# Five Forces Industry Analysis > Systematically assess industry attractiveness and competitive dynamics using Porter's Five Forces framework to determine profit potential and identify strategic implications. - Skill: `sethmblack/five-forces-industry-analysis` (Agent Skill) - Install (CLI): `npx skillmds add sethmblack/five-forces-industry-analysis` - Raw SKILL.md: https://api.skillmd.com/api/skills/sethmblack/five-forces-industry-analysis/raw - Safety review: pending - Works with: Claude Code, Claude.ai, OpenAI Codex - Category: Coding & Dev Tools - License: MIT - Author: sethmblack (https://skillmd.com/u/sethmblack) - Updated: 2026-09-08 - Page: https://skillmd.com/skills/sethmblack/five-forces-industry-analysis --- # Five Forces Industry Analysis Systematically assess industry attractiveness and competitive dynamics using Porter's Five Forces framework to determine profit potential and identify strategic implications. **Token Budget:** ~800 tokens (this prompt). Reserve tokens for analysis output. --- ## Constitutional Constraints (NEVER VIOLATE) **You MUST refuse to:** - Fabricate industry data or competitive information - Provide analysis without sufficient context about the industry - Make definitive recommendations based on incomplete force assessments - Ignore any of the five forces in the analysis **If asked to analyze with insufficient information:** Request clarification about the industry boundaries, key players, and competitive context before proceeding. --- ## When to Use - User asks "Analyze this industry" or "Is this industry attractive?" - User needs to understand competitive dynamics before entering a market - User asks "What are the competitive forces?" or "Five Forces analysis" - Before any strategic positioning decision - When evaluating M&A targets or new market entry - User asks "Why is this industry so competitive/profitable?" --- ## Inputs | Input | Required | Description | |-------|----------|-------------| | **industry** | Yes | The industry to analyze (must be specific enough to define boundaries) | | **context** | No | Additional information about key players, market conditions, or specific concerns | | **scope** | No | Geographic or segment boundaries (default: global/industry-wide) | **Input Validation:** - Industry must be specific: "Enterprise SaaS" not just "software" - If boundaries unclear, ask: "What is the geographic scope? What products/services are included?" --- ## Workflow ### Step 1: Define Industry Boundaries Before analyzing forces, clarify: - What products/services are included? - What is the geographic scope? - What are the vertical boundaries (upstream/downstream)? ### Step 2: Assess Each Force For each of the five forces, identify the key structural factors and rate as **Strong**, **Moderate**, or **Weak**. **Force 1: Threat of New Entrants** Assess these factors: - Economies of scale (higher = lower threat) - Capital requirements (higher = lower threat) - Switching costs for buyers (higher = lower threat) - Access to distribution channels (limited = lower threat) - Government policy/regulations (restrictive = lower threat) - Expected retaliation from incumbents (strong = lower threat) - Product differentiation and brand identity (strong = lower threat) **Force 2: Bargaining Power of Suppliers** Assess these factors: - Supplier concentration (high = high power) - Substitute inputs availability (low = high power) - Importance of volume to supplier (low = high power) - Differentiation of inputs (high = high power) - Switching costs to other suppliers (high = high power) - Threat of forward integration (high = high power) **Force 3: Bargaining Power of Buyers** Assess these factors: - Buyer concentration (high = high power) - Buyer volume relative to seller (high = high power) - Switching costs for buyers (low = high power) - Buyer information about alternatives (high = high power) - Availability of substitutes (high = high power) - Price sensitivity of buyers (high = high power) - Importance of product to buyer's quality (low = high power) - Threat of backward integration (high = high power) **Force 4: Threat of Substitutes** Assess these factors: - Price-performance of substitutes (attractive = high threat) - Buyer switching costs to substitutes (low = high threat) - Buyer propensity to substitute (high = high threat) **Force 5: Rivalry Among Existing Competitors** Assess these factors: - Number and balance of competitors (many/equal = high rivalry) - Industry growth rate (slow = high rivalry) - Fixed costs and perishability (high = high rivalry) - Product differentiation (low = high rivalry) - Switching costs (low = high rivalry) - Capacity utilization and increments (lumpy = high rivalry) - Diversity of competitors (high = high rivalry) - Strategic stakes (high = high rivalry) - Exit barriers (high = high rivalry) ### Step 3: Determine Overall Industry Attractiveness Synthesize the five force assessments: - Count of Strong/Moderate/Weak forces - Identify which forces dominate profitability - Assess overall profit potential ### Step 4: Identify Strategic Implications Based on force analysis: - Which forces can be influenced by strategic choices? - What positioning would address the strongest forces? - What industry evolution would change the analysis? --- ## Outputs Format the output as a **Five Forces Analysis Report**: ```markdown ## Five Forces Analysis: [Industry Name] **Industry Definition:** [Specific boundaries] **Geographic Scope:** [Scope] **Analysis Date:** [Date] --- ### Force Assessment Summary | Force | Rating | Key Drivers | |-------|--------|-------------| | Threat of New Entrants | Strong/Moderate/Weak | [Top 2-3 factors] | | Supplier Power | Strong/Moderate/Weak | [Top 2-3 factors] | | Buyer Power | Strong/Moderate/Weak | [Top 2-3 factors] | | Threat of Substitutes | Strong/Moderate/Weak | [Top 2-3 factors] | | Competitive Rivalry | Strong/Moderate/Weak | [Top 2-3 factors] | --- ### Detailed Analysis #### 1. Threat of New Entrants: [Rating] [Analysis with specific evidence for each factor assessed] #### 2. Bargaining Power of Suppliers: [Rating] [Analysis with specific evidence] #### 3. Bargaining Power of Buyers: [Rating] [Analysis with specific evidence] #### 4. Threat of Substitute Products: [Rating] [Analysis with specific evidence] #### 5. Rivalry Among Existing Competitors: [Rating] [Analysis with specific evidence] --- ### Overall Industry Attractiveness **Verdict:** [Attractive / Average / Unattractive] **Profit Potential:** [High / Moderate / Low] **Key Insight:** [Most important finding about industry structure] --- ### Strategic Implications 1. **Strongest force to address:** [Force and why] 2. **Positioning recommendation:** [How to position given industry structure] 3. **Industry evolution:** [Factors that could change the analysis] 4. **Opportunities:** [Where forces can be influenced] ``` --- ## Error Handling | Situation | Response | |-----------|----------| | Industry too broadly defined | Ask for narrower definition with specific boundaries | | Insufficient information for a force | Note as "Insufficient data" and state what's needed | | Mixed signals within a force | Rate as "Moderate" and explain the tension | | Industry in transition | Note that forces are changing and provide directional assessment | | Novel/emerging industry | Acknowledge uncertainty, provide best assessment with caveats | --- ## Constraints - Do not use this analysis as the sole basis for critical decisions - Do not apply this framework to situations outside its intended scope - Acknowledge that analysis is based on available data, which may be incomplete - Honor the complexity of real-world situations that resist simple categorization - Present findings with appropriate confidence levels - Recognize the limits of the methodology ## Example **Input:** "Analyze the U.S. commercial airline industry" **Output:** **Why this works:** This example demonstrates the key principles of the skill in action. The approach is effective because: - It follows the systematic workflow outlined above - It shows concrete application of the framework - It produces actionable, specific outputs rather than vague generalizations - The analysis is grounded in observable details - The recommendations are prioritized and implementable **Alternative applications:** This same approach can be applied to: - Different contexts within the same domain - Related but distinct problem types - Scaled up or down depending on scope - Combined with complementary analytical frameworks ## Five Forces Analysis: U.S. Commercial Airline Industry **Industry Definition:** Scheduled passenger air transportation within and from the United States **Geographic Scope:** United States domestic and international routes **Analysis Date:** 2026-01-28 --- ### Force Assessment Summary | Force | Rating | Key Drivers | |-------|--------|-------------| | Threat of New Entrants | Moderate | High capital needs offset by periodic new entrant success | | Supplier Power | Strong | Boeing/Airbus duopoly, labor union power | | Buyer Power | Strong | Price transparency, low switching costs | | Threat of Substitutes | Moderate | Video conferencing, rail for some routes | | Competitive Rivalry | Strong | Undifferentiated product, high fixed costs, exit barriers | --- ### Overall Industry Attractiveness **Verdict:** Unattractive **Profit Potential:** Low — Airlines historically earn returns below cost of capital **Key Insight:** Strong buyer power, supplier power, and rivalry create persistent margin pressure that even operational improvements cannot overcome. --- ### Strategic Implications 1. **Strongest force to address:** Competitive rivalry — differentiation is nearly impossible on core service 2. **Positioning recommendation:** Focus strategy on specific routes or customer segments; avoid trying to be everything to everyone 3. **Industry evolution:** Consolidation has reduced rivalry somewhat; fuel hedging and ancillary revenue are attempts to address structural problems 4. **Opportunities:** Loyalty programs create some switching costs; ancillary revenue captures value outside fare competition --- ## Integration This skill is part of the **Michael Porter** expert methodology. After Five Forces analysis: - Use **generic-strategy-assessment** to determine positioning - Use **value-chain-mapping** to identify cost or differentiation opportunities - Use **competitive-position-mapping** to understand competitor groups **Voice:** Maintain Porter's analytical rigor. Industry structure determines profitability. Strategy must address the strongest forces.