Framework Overview
Porter's Five Forces is a strategic analysis framework developed by Michael E. Porter in 1979 to evaluate the competitive intensity and attractiveness of an industry. This model helps businesses understand the competitive forces that shape their industry and develop strategies to gain competitive advantage.
Who Uses It
- • Strategic consultants
- • Business executives
- • Investment analysts
- • MBA students
Key Benefits
- • Industry structure analysis
- • Competitive positioning
- • Strategic planning
- • Investment decisions
Industry Attractiveness Score
High attractiveness indicates favorable industry conditions
Interactive Five Forces Analysis
Competitive Rivalry
Market competition intensity
High rivalry due to numerous established competitors and slow market growth
Supplier Power
Supplier bargaining strength
Limited suppliers for critical components increase their bargaining power
Buyer Power
Customer bargaining strength
Moderate buyer power with some price sensitivity but reasonable brand loyalty
Threat of Substitutes
Alternative product availability
Moderate substitute threat with emerging technologies providing alternatives
Threat of New Entry
Market entry barriers
High barriers to entry due to capital requirements and established brand recognition
Historical Context
Framework development
Industry Comparison
Force Trends Over Time
How to Use Porter's Five Forces Analysis
Identify Industry Scope
- • Define your specific industry
- • Determine geographic boundaries
- • Identify key players and stakeholders
Gather Information
- • Collect market data
- • Research competitors
- • Analyze industry trends
Analyze Each Force
- • Evaluate competitive rivalry
- • Assess supplier power
- • Measure buyer influence
- • Review substitute threats
- • Examine entry barriers
Score and Rate
- • Rate each force (1-10)
- • Document key factors
- • Compare with benchmarks
Develop Strategy
- • Identify opportunities
- • Address weaknesses
- • Create action plans
- • Set strategic priorities
Monitor & Update
- • Review periodically
- • Track industry changes
- • Update analysis
- • Adjust strategies
Advantages
Disadvantages
Key Insights & Strategic Recommendations
Primary Insight
High competitive rivalry and supplier power are the dominant forces affecting industry profitability. Focus on differentiation strategies to reduce price competition.
Strategic Focus
Develop supplier partnerships and vertical integration opportunities to reduce supplier power. Invest in customer loyalty programs to strengthen buyer relationships.
Defensive Strategy
Maintain high barriers to entry through continued innovation and brand building. Monitor substitute technologies for early threat detection.