Corporate Strategy

Module 2
 What is a TOWS Analysis?
• A TOWS analysis is very similar to SWOT, however
there is a key difference between the two, other than
a reshuffling of a few letters!
• While SWOT analysis, puts the emphasis on
the internal environment (your strengths and
weaknesses), TOWS forces you to look at
your external environment first (your threats and
opportunities).
• Doing this allows you to gain better understanding of
the strategic choices that you face. (Remember that
"strategy" is the art of determining how you'll "win"
in business and life.)
 TOWS Analysis
• It helps you ask, and answer, the following questions:
• How can we make the most of our strengths?
• How do we circumvent our weaknesses?
• How can we capitalize on external opportunities?
• How should we best manage threats?
• Once you've answered these questions, the next step
is to match external opportunities and threats with
your internal strengths and weaknesses, as illustrated
in the matrix below
 TOWS Strategic Alternatives Matrix

  External Opportunities (O) External Threats (T)

Internal Strengths (S)

SO ST
"Maxi-Maxi Strategy" "Maxi-Mini Strategy"
Strategies that use strengths to Strategies that use strengths to
maximize opportunities. minimize threats.

Internal Weaknesses (W)

WO WT
"Mini-Maxi Strategy" "Mini-Mini Strategy"
Strategies that minimize weaknesses Strategies that minimize weaknesses
by taking advantage of opportunities. and avoid threats.
 How to Use a TOWS Matrix

Step 1: Do a SWOT Analysis

Print off our free SWOT Worksheet and perform a
TOWS/SWOT analysis, recording your findings in the
space provided. This will help you to understand what
your strengths and weaknesses are, as well as
identifying the opportunities and threats that you
should be looking at.
Step 2: Translate Your Findings Using a TOWS Matrix
Print off our free TOWS Strategic Options Worksheet,
and copy the key conclusions from your SWOT
Worksheet into the area provided (shaded in blue).
• Step 3: Link and Assess Your Strategic Options
• For each combination of internal and external
environmental factors, consider how you can use
them to create good strategic options:
• 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?
• The options you identify are your strategic
alternatives, and these can be listed in the
appropriate quadrant of the TOWS worksheet.
 What is Competitive Advantage

• A competitive advantage is where one

business has an edge over another. In other
words, it is what makes the business stand out
from other competitors in the market. For
example, a business may have a competitive
advantage due to its brand image,
technological expertise, customer service, or a
distribution network.
 cont
• By having a competitive advantage, the
business and its products/services become
more attractive to the consumer. This may be
because it can offer lower prices, a better-
quality product, or superior customer service.
In economics, this is known as the value
proposition.
 Types of Competitive Advantage

• There are three generic types of competitive

advantage that Michael Porter set out in his
book, “Competitive Advantage: Creating and
Sustaining Superior Performance.” They are
Cost Leadership, Differentiation Leadership,
and Focus, which is divided into cost and
differentiation focus.
 Comp adv cont
• For instance, Southwest Airlines in the US
provides bespoke transport between airports.
Therefore, by focusing on a specific part of the
market, such firms are able to distinguish
themselves from big players that are more
broad in focus – thereby obtaining a
competitive advantage.
 What Is Starbucks’ Generic Strategy?

• There are three kinds of generic strategies

used by companies to gain a competitive
advantage: cost leadership, product
differentiation, and focus, and Starbucks’
competitive strategy has been product
differentiation, to set itself apart from the
competition.
 Starbucks Competitive Advantage In 2022

Starbucks’ competitive advantage is based on its

strategy of product differentiation, which makes
the brand stand out from its rivals in 2022. Such
strategies include the concept the Third Place
environment, quality products, constant
innovation with new menu items, and the use of
technology to connect with customers. As well,
Starbucks connects directly with growers and
suppliers to maintain quality control.
 Starbucks is Competitive Advantage
• 1. The Starbucks Experience
• Former CEO Howard Schultz had a vision of Starbucks stores
as a Third Place where people could meet, relax, work or
study in comfortable, welcoming surroundings.
• Customers love the concept of the Starbucks experience,
which includes the ambience as well as the coffee and the
food, supported by the policy that you don’t have to
purchase anything from the cafe in order to sit and enjoy
the atmosphere.
• The Third Place policy therefore sets Starbucks apart from
other major coffee chains such as Dunkin’ Donuts and
McCafé, which have more of a fast-food atmosphere and are
not over-focused on creating a full aesthetic experience.
 Starbucks is Competitive Advantage
• 2. Starbucks Offers Quality Products
• Starbucks coffee and drinks have always been
premium products, and customers are generally
willing to pay higher prices for quality.
• Starbucks only uses the highest quality Arabica
coffee beans. As well, the equipment used to
brew coffee is the best quality, such as the
Swiss-made Mastrena espresso machines and
the Clover single brew used in Starbucks stores
Starbucks is Competitive Advantage
 Starbucks is Competitive Advantage
3. Starbucks stores are strategically located in
neighborhoods as well as high-traffic areas like
downtown centers, shopping malls, and busy streets.
• The choice of location for a Starbucks store helps to
ensure that the stores will always be busy at any time
during the day. However, at times Starbucks will also set
aside this trend and pick less busy or upscale locations.
• Starbucks has also opened stores in lower-income
neighborhoods, where they may not see as much traffic,
in order to help efforts to revitalize local communities.
 Starbucks is Competitive Advantage
• 4. Starbucks Has Embraced Innovation
• Starbucks has constantly innovated its menu of coffees,
drinks and food. Drinks like the Frappuccino, Pumpkin
Spice Latte, cold brews, Refreshers and more offer
customers new tastes all the time.
• New drinks and food items are introduced every season,
and the drinks that become popular usually gain a space
on the permanent menu.
• Starbucks also responds to changing customer
preferences by adding new items to the menu, like plant-
based, dairy-free and gluten-free food and drinks.
 Starbucks is Competitive Advantage
• 5. Starbucks Uses Technology To Connect With Customers
• Starbucks has used new internet technology to connect with
customers in a very direct way.
• For example, the Starbucks Rewards loyalty program, which
customers can join online or by downloading the Starbucks
mobile app, has over 11 million members.
• Rewards members can order ahead using their accounts, which
cuts down on waiting times in line at the store or the drive-thru.
• Additionally, the Starbucks app and Rewards program are very
effective in communicating with customers and announcing new
promotions and products.
 Starbucks is Competitive Advantage
• 6. Starbucks Has A Direct Connection To Growers
And Suppliers
• Starbucks has direct and long-term connections
with the people who grow the coffee, tea and cocoa
used in its stores as well with other suppliers.
• By choosing a more hands-on approach to gaining
supply, Starbucks gains a competitive advantage
because it can avoid fluctuations in the supply of its
basic ingredients like coffee, tea and cocoa.
 Starbucks is Competitive Advantage
• 7. The Starbucks Global Supply Chain Is Vertically Integrated
• The Starbucks global supply chain is vertically integrated,
which means that it has direct control of every stage in
moving coffee beans from the farm to the store.
• In other words, there are no middlemen or third parties
involved from the farms where the coffee is grown, to
transportation on ships to roasting facilities in the US and
Europe, to distribution in stores worldwide.
• Overall, this method makes the whole company supply chain
much more efficient, and lets Starbucks maintain quality
control for all its products.
 Starbucks is Competitive Advantage
• 8. Starbucks Invests In Its Employees
• By treating its employees well and giving them good wages, and
benefits, Starbucks lays the groundwork for success. In fact,
Starbucks spends more on healthcare for employees than on
coffee beans, but it’s an investment that pays off, which lowers
attrition rates.
• Starbucks also spends a lot of money and effort on training
staff when they initially join the company as well as throughout
their careers, giving the company a skilled and committed
workforce.
• Additionally, Starbucks employees get stock options as part of
their pay package, giving them an actual stake in the company.
 Starbucks is Competitive Advantage
• 9. Starbucks Does Not Have Any Franchises
• Unlike its major rivals Dunkin’ Donuts and McDonald’s,
Starbucks does not have any franchise stores.
• Howard Schultz saw franchises as middlemen who
would obstruct a direct connection between Starbucks
and its customers.
• Therefore, while Starbucks does have some licensed
stores, it doesn’t have franchise stores, allowing the
company to maintain quality and a uniform customer
experience in all its stores.
 Scenario Analysis Explained

• In business as in life, the only thing that’s certain is

uncertainty. Scenario analysis is a powerful process
for navigating the uncertainty of the future by
analyzing the potential business impacts of future
events and considering alternative possible
outcomes. Companies can use scenario analysis to
explore a broad range of possible future situations,
from economic slowdowns and natural disasters to
expanding a product line or opening new offices.
 What Is Scenario Analysis?
• Scenario analysis is a technique that provides a rational and
structured way to analyze the future.
• Businesses can use it to examine different potential impacts of
negative and positive events, such as:
• What are the possible impacts on the business of an
economic slowdown?
• What happens to revenue and profitability if the cost of
various raw materials rises?
• What revenues might be generated by a new product line?
• How would the business be impacted by the unexpected
market entry of new competitors?
 Scenario analysis contt
• Scenario analysis doesn’t attempt to predict a
single outcome from any of these events.
Instead, it examines a spectrum of different
potential situations and outcomes, typically
ranging from a best-case to worst-case
scenario. Businesses can then
conduct scenario planning to better prepare
for these events and their potential impacts.
 Why Businesses Need Scenario Analysis
• Changes that impact the business environment can
happen unexpectedly and suddenly—as
demonstrated in magnified ways by the global
pandemic in 2020. Scenario analysis allows
organizations to analyze and quantify potential
business impacts of such events, so they can plan
accordingly. It can also be used to assess the benefit
and risks of different business decisions, such as the
potential impact on revenue and profitability of
building new facilities. It helps businesses avoid
diving blindly into a risky investment or project.
 6 Steps to Perform a Scenario Analysis

• Taking a methodical approach to scenario analysis can help to ensure that the company focuses
on the most important scenarios, considers the most relevant factors, and gets the most
benefit from the process. Here are six key steps:
1. Define the issue and the decisions that you need to make.
2. Gather data and identify key factors, trends and uncertainties that may affect the plan. This
may include external factors such as market shifts, political changes, competitive threats and
trends in customer behavior. It may also include internal factors such as the company’s key
strengths and development capabilities.
3. Develop a scenario planning template. This is generally a financial model (see below) that
enables the company to plug in various assumptions and examine the impact on key metrics
such as revenue or net income.
4. Develop scenarios. Develop base-, worst- and best-case scenarios, plus others if desired. To
get the broadest view of potential scenarios and assumptions it’s important to involve people
with relevant knowledge across the organization. This can also help avoid unconscious bias
and potential blind spots.
5. Evaluate the scenarios. Analyze the potential impact of each scenario.
6. Plan accordingly. Use the scenarios you have developed in your planning, weighing the most
likely risks and rewards.
 What Is Financial Modeling?

• Financial modeling is a tool for determining likely

financial outcomes based on a company’s
historical performance and assumptions about
future revenue, expenses and other variables.
Financial modeling relies on financial forecasts:
It takes a forecast’s assumptions and plays them
out using a company’s financial statements to
show how those statements may look in the
future. Because models are created from financial
statements, they most often generate results for a
month, quarter or year.
 Business Strategies for the New Normal (Life After the Pandemic)

• Business solutions must adapt to the changing times and seasons, and the one we are in now is far

from normal. The pandemic upended the way we live, work, and do business. 

• The world is abuzz about the “new normal,” our life after the pandemic. Eager to get back into some

kind of normalcy, businesses too are gearing up for the new normal economy. 

• But this “new normal” demands new mindsets, new strategies, and a new resilience among

businesses. There are opportunities for growth despite the health and financial crisis the world is

going through. If business models are adjusted to adapt to new challenges and demands, businesses

can grow and thrive. 

• Here are three examples of business solutions effective for life after the pandemic:
 3 Examples Of Business Strategies For The New Normal

• Co-Business Solutions For Micro And Small Businesses

• Individual freelancers or small freelancing groups avail of coworking spaces that reduce CAPEX and OPEX
costs. We can carry this concept over to micro-businesses (MBs), small businesses (SBs), and even small-
to-medium-sized enterprises (SMEs). 
• Micro businesses are companies with annual sales and assets valued at less than $250,000 per year and
fewer than five people in its workforce, including the owner. Micro enterprises are part of this category. 
• No matter what market or industry a micro-business belongs to, it would need similar skills and types of
operations as their larger business counterparts. The world’s economy is going more and more digital. It
gives micro-businesses and small businesses a chance to compete with more prominent brands on fair
competition. 
• But one thing that MBs, SBs, and SMEs often lack is capital and facilities for design, simulation, and
manufacturing. If you are a business with the capacity for all that, you can offer your business’
capabilities to extend others. 
• For instance, a company called TECHNIA is helping MBs and SBs leverage its preexisting business-
engineering systems. The company launched its “Business Must Go On” offering, empowering business,
digital, and operational continuity for micro to small enterprises with legacy 3DEXPERIENCE installations. 
 The are three features to this co-business solution includes:

 
• Co-Design: providing SaaS allows MBs and SBs to bring their teams together
with their customers into one virtual environment that empowers
collaboration, fosters innovation, and boosts productivity to stay globally
competitive. 

• Co-Simulation: They are using AI (artificial intelligence) and cloud computing

technologies to sustain businesses during times of disruption. Simulation
technology helps businesses to validate designs before actual implementation. 

• Co-Manufacture: Although the recent business disruption because of the

pandemic affects all sectors, it does so differently. One thing is constant,
however, and that is for businesses to continue planning, preparing, and
scheduling resources to keep businesses going. 
 Distributed Teams: Going Remote
• In the last decade, remote working increased to 115% of the workforce. This growth is unprecedented
and ten times faster than any kind of workforce increase on record. 
• So even before the pandemic, remote working is already on the rise. More and more companies were
adopting the work-from-home set-up to save costs and capitalize on finding the best talents they could
get if the location is no longer an issue. 
• The pandemic hastened the speed of adoption of remote workers into the mainstream workforce. It is
no longer for niche careers, but for every type of work that does not require manual operations, like
construction work, manufacturing factory operators. 
• All the world issues between now and in the years to come will cause a shift in businesses, who will
most likely operate with distributed teams being the norm. 
• Resilient businesses discern opportunities amid times of crisis. The pandemic left businesses with no
choice but to rethink their business models and adapt to challenging times. Through digital
technologies, businesses can keep meeting market demands and stay in touch with their consumers. 
• One way businesses adapts is by distributing their teams. Some businesses reassigned most workers
to work remotely or from home, while a skeletal workforce continued to manage business facilities. 
• Smaller businesses let go of their physical locations and went 100% remote, operating the business
through Digitech innovations for business. 
 Globalization Pushes Businesses Forward

• Globalization has a huge effect on leading international companies.

Life after the pandemic drives globalization in companies affecting
management decisions and liberating local companies into the global
market. 
• The increase in globalized production helps companies cope amid
pandemic woes and still attain record-high ROI for their businesses
and companies. Countries that once supplied laborers and talents to
the global stage are now emerging as untapped pools of global
consumers by the millions. 
• It also breeds new competitors, since businesses are competing on a
global platform. Those companies that have invested in building an
international presence before the pandemic can adapt quickly to
business after the pandemic. 
Conclusion: The New Normal Demands New Business Solutions

• Jack Ma says that the internet will be the “lifeblood

of enterprises after COVID-19 pandemic.” Those who
have their business online will experience the fastest
growth amid the pandemic. He adds that Internet
technology and eCommerce are the new business
infrastructure.
• Every business must take this direction to stay
competitive in the global economy. 
• The real economy and internet economy will run
alongside each other synergistically and be the
primary developing trend and business solution in
the new normal.