Situational analysis — Key factors
When managers conduct a situational analysis, they will always find that there are more factors that need attention than they can possibly address within the constraints of the available time, money and other resources. Managers need to be able to isolate the key, or most important, factors that need to be addressed, and need to be able to prioritise or rank the factors to determine which factors will be used to inform their decision making. Situational analysis involves identifying the key factors that will be used as a basis for the development of strategy.
Managers must be able to understand the current opportunities that are available in the market, the main threats that business is facing and may face in the future, the strengths that the business can rely on and any weaknesses that may affect the business performance.