Strategic Budget

An organization uses a variety of methods to achieve goals. It makes plans for managing its
resources, including planning how to assign resources to each program area. The way the
manager of each program area spends assigned resources must help the organization accomplish
its goals. On a large scale, managers using resources for goal achievement help the organization
succeed as a whole.

Strategy audit is a review of a company's business plan and strategies to identify weaknesses and
shortcomings and enable a successful development of the company.

The starting point for each strategy discussion is an audit examining the current situation
systematically and in its entirety. Numerous clients from nearly every industry sector trust
in our company's experience and international network of experts when they plan to
evaluate their current strategy.

What Is the Importance of the Strategic Audit?

Internal audits serve various purposes. Some audits assess compliance with laws and regulations.
Others measure compliance with the organization's internal policies and procedures. A strategic
audit helps small-business owners assess whether internal processes move the needle toward
their strategic goals. Based on audit results, management adjusts operations to maximize
progress toward the goals.
Strategic Plan
A business needs a strategic plan that includes short-term and long-term goals. Long-term goals
for a bicycle shop may be to dominate the market for a niche product category -- high-end offroad bicycles, for example. Short-term objectives that support the goal may be to offer
customization services and to increase the number of different models the store carries in the
product category. Establishing the strategic plan gives auditors a baseline for their work.
Implementing the Plan
With the strategic plan in place, auditors examine business functions and assess each function to
see if the work it does furthers the plan. At the bike shop, the physical layout should feature a
special area for high-end mountain bikes. Management should provide training on new products
to the sales force, and advertisers should advertise on mountain biking websites and promote the
shop at local bike races.
The Audit Report
The strategic audit compares the state of a business as it exists on the day of the audit to the state
of the business the way it would have looked and operated had it achieved its goals. The auditor
prepares a written report that evaluates each functional unit of the business and grades it
according to its alignment with the goals. For example, if a bike shop that wants to increase its
mountain biking business spends its entire advertising budget promoting children's bikes, it
might receive a D or an F in the audit. If the shop's sales team formed a bike racing team that

plans to ride bicycles the store carries in an upcoming race in the community, it might receive an
A or a B in the audit.
The Audit Cycle
The strategic audit is an ongoing process. A business owner implements changes based on the
audit report, and the auditor team checks in periodically to reevaluate the performance of each
unit. As the business achieves its goals, management updates the strategic plan, and the audit
cycle begins anew
A strategic audit evaluates how appropriate your business strategy is and how well you are
positioned to execute it. Particularly for a small business, periodic strategic audits can mean the
difference between a road map to success and a drift into financial struggles caused by a poorly
thought-out or outdated plan that doesn't reflect changing market conditions.

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.

External Threats
(T)
1.
2.
3.
4.

SO
"Maxi-Maxi" Strategy

ST
"Maxi-Mini" Strategy

Strategies that use

strengths to maxim
ize opportunities.

Strategies that use

strengths to minimi
ze threats.

WO
"Mini-Maxi" Strategy

WT
"Mini-Mini" Strategy

Strategies
thatminimize
weaknessesby taki
ng advantage of
opportunities.

Strategies
that minimize
weaknesses and avo
id threats.

The TOWS (threats, opportunities, weaknesses, strengths) matrix is a two-cell by two-cell matrix that
assists companies in determining strategic alternatives by examining external opportunities and
threats and how they compare to a companys existing strengths and weaknesses. All the threats,
opportunities, weaknesses and strengths are listed on the outside of the matrix and compared within
each cell.
The TOWS matrix is used for strategic planning and helps marketers identify opportunities and
threats and measure them against internal strengths and weaknesses.

What is a SWOT Analysis?

A SWOT analysis is a strategic planning tool that involves listing a company's strengths,
weaknesses, opportunities and threats, or SWOT. Strengths are things a business does well
or advantages it has, such as dedicated workers, an innovative product design or a good
retail location, while weakness are things a business does poorly or disadvantages it has.
Threats or external factors that might harm the business, such as competitors and
unfavorable government regulations, while opportunities are external factors that the

company might benefit the company, including untapped markets or favorable regulations.
After creating a list of strengths, weaknesses, opportunities and threats, managers think of
ways the business can maximize strengths and use them to reduce weaknesses; take
advantage of opportunities; and avoid or minimize threats

What is a TOWS Analysis?

A TOWS analysis involves the same basic process of listing strengths, weaknesses,
opportunities and threats as a SWOT analysis, but with a TOWS analysis, threats and
opportunities are examined first and weaknesses and strengths are examined last. After
creating a list of threats, opportunistic, weaknesses and strengths, managers examine ways
the company can take advantage of opportunities and minimize threats by exploiting
strengths and overcoming weaknesses.

SWOT vs. TOWS

SWOT and TOWS analysis involve the same basic steps and likely produce similar results.
The order in which managers think about strengths, weaknesses, threats and opportunities
may, however, have an impact on the direction of the analysis. Michael Watkins of the
"Harvard Business Review" says that focusing on threats and opportunities first helps lead to
productive discussions about what is going on in the external environment rather than
getting bogged down in abstract discussions about what a company is good at or bad at.

Considerations
SWOT and TOWS use the same factors for analysis, and the terms are sometimes used
interchangeably without regard to the order that strengths, weaknesses, threats and
opportunities are examined.