Exploring TOWS Analysis, VRIO Analysis, and Porter's Diamond Theory in Marketing Strategy

This study aims to explain TOWS analysis, VRIO analysis and Porter’s Diamond Theory, with the help of real life examples from Apple, Samsung Galaxy, and also countries like China which have achieved the fist position among all the manufacturers of the world.

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MARKETING STRATEGY
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Author Note

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Executive Summary:
This study aims to explain TOWS analysis, VRIO analysis and Porter’s Diamond
Theory, with the help of real life examples from Apple, Samsung Galaxy, and also
countries like China which have achieved the fist position among all the manufacturers
of the world

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Introduction:
This study attempts to throw lights on several business administration strategies
and anagram along with their uses, benefits as well as challenges. One of them is
TOWS or SWOT Analysis. TOWS or SWOT Analysis is the abbreviation for Threats
Opportunities Strengths and Weaknesses. It is considered to be one of the significant
instruments through which an emerging business gains information about its rivals who
are considered to be its threats. Again, TWOS or SWOT also assist a business to
explore its future opportunities. Along with this, a marketer also becomes able to make
an assessment of the weaknesses as well as strengths it possesses, by conducting a
TOWS analysis. Another marketing strategy that the study tries to explore is VRIO
analysis, VRIO analysis is the abbreviation for Value, Rarity, Imitability, and
Organization. In this case, the term ‘value’ refers to the value or effectiveness of the
resources owned by a business. Again, whether the resources owned by a company
are rare or not can also be revealed through a VRIO analysis. Further, with the help of
VRIO analysis a marketer will be able to trace out the imitability as well as competitive
advantage of his or her business. Finally, VRIO analysis enables a business to estimate
its actual value in the market. Further this study has focused on Porter Diamond Theory
of National Advantage, in order to form a vivid idea about competitive advantage in
business. Final section of this study reflects on the business administration strategies
discussed.
TOWS Analysis:
Meaning:
TOWS can be considered as the combination of an analysis of the external as
well as internal factors of a business. TOWS analysis is conducted by a marketer before
the entering a new market. The company can First two factors of TOWS analysis are
Threats and Opportunities. These are the external factors that impact the operation of a
business in multiple ways (Salmi and Hasnan 2015). Other two factors covered in a
TOWS analysis are strength as well as weakness. These are the internal factors

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determining the growth potentialities of a company (Alaaraj and Hassan 2014). Further
a TOWS analysis also conducts a cross-examination of the four external as well as
internal factors which will help a company to overpower the weaknesses and threats of
a business with the help of its strengths and opportunities.
Benefits:
One of the advantages of TOWS analysis is that, it assists a marketer to analyze
the external business environment and the way the external business environment can
impact the growth and development of the business. More specifically, TOWS analysis
helps a marketer to be well aware of existing taste as well as preference of the targeted
customers, future trends, changing mentality of the younger generation (Baudino et al.
2017). This in turn assists a marketer to analyze future opportunities for his or her
business. These opportunities include-the opportunity to creating perception and
insights about the brand so that new customers can be attracted and the existing
customers can be retained as well. Again, the opportunities for expansion can also be
estimated with the help of TOWS analysis. Another significant advantage of TOWS
analysis is its assistance to the marketer to know about the rival companies offering
similar products or services (Kapoor and Kaur 2017). TOWS analysis also carries on a
cross-examination of the four external as well as internal factors and facilitates in the
derivation of the strategies to overpower the weaknesses and threats of a business with
the help of its strengths and opportunities.
Uses:
One of the usages of TOWS analysis conducts a cross-examination of the four
elements of TOWS analysis assist the marketers to find out several strategies like-
Strengths-Opportunities Strategies-
With the use of TOWS analysis a marketers can derive strategies to utilize the
strengths of the business to maximize the future opportunities (Alaaraj and Hassan
2014).

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Weaknesses-Opportunities Strategies-
TOWS analysis also assists a marketer to determine mini=-maxi strategies, or
strategies to minimize weaknesses of a business with the help of the opportunities
opened in front of the business.
Strengths-Threats Strategies-
TOWS analysis also guides a marketer to find out ST strategies or the strategies
which will be helpful to use the strengths of the business as the instrument to minimize
threats from the rivals, government regulations or other type of trade barriers (Sarsby
2016).
Weaknesses-Threats Strategies:
TOWS analysis also enables a marketer to formulate strategies facilitating the
minimization of the weaknesses and evading the threats of the business.
Challenges:
One of the significant drawbacks of TOWS analysis is the expensive
methodology. The matrix methods used in the TOWS analysis demands for the access
to detailed information, huge resources and expense. Further lack of control over the
outside variables also affects the analysis of the external business environment in case
of TOWS analysis for which, the estimation of threats may become wrong. For example,
the competition in the global market is a variable that helps a business to detect threats
in the external business environment (Gottfried et al. 2018). The rate of competition
fluctuates depending on the demand, supply, and opportunities to earn profits and
changing trends. Hence, a marketer does not have any control on the amount of
competition he or she is going to face in the global market. This is one of the reasons
why the estimation of the threats may often become erroneous.
Using strengths and Opportunities to overcome the
weaknesses and threats:

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The Use of strengths and Opportunities to overcome the weaknesses and threats
can be explained with the help of a TOWS analysis of a real-life organization- DELL.
Threats to Dell and Opportunities to minimize threats:
Firstly, decline in the usage of laptops, and increasing use of Smartphones and
tablets which are easy to carry and more convenient to use. The rivals of Dell like Apple
and Samsung have emerged with a wide range of smart phones and tablets. Secondly,
the rising costs of the hardware materials and decline in the price of Smart phones
which are lowering the demand for Dell laptops. Thirdly, the position of Laptops and
computers at the stage of maturity or saturation, which is causing a lack of new
customer and a declining growth rates of Dell laptops. Opportunities to Dell which can
be used to minimize threats is product diversification through research and
development. This is one of the main opportunities which may minimize the threats like
lack of demand for the laptops due to closely substitute products like smart phones. For
example- Dell can provide software related services to its customers. This may include
net work security, cloud computing, digital storage and so on.
Weaknesses of Dell and Strengths to Overpower Weaknesses:
A decline in the quality of services provided to the customers due to the out
sourcing of customer support is one of the weaknesses of Dell. Lack of product
diversification strategies and low level of expenditure on the research and development
can be marked as the other loopholes of Dell (Simão and Diaz 2013). Further poor
promotional strategy and inability of Dell to offer its products at a pocket friendly price as
it used to offer during the initial periods of the business, are also considered as other
weaknesses of Dell. The strengths that can overpower the weaknesses of Dell are-its
popularity as the first manufacturer of personal computer which offered instant and on-
site product service. The approach of direct sales is one of strengths of Dell using which
Dell can build up a strong relationship with the corporate as well as institutional
customers. Again, elimination of the strategies of outsourcing customer service and
introduction of latest technology to the customers through the networks of direct sales
networks are the other strengths that Dell can apply to overcome its weaknesses.

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VRIO Analysis:
Definition:
VRIO is considered to be a tool to conduct an analysis and evaluation of
resources as well as capabilities of a business. VRIO is the abbreviation for Value
Rarity Imitability Organization. In other words, VRIO conduct evaluation of the resources
owned by a company from different dimensions such as –value of the resources, rarity
as well as Imitability of the resources, the value created by the organization utilizing its
resources (Simão and Diaz 2013).
Value of the Resources:
The financial resources owned by a company help the company to eliminate
threats and invest in the business more, enhance the value of the business by
introducing new products, modifying existing products.
Rarity of the resources:
Rarity indicates to the channelization of resources to foster creativity and
innovation. For example, Apple iPad, iPhones, iPod a premium quality software named
iOS specially designed by Apple that contributes to the fast and flawless operation of
Apple iPhones. Moreover, Apple has its own app store that verifies every mobile
application before it is being downloaded and allows the downloading of completely
secured, authentic and expensive mobile applications. All these keep iPhones free from
virus and contribute to the swift and smooth operation of the iphones and refrains
iPhones from getting hanged.
Imitability of the resources:
Imitability refers to the patent of a business on any kind of resource, production
technique, use of software, formula that refrain other brands operating in the same
market to imitate the use of specialized production technique, formula or software. For
example specialized software designed by Apple for their smart phones and iPads is-
iOS, which cannot be imitated by other companies as Apple has patent tyo use the

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software it had invented for its own products. This reduces the uniqueness of Apple
products.
Organization’s values created by utilizing its resources:
This indicates to the evaluation of the resources that helps an organization to
impact it targeted customers by creating values through the inclusion of innovation or
rarity and reduction of imitability.
Use of VRIO analysis:
VRIO is used to analyze the internal environment of a business. The analysis
conducted using VRIO is multidimensional. VRIO is used for the purpose of
identification and evaluation of the resources owned by a company. The resources
evaluated under this approach are financial resources, human resources, material as
well as non-material resources (Kim Lee and Shin 2015). VRIO is used by the
marketers for strategic planning and decision making and analyzing the opportunities to
gain competitive advantage over the rivals.
Benefits
One of the greatest benefits of VRIO analysis, is that, VRIO analysis assists the
marketer to understand what type of rarity or innovation he or she should attempt to
enhance the value of the brand as well as the respective organization. Again VRIO
analysis reveals the way a brand can inspire other brands operating in the same market
while reducing the chances of imatibility and accelerating a certain amount of
competition in order to keep the rush for growth alive. VRIO also determines the way
the financial resources should be channelize to develop a business.
Challenges:
Often, in case of VRIO the evaluation of Rarity and imitability become
inappropriate. This happens due to the change in trends, consumer choice and
technology. For example ten years ago dual camera in a smart phone is considered to
be a rare and exclusive feature which has become a common feature to the modern-

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days smart phone as most of the mobile company has started imitating the
incorporation of this feature in the mobiles manufactured by them. This signifies that the
result of VRIO analysis cannot provide a fixed solution to the marketing issues as it is
dependant of many external variables like changing technology fashion and trends and
may change even within a short period of time.
VRIO can be explained with the help of an example:
For example if the financial resources like cash and liquid assets own by Apple
worths $233 billion, which is very close to financial resources owned by Samsung $226
billion. In spite of this the annual revenue from the annual sales of both the company
differs substantially. The annual revenue generated from the sales of Apple iphones lies
between $60 billion and $62 billion, whereas the annual revenue generated from the
sales of Samsung galaxy smart phones are $53.5 billion. This is because Apple focuses
on innovation as in order to enhance the rarity of the product and reduce Imitability. For
example, Apple iPhones, iPad, iPod a premium quality software named iOS specially
designed by Apple that contributes to the fast and flawless operation of Apple iPhones.
Moreover, Apple has its own app store that verifies every mobile application before it is
being downloaded and allows the downloading of completely secured, authentic and
expensive mobile applications. All these keep iPhones free from virus and contribute to
the swift and smooth operation of the iphones and refrains iPhones from getting
hanged. On the other hand, Samsung has not tried any kind of innovation in developing
more secured and premium quality operating system. Samsung Galaxy phones provide
customers attractive features, but uses android operating system as the core system
software responsible for the operations of Galaxy mobiles. Android operating system is
quite cheaper and do not assure the users a safe and secure mobile operation. Though
Android is upgrading itself, but the use of Android operating system in Samsung Galaxy
phones allows the downloading of mobile applications without any security check which
enhances the chances of virus attacks and hacking (Chung, 2016). Again, Android
software used in Samsung Galaxy often makes the multi-tasking and multi-processing
slow and may also result into abrupt ceasing of the mobile operations.
Porter’s Diamond Model

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Porter Diamond theory is an effective model that helps a business to derive
strategies to gain competitive advantage by analyzing six elements:
Factor conditions-
These refer to the elements existing in the home country of a business that helps
a business to gain competitive advantage (Brosnan Doyle and O’Connor 2016). For
example-human resources, knowledge resources, physical resources, capital resources
as well as infrastructure.
Demand conditions-
It depends on factors facilitating the creation of competitive advantage-demand,
the size of the market, growth of the market as well as sophistication.
Related as well as supporting industries-
This includes the ancillary industries that supply raw materials and cost-effective
inputs to the core industry and facilitates in gaining competitive advantage.
Strategies, structure as well as rivalry of the firm-
Existence of rivalry makes the companies realize how important it is to foster
innovation to survive the competition. Thus rivalry induces a business to formulate
prudent strategies, foster innovation and renovation of the existing structure and
facilitate the business to gain competitive advantage (Kharub and Sharma 2017).
Government-
This indicates to the power of the government of the home country of the business to
promote or restrict exports.
Chance-
This signifies the random factors that act as catalysts in the gaining or losing of
competitive advantage. These factors are not under the control of a company. For

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example- changing trends, fashion, taste and preferences of the customers (Pesic Milic
and Stankovic 2013).
A real life example of the application of Porter’s diamond theory can be found in the
manufacturing strategies adopted by china that made the country successful to
establish itself as the number one manufacturer in the world (Konsolas 2017). China
encountered favorable factor as well as demand conditions which helped the country to
gain competitive advantage over the other developing countries. Further the
implementation of advanced technology to derive cost effective methods of
manufacturing as well as the support of related ancillary industries helped China to
become the ‘number one manufacturer’ in the world. Further the lack of government
restriction on the exports has also provided China a platform to distribute indigenous
products to the international customers (Fainshmidt Smith and Judge 2016). Again,
China has fostered creativity through the inclusion of advance technology in
infrastructural development like elimination of roads-traffic, boosting the cottage
industries, inventing their own social media, and accelerating industrial growth. All these
have paved the way for China to gain maximum level of competitive advantage and
become the greatest manufacturer of the world.
As the reflection on Apple’s efforts to apply Porter’s Diamond Theory of competitive
advantage, I can state that Apple iPhones have competitive advantage over Samsung
Galaxy (Castro-Gonzáles Peña-Vinces and Guillen 2016). Application of innovation or
rarity and strategies implemented to reduce immitability is the features of the marketing
of Apple iPhones, that helped Apple to gain competitive advantage over Samsung.
Hence, it is vivid that, the reason behind the difference in the revenues of Apple
iPhones and Samsung Galaxy, is that Apple iPhones reflects the utilization of the
resources to foster innovation rarity and creativity and reduce immitability, which
Samsung Galaxy did not reflect.
Hence, in the conclusion it can be said that, TOWS analysis is an effective
marketing tool that help the new industries to gain a brief overview of the internal as well
as the external factors impacting the business. It is true that TOWS analysis is effective
for the industry who are at their initial phase, but for the industries who have already

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established themselves as a newcomer in the global market, only TOWS analysis will
not be helpful. In other words, TOWS analysis does not focus on the evaluation of the
resources of a business. In order to conduct a multidimensional analysis of the
resources owned by a company, further a VRIO analysis has been conducted. The
VRIO analysis has thrown lights on the different aspects of the resources owned by a
company such as –value of the resources, rarity as well as Imitability of the resources,
the value created by the organization utilizing its resources. All the elements of the
VRIO analysis has been elaborated with the help of a real-life example demonstrating
the way Apple iPhone has gained competitive advantage over Samsung Galaxy. This
discussion paved the way for further discussion on competitive advantage of a nation.
This is the reason why this study has considered Porter’s Diamond Theory effective for
the industries that intend to have grip on the markets other than their home country. The
findings of the theory have been evidenced by the real life instances like the
empowerment of China as the ‘number one’ manufacturer in the world.

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