Tows (2)


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Tows (2)

  1. 1. TOWS & Blue OceanTOWS & Blue Ocean Strategy AnalysisStrategy Analysis - By Prof. Purvish Shah BE (Mech), PGDBM (Gold Medalist)
  2. 2. -SWOT ( Strength, Weakness, Opportunity, Threats) -TOWS ( Threats, Opportunity, Weakness, Strength) Both are same in meaning but, in TOWS all the functions are inter related with future strategies and planning.
  3. 3. ExternalExternal OpportunitiesOpportunities External ThreatsExternal Threats Internal StrengthInternal Strength SO “Maxi-MaxiSO “Maxi-Maxi Strategy” StrategyStrategy” Strategy that use strengththat use strength to maximizeto maximize OpportunitiesOpportunities ST “ Maxi-MiniST “ Maxi-Mini Strategy” StrategyStrategy” Strategy that use strengthsthat use strengths to minimizeto minimize threats.threats. InternalInternal WeaknessWeakness WO “ Mini – Maxi”WO “ Mini – Maxi” Strategy thatStrategy that minimizeminimize weakness byweakness by taking advantagestaking advantages of opportunitiesof opportunities WT “ Mini-Mini”WT “ Mini-Mini” Strategy thatStrategy that minimizeminimize weaknesses andweaknesses and avoid threats.avoid threats.
  4. 4. Application of TOWS Matrix to Volks Wagon: -This is a Germany based company in to manufacturing of automobile. -In 1980s company wanted to enter in to US market -Case discusses TOWS analysis done for them.
  5. 5. IT-Strong R & D and Engineering -Strong Sales and Service Network - Efficient Prod / Automation Capabilities IWIW- Heavy Reliance on One Product - Rising Costs in Germany - No Experience With U.S. Labor Unions if Building Plant in the U.S. EO -EO - Growing Affluent Market Demands More Luxurious Cars with Many Options - Attractive Offers to Build an Assembly Plant in U.S. - Chrysler and American Motors Need Small Engines SOSO -- Develop and Produce Multiproduct Line with Many Options, in Different Price Classes ( like desser, Audi Line) - Build Assembly Plant Using R & D, Engineering. - Build Engines for Chrysler and AMC WOWO -- Develop Compatible Models for Different Price Levels (Ranging from Rabbit to Audi ) - To Cope with Rising Costs in Germany, Build Plant in U.S., Hiring U.S. Managers with Experience in Dealing with U.S. Labor Unions ETET -- Exchange Rate: Devaluation of Dollar in Relation to Deutshe Mark (DM) - Competition from Japanese and U.S. Automakers - Fuel Shortage and Price STST -- Reduce Effect of Exchange Rate by Building a Plant in the U.S. - Meet Competition with Advanced Design Technology - Improve Fuel Consumption Through WT - Overcome Weaknesses by Making Them Strengths (Move Toward OS Strategy) - Reduce Threat of Competition by Developing Flexible
  6. 6. Blue Ocean Strategy: Strategy where a business unit decides to create new market space rather than competing in existing market is known as Blue Ocean Strategy.
  7. 7. Difference Between Blue Ocean andDifference Between Blue Ocean and Red Ocean Strategy:Red Ocean Strategy: -Try to create new market / Try to compete inTry to create new market / Try to compete in existing market.existing market. - Market or Industry not exist today /Market or Industry not exist today / Grab the market share from your competitorGrab the market share from your competitor -Demand is created / demand is foughtDemand is created / demand is fought -More concentration on Innovation / Focus onMore concentration on Innovation / Focus on advertising, marketing, product promotionsadvertising, marketing, product promotions
  8. 8. SEQUENCE OF BLUE OCEAN STRATEGY: - Buyer Utility ( Is there any exceptional buyer Utility in your business idea? - Price ( Is your price easily accessible -Cost (Can you attain your cost target to profit your strategy) - Is it possible for you to put your plan in reality?
  9. 9. TATA NANO: -Reverse pricing was done Price was set first looking at what people could pay. -Lower engine capacity for small city roads of India. - Supply chain being partner in development of product itself. - Save on costs like advertisement and special distribution network. - Entire Car to be built in Kit form and just do the assembly.
  10. 10. SOME MORE EXAMPLES: -PARAS PHARMA ( Move, Livon, Lipguard, Itch guard, Dermi cool, etc. ) -Cavinkare – Launch of shampoo sachets for “chick” brand. -Nirma – Bottom of pyramid market ignored by both HLL and P & G.