of your X and Y points. Draw a line from the center of the SPACE matrix to your point. This line reveals the type of strategy the company should pursue.
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BOSTON CONSULTING GROUP (BCG) MATRIX
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Is a popular tool which can help a business analyze its portfolio. In a business sense, a portfolio simply means the range of products sold by a business.
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when a business has a portfolio of products it must decide how to allocate investment, such as marketing budget or R&D resource, to that portfolio. The Boston Matrix is a tool which can help in making these decisions.
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The BCG Matrix was created for the Boston Consulting Group by Bruce Henderson in 1968. analyze products, but the BCG Matrix can also be used to evaluate individual business units (called Strategic Business Units (SBUs)) or any other cash-generating assets, such as property.
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The BCG Matrix works on the principle that every company should have a portfolio containing both high-growth products requiring cash investment and low-growth products that throw off excess cash.
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What is the BCG Matrix? The BCG Matrix is a simple grid with Market Growth Rate on one axis, and Relative Market Share on the other. Market growth rate: Is the market in which the product is being sold growing quickly, slowly, or not at all? Relative market share: Does the product have a high or a low share of the current market?
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Four quadrants into which firms brands are classified:
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Question Marks These are products with a low market share in a high-growth market. Because of this their growth-rate going forward is unclear and further investigation is needed to decide what to do with these products. These products might become stars, but equally, they might crash and burn as it’s not easy to spot a future star.
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Stars These are products with a high-market-share in a growth market These stars have the potential to provide a high proportion of the future profits of the business. It is thus advisable for a business to invest in these products to maintain market leadership, thus securing future profits as the market continues to grow.
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Dogs These are products with a low market share in low-growth markets If these products are not profitable you may wish to divest them If a dog is profitable you should invest as little as possible into it, or even consider divesting it.
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Cash Cows These are products with a high-market-share in a slow-growing market They are profitable, generating good margins, and throwing off excess cash without the need for significant investment. Cash Cows need to be milked for profits but given minimum investment. In a nutshell, we want to milk these products without killing the cow!
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