Porter Five Forces — Industry Structure Analysis Methodology
A skill that enhances industry structure analysis for the industry-analyst and competitor-analyst.
Target Agents
- industry-analyst — Analyzes industry competitive dynamics
- competitor-analyst — Evaluates competitive positioning within industry structure
The Five Forces Framework
1. Threat of New Entrants
Assessment factors:
- Capital requirements (High = low threat)
- Economies of scale (High = low threat)
- Brand loyalty / switching costs
- Access to distribution channels
- Government regulations / licenses
- Proprietary technology / patents
- Network effects
Rating: Low / Medium / High threat
2. Bargaining Power of Suppliers
Assessment factors:
- Number of suppliers (Few = high power)
- Switching costs to alternative suppliers
- Availability of substitutes
- Supplier concentration vs. industry
- Importance of volume to supplier
- Forward integration threat
Rating: Low / Medium / High power
3. Bargaining Power of Buyers
Assessment factors:
- Number of buyers (Few = high power)
- Buyer volume relative to total sales
- Switching costs for buyers
- Buyer price sensitivity
- Product differentiation
- Backward integration threat
- Access to market information
Rating: Low / Medium / High power
4. Threat of Substitute Products
Assessment factors:
- Availability of close substitutes
- Price-performance ratio of substitutes
- Buyer switching costs
- Buyer propensity to substitute
- Cross-industry substitutes
Rating: Low / Medium / High threat
5. Rivalry Among Existing Competitors
Assessment factors:
- Number and size of competitors
- Industry growth rate
- Product differentiation
- Exit barriers
- Fixed costs / value added
- Capacity utilization
- Competitive information availability
Rating: Low / Medium / High rivalry
Analysis Output Template
## Porter's Five Forces Analysis: [Industry]
### Summary
| Force | Rating | Key Factors |
|-------|--------|-------------|
| New Entrants | Low/Med/High | [Top 2-3 factors] |
| Supplier Power | Low/Med/High | [Top 2-3 factors] |
| Buyer Power | Low/Med/High | [Top 2-3 factors] |
| Substitutes | Low/Med/High | [Top 2-3 factors] |
| Rivalry | Low/Med/High | [Top 2-3 factors] |
### Overall Industry Attractiveness
[Assessment based on combined forces]
### Strategic Implications
1. [Implication + recommended action]
2. [Implication + recommended action]
3. [Implication + recommended action]
Scoring Guide
Each force: 1 (Low) to 5 (High)
Industry Attractiveness Score = 25 - Sum of forces
20-25: Very attractive
15-19: Attractive
10-14: Moderate
5-9: Unattractive