TOWS stands for "threats, opportunities, weaknesses, and strengths." It is a method of analyzing situations based on the popular SWOT method of analysis ("strengths, weaknesses, opportunities, and threats"), which looks at the same issues in reverse order.
In analyzing a situation, it is often a good idea to start with an estimation of the threats to a plan and the opportunities available at the time. That allows you to evaluate the limitations and opportunities of your position before identifying weaknesses and strengths. TOWS can be used when you discover your competition has expanded its product line, for example, and you want to develop a response. It is particularly useful in evaluating the potential impact of sudden events or developments. It is an action tool.
In business, SWOT analysis is usually employed in evaluating a company, a business plan, a product line, a marketing strategy or other existing, defined element or concept. Starting your analysis with a listing of strengths and weaknesses allows you to analyze the value of various opportunities and the potential impact of threats. SWOT analysis is a planning tool rather than an action tool.
Using a system such as TOWS or SWOT analysis to evaluate business situations or elements of a company creates a quick, organized and easily communicated analysis of what can be a complex and confusing problem. Such evaluation systems also promote uniform, analysis-based decision making as opposed to spur of the moment, hunch-based decisions.
The development of uniform decision making procedures allows for the creation of a body of corporate knowledge. If a decision results in a failure, the process can be reviewed for errors. Likewise, if a decision is successful, the knowledge created in the SWOT or TOWS process can be applied to future decisions. If decisions are made on the basis of hunches, no supporting documentation will exist for future study and use. The value of a company is in its intellectual property, which includes corporate knowledge.
In the 1960s, Stanford University professor Albert Humphrey created the SOFT analysis, which identified company qualities as positive or negative, in the present or the future. For example, what is positive at present is Satisfactory and what is positive in the future is Opportunity. A present negative is a Fail and a future negative is a Threat. Over time, the Fail became known as Weakness and eventually the analysis examined Strengths and Weaknesses rather than Satisfactory elements and Opportunities, giving us the now familiar SWOT.