International Journal of Research and Development 2012

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1 2012 Volume 1, Issue 1 IJRD1

2 STRATEGIC FORMULATION USING TOWS MATRIX A CASE STUDY Gomatesh M. Ravanavar Professor & Dean (Academic) Bahubali College of Engineering, Shravanabelagola , India Mobile: Dr. Poornima M. Charantimath Professor, KLS Institute of Management Education & Research, Belgaum , India Mobile: Abstract: Strength, Weakness, Opportunities and, Threats (SWOT) technique examines both internal and external factors of an organisation. The prioritized SWOT factors are used to formulate alternative strategies using TOWS matrix. The purpose of this study is to evaluate the critical factors of the rural engineering college as perceived by its stakeholders through SWOT analysis method, to validate the weightage to each factor with respect the points given to them in the National Board of Accreditation (NBA) manual and then to formulate strategies utilizing TOWS matrix for the college based on those factors. It would be crucial for the management of the college to understand the relative importance of the critical factors. To support their decision making process, a SWOT analysis was used and critical factors were validated with NBA qualifying points in this study. At the end, twelve strategies were formulated and shown in the TOWS matrix for further course of action for the college. Keywords: SWOT, TOWS, NBA, Rural Engineering College INTRODUCTION: Strength, Weakness, Opportunities and, Threats (SWOT) analysis method has been widely used as a tool for planning and analysing strategic actions over the past decade. This method can also be used in identifying environmental relationships and enable an institution to relate to its environment and help to develop strategies. SWOT analysis originally explained by Learned et al. (1969) as a key tool for tackling complex strategic issues by decreasing the quantity of information to enhance decision making. SWOT analysis is a commonly used instrument which scans internal strengths and internal weaknesses of a product or service industry and highlights the opportunities and threats of the external environment (Rauch, 2007). This will help to focus on the strengths, minimize weaknesses and take the greatest possible advantage of opportunities available by overcoming threats. SWOT analysis becomes a useless exercise if it is not extended to TOWS where the strengths are used to capitalize on opportunities and to counter threats, the weaknesses are minimized using opportunities and both weaknesses and threats are avoided. Generally SWOT is a list of statements or factors with descriptions of the present and future trend of both internal and external environment; the expressions of individual factors are IJRD2

3 general and brief which describes subjective views. Despite early advantages of SWOT in decision making, the use of conventional SWOT analysis has no means of determining the importance of each SWOT factor (Shinno et al. 2006). It is difficult to assess the most influencing factor in the strategic decision. Further, numerous criteria and interdependencies often complicate the decision process. Thus, utilization of SWOT alone in decision making process is insufficient. In this study, the priorities as perceived by the stake holder are verified with respect to NBA points. Eight important strategies are then formulated using TOWS matrix. 2. SWOT-TOWS METHODOLOGY The idea of using SWOT analysis is to systematically evaluate SWOT s criteria or factors and proportionate their strength. This method scans both demand (external) and supply (internal) side. Regardless of these advantages of SWOT, the use of traditional SWOT analysis has no mean of forming the significance of each SWOT factor (Shinno, et. al. 2006). It will be hard to evaluate the most impacting factors in decision making process. Hence, with SWOT analysis method alone cannot perform accurate decision. In this research, the frequencies/weightages as perceived by the stakeholders are validated with respect to the points as mentioned in the NBA manual. Current study used SWOT and NBA points to prioritize the internal and external factors, followed by developing alternative strategies based on those factors in the form of TOWS matrix developed by Weihrich, The objective in utilizing the NBA manual is obviously to follow the guidelines to carryout accreditation process for the engineering college. The steps followed to carry out this research work are explained below. TOWS Analysis is an effective way of combining a) internal strengths with external opportunities and threats, and b) internal weaknesses with external opportunities and threats to develop a strategy. 3. STRATEGY FORMULATION WITH TOWS MATRIX Weihrich (1982) developed TOWS as the next step of SWOT in developing alternative strategies. TOWS matrix provides means to develop strategies based on logical combinations of factors relate to internal strengths (or weaknesses) with factors related to external opportunities (or threats). TOWS matrix identifies four conceptually distinct strategic groups: Strength- Opportunity (SO), Strength-Threats (ST), Weaknesses-Opportunities (WO), and Weaknesses- Threats (WT), for creating the alternative strategies (Table1). The SO strategies use the internal strengths to take advantage of external opportunities (ideal case) and the WO strategies aim at reducing internal weaknesses by taking advantage of external opportunities. On the other hand ST strategies include utilization of the strengths in order to avoid or reduce the effects of external threats whereas WT strategies are defensive tactics aimed at reducing internal weaknesses and external threats. The primary advantage of this approach is the influence of prioritized internal and external factors embedded in alternative strategies. The main disadvantage of the TOWS matrix is that certain combinations are not considered such as SW or OT. Table 1 TOWS Strategic Alternatives Matrix Internal Internal Strengths (S) Weaknesses (W) IJRD3

4 External Opportunities (O) External Threats (T) SO: "Maxi-Maxi" Strategy Strategies that use strengths to maximize opportunities ST: "Maxi-Mini" Strategy Strategies that use strengths to minimize threats WO: "Mini-Maxi" Strategy Strategies that minimize weaknesses by taking advantage of opportunities WT: "Mini-Mini" Strategy Strategies that minimize weaknesses and avoid threats Source: H. Weihrich, The TOWS Matrix A Tool for Situational Analysis pp CASE STUDY: RURAL ENGINEERING COLLEGE An engineering college situated at a rural place is facing many challenges since last four years due to increase in numbers of colleges to its surrounding urban places and their competitions. There is shortage of admissions in most of the colleges as total availability of seats in the colleges has increased as compared to the numbers of eligible students aspiring to take admission to engineering colleges. Under such situation, with an aim to formulate a strategic planning for the next five years, the management of the college decided to carry out situational assessment, find critical factors for its sustainability and priorities them to prepare an action plan. The three steps followed in formulating strategy using TOWS matrix are explained below. 4.1 STEP 1: Situational Assessment (SWOT Analysis) The ultimate success of a strategic planning is largely dependent on the accuracy of an effective situational assessment. SWOT technique is one of the best and the simplest in situational assessment. Though the outcome is more subjective and qualitative, if used carefully SWOT can provide a good basis for successful strategy formulation (Pesonen et al., 2000). Initial questionnaires were framed for the current study to collect data in order to prepare a SWOT matrix for the college. Data collection was carried out from the students, parents, faculty and the alumni of the college. In total, 143 students, 43 parents, 44 faculty and 53 alumni responded to the questionnaire. The answers of the respondents for SWOT were listed, reviewed, deliberated, and organized into meaningful small number of groups. Thus, the current process yielded 8 strengths, 7 weaknesses, 5 opportunities and 6 threats as shown in figure 1. It is mentioned that the developed SWOT matrix for an engineering college is applicable for only next five years and same could be repeated if required for the future strategic planning. Strengths What strengths can we build upon? S1. Calm and Quite Environment, Good for Studies S2. Good and Care Taking Faculty and Staff Weaknesses What weaknesses do we need to address? W1. Poor Placements W2. No Branding W3. Low Financial Status (Fundraising) W4. Less Exposure due to Rural Place IJRD4

5 S3. Cost of Education is Less (Economical) S4. Small Class Size S5. Good Discipline S6. Good Teaching S7. Good Results S8. Good Administration Opportunities What opportunities can we use? O1. Adding New Courses O2. Building Infrastructure O3. Take Advantage of Location for Programming and Fund Raising O4. Partner with Business, Industry and Government O5. Enhancing Campus Facilities W5. Inadequate Marketing Promotion W6. Low Academic Standards of the Students W7. Limited Campus Life Threats What threats do we need to be aware of? T1. Loss of Key Staff T2. Lack of Professional Approach T3. Sustaining Internal Capabilities T4. Sustainable Financial Backing T5. Increased Competition from Others T6. Negative Perception due to Past Experience Figure 1 SWOT Matrix for the College 4.2. STEP 2: Comparing the Critical Factors with NBA Points: The study was extended to validate the priorities given by the stakeholders with respect to the points mentioned for the selected categories in the NBA manual. All the responses given by Students (S), Parents (P), Faculty (F) and Alumni (A) are categorized and grouped as per the NBA headings. These are shown in the Table 2. Both stakeholders priorities and NBA points were then normalized (Addition of all points will be equal to one) and shown in the Table 3 to check for the matching of the points / weightage. Surprisingly almost all factors except infrastructure show the match with the minor percentage of difference (Figure 2). This will further strengthen the members of management; head of the institution /department will take the suggested action plans with confidence. Table 2 Categorisations and grouping of factors expressed by the stakeholders with respect to NBA Factors % % % A % % NBA NBA Sub Category SWOT P F S Total Criterion Points Group Discipline among staff & Students I 5 Discipline Opportunity Infrastructure Development I 30 Infrastructure Opportunity Campus Recruitments III 40 Placement Opportunity Environment I 30 Campus facility Strength (homely/study/peaceful) Accommodation/Good hospitality I 30 Campus facility Strength National Conference (Events) I 10 Co-curricular Strength Alumni Meet I 10 Co-curricular Strength Overall-Good in everything I 20 Governance Strength Students (unity) III 20 Professional Activities Opportunity for students III 20 Professional development Activities Teaching (Good) II 50 Teaching & Training Teaching faculty/staff IV 40 Teaching & Strength Strength Strength Strength IJRD5

6 International Journal of Research and Development (caring/interactive) Training Competitors - Strategy I 20 Governance Threat Preserve Sweet old memories I 20 Governance Threat Infrastructure Development is slow I 30 Infrastructure Threat Good Teachers / Experienced Staff IV 20 Teaching & Threat leaving Training Discipline among staff & Students I 10 Discipline Weakness is poor Infrastructure & Appearance is I 30 Infrastructure Weakness not good Campus selection is Poor III 40 Placement Weakness Table 3 Normalization of points / priorities Category NBA Points Priority by Differences the in points Stakeholders Placement Teaching & Training Campus facility Infrastructure Governance Professional Activities Co-curricular Discipline NBA Points Priorities by the Stakeholders Figure 2 Comparisons between the NBA and stakeholders points IJRD6

7 OPPORTUNITIES International Journal of Research and Development 4.3 STEP 3: Strategy Formulation Using TOWS Matrix The underlying objective of strategy formulation is to transform current conditions into desired situations. The TOWS matrix, developed by Weihrich (1982) is used to formulate strategies. It draws four different strategy types (or logical combinations): (1) SO-strategies: internal strengths can be used to realize external opportunities (ideal case), (2) WO-strategies: reduce internal weaknesses or develop missing strengths to realize external opportunities, (3) ST-strategies: internal strengths are used to minimize external threats, and (4) WT-strategies: reduce the internal weaknesses to avoid external threats (only defensive strategy, worst case scenario). The alternative strategies were developed after brainstorming and deliberation with the Heads of the departments and senior faculty members of the college. For each evolved strategy, SWOT combinations were listed in order to create a rational comprehensible result (e.g., S2, O1 means that strength number 3 and opportunity number 1 have been considered mainly). To further simplify the analysis, only first two strategies of each strategy block is selected and shown in the TOWS Matrix (Table 4). STRENGTHS Table 4 TOWS Matrix for the College WEAKNESSES SO Strategies: Maxi-Maxi 1-More focus on educational aspects using the latest/industry relevance knowledge and modern skills technologies (Add on training, use of ICT and soft skill training) (S2, S8, O1, O4) 2-Expanding and strengthening relations with Industries in viewpoint for the students (S2, S8, O4) 3-In line with the good teaching and training and good care taking of the students, provide good campus facilities compared to the competitors (S2, S6, S8, O2, O5) WO Strategies: Mini-Maxi 1-Promoting educational quality (W4, W6, O4) 2-Investing in building infrastructure and face lifting of the old buildings in a phased manner (W5, W7, O2, O5) 3-Appointing few more experienced and well qualified teachers to strengthen the departments (W2, W5, W6, O1) IJRD7

8 THREATS International Journal of Research and Development ST Strategies: Maxi-Mini 1-Continuous Training of the staff and the students creating a learner organization (S2,S5,S8,T2,T3) 2-Qualitative and quantitative expansion of the academic majors related to industry and vocations. (S3,S4,S8,T2,T3,T5) 3- Sustaining the internal capabilities and see that no key staff of the college should leave the organisation. (S8,T1,T3) 5. DISCUSSION WT Strategies: Mini-Mini 1-Promoting productivity through using and improving administrative systems (W2,W3,W5,T2,T3,T5,T6) 2-Comprehensive development of higher educational levels for the required majors (Masters degree and PhD) (W2,W5,W7,T2,T5) 3-Overcoming the competitions of the neighboring colleges through professional outlook to the training and placement activities to enhance placements of the students (W1,W2,W3,W4,T2,T3,T5,T6) This paper intended to introduce a simple, acceptable and systematic methodology for strategic planning for an engineering college. The ultimate success of a strategic process is, to a large extent, dependent on the accuracy of an effective situational assessment (i.e., external and internal environment). However, SWOT does not alone determine the importance of factors or assess the fit between SWOT factors and decision alternatives. To eliminate these drawbacks, the stakeholders perceived factors were validated by comparing with the points to the respective factors as given in the NBA manual. The factors as identified by the stakeholders were grouped under respective categories as given in the NBA manual. Future course of actions are mentioned by formulating twelve alternative strategies through TOWS matrix looking to the immediate concern. 6. CONCLUSION This study brings up a systematic approach and alternative strategic formulation for the rural engineering college which could be extended to any colleges. Combined SWOT and TOWS were applied in the process to identify the critical factors and to develop alternative strategies for the college to address weaknesses and threats by effectively leveraging the strengths and opportunities for the next five years. After carrying out the suggested action plans in the next five years, if required the process of SWOT-TOWS approach be repeated. After careful study of the data it is concluded that a systematic approach with formulating alternative strategies these issues could be tackled. It is hoped that administrators, members of management, head of the institution/department will take strategic measures for the overall growth and development of the college. REFERENCES: [1] Gomatesh M R and Poornima M C (2012). SWOT Analysis: An Instrument for IJRD8

9 Strategic Planning A Case Study (unpublished) [2] J. David Hunger, Thomas L. Wheelen (2007). Essentials of Strategic Management. Fourth Edition, Prentice-Hall of India Pvt. Ltd., New Delhi [3] Manual of Accreditation (2008). National Board of Accreditation, All India Council for Technical Education, New Delhi. [4] Pasonen, M., Kurttila, M., Kangas, J., Kajanus, M., and Heinonen, P. (2000) Assessing the priorities using A WOT among resource management strategies at the Finnish forest and park service, Forest Science, Vol. 47, No. 4, [5] R. Srinivasan (2006). Strategic Management The Indian Context, Second Edition, Prentice-Hall of India Pvt. Ltd., New Delhi [6] Shinno, H., Yoshioka, H., Marpaung, S., and Hachiga, S. (2006). Quantitative SWOT analysis on global competitiveness of machine tool industry, Journal of Engineering Design, Vol. 17, No. 3, [7] Taylor, B. W., (2004). Introduction to Management Science, New Jersey: Pearson Education Inc. [8] Weihrich, H. (1982) The TOWS matrix-a tool for situational analysis, Long Range Planning, Vol. 15, No. 2, [9] Wickramasinghe, V. and Takano, S. (2009). Application of Combined SWOT and Analytic Hierarchy Process (AHP) for Tourism Revival Strategic Marketing Planning: A Case of Sri Lanka Tourism, Journal of the Eastern Asia Society for Transportation Studies, Vol.8, pp IJRD9

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