Pepsi Tows Matrix

 TOWS analysis for Pepsi

Introduction:

A TOWS Matrix can also be understood as an extension of the SWOT matrix. A SWOT matrix helps us identify the strengths, weaknesses, opportunities and threats for a business. However, a TOWS matrix helps with strategy formulation on the basis of the identified factors. It is an analytical tool that helps build over your strengths and make the best use of available opportunities while also minimizing the threats. A TOWS analysis based on the SWOT factors helps managers build their strategy over how they can use their strengths and opportunities for business growth.  The TOWS matrix links the strengths of a business brand with opportunities and shows how to use them to control the threats. Similarly, it provides methods to control weaknesses in order to minimize the threats. For a better and deeper understanding go through this example TOWS matrix of Pepsi.

Brief SWOT:

Before moving on a TOWS analysis let’s look at a brief SWOT analysis of the brand. Pepsi is among the two leading soda beverages of the brand globally. Its products are sold in more than 200 countries.  Some key strengths of the brand are its financial strength, its marketing capabilities, as well as a large product portfolio.  In the recent years, the brand has invested a lot in digitization as well as expanded its product portfolio to add more nutritious and healthy products like low calorie drinks and healthy oat meals. Extensive investment in digital technology has helped the brand find faster growth during the last five years.  Apart from product innovation, marketing innovation has also helped the brand grow internationally. Check out this brief SWOT analysis:

Strengths	Weaknesses
·         Strong brand image ·         Strong financial performance ·         Global presence supported by a strong supply chain and distribution network ·         Strong marketing capabilities ·         Large and varied product portfolio	·         Overdependence on US market ·         Reduced Net revenue in Middle East
Opportunities	Threats
·         Technological innovation down the distribution network ·         CSR and water recycling ·         Partnerships with related businesses ·         Growth through acquisitions	·         Legal and regulatory threats ·         Competitive pressures ·         Stronger dollar and fluctuation in foreign currency exchange rates

Strengths (S)	Weaknesses (W)
Opportunities (O)	SO – Using strengths to capitalize on available opportunities	WO – Overcome weaknesses to capitalize on opportunities
Threats (T)	ST – Use strengths to avoid threats	WT- Reduce weaknesses to avoid threats

 

SO –

• Pepsi both has a strong image as well as financial strength. Apart from them it also has stronger marketing capabilities which can help it grow faster in the Asian nations. Releasing low cost options (smaller portion sizes) of its products will help the brand grow faster internationally and reduce its dependence on the US markets.
• Finding growth internationally also help it overcome the losses that time to happen due to currency fluctuations in individual markets.

ST-

• To minimize the competitive threat, Pepsi must focus specifically on marketing of its brand, product innovation and of using its digital capabilities better. This will reduce the competitive pressure on the brand.
• Forming partnerships with other related businesses as well as acquiring smaller businesses will minimize the threat from a stronger dollar and currency conversion rates.

WO –

• Innovating the distribution network internationally and investing in partnerships will also help at reducing the brand’s dependence on the US market.
• Partnerships and acquisitions and extending its ecommerce will also help the brand to grow faster and reduce the losses that happen due to currency fluctuations.

WT –

– Reducing its dependence on the US market will also help the brand overcome some of the competitive threat.

–  Increased international e-commerce presence will help it battle the losses happening due to economic fluctuations in individual markets. It must focus on the Asian market which are currently the fastest growing economies in the world.