Porter's Five Forces Analyzer
Industry-structure analysis that explains why some markets are profitable and others aren't.
What this skill is
A workflow that applies the Five Forces framework developed by Michael Porter with quantitative pressure scoring (1-5 per force) and the structural drivers behind each score. It surfaces the dominant force, identifies where the company can move the structure in its favor, and produces a positioning recommendation that goes beyond "the industry is attractive or unattractive."
What it solves
- Industry analysis that stops at "competition is intense" without identifying which force matters most
- Strategy memos that ignore supplier or buyer power
- Treating substitutes only as direct competitors (missing adjacent threats)
- Static analysis with no view on how forces are evolving
- Recommendations disconnected from the structural levers identified
When to invoke
- Entering a new vertical, geography, or product category
- Pre-Mergers and Acquisitions (M&A) diligence in an unfamiliar industry
- Defending current strategy when challenger dynamics shift
- Annual strategic plan industry-context refresh
- Board memo justifying a market exit or entry
Phase 1: Define the industry boundary
Industries are not obvious - and a bad boundary choice invalidates the analysis. Decide:
- Product or service scope - what's in, what's out (e.g., "Business-to-Business (B2B) fleet telematics" vs. "vehicle hardware")
- Geography - global, regional, country-specific
- Customer segment - enterprise versus small and medium business; consumer versus industrial
- Value chain stage - manufacturer, distributor, retailer, service provider
Different boundaries can produce different forces. Document the choice explicitly.
Phase 2: Force 1 - Supplier power
Score 1 (weak) to 5 (strong) and explain drivers:
| Driver |
Pushes power UP |
Pushes power DOWN |
| Supplier concentration |
Few, dominant suppliers |
Many fragmented suppliers |
| Switching costs |
High (proprietary inputs) |
Low (commodity) |
| Forward integration threat |
Credible |
Not feasible |
| Importance of industry to supplier |
Small customer for them |
Large customer |
| Substitute inputs |
None |
Many viable |
| Differentiation of inputs |
Highly differentiated |
Commoditized |
Cite specific suppliers when known (e.g., Taiwan Semiconductor Manufacturing Company (TSMC) for advanced silicon).
Phase 3: Force 2 - Buyer power
| Driver |
Pushes power UP |
Pushes power DOWN |
| Buyer concentration |
Few large buyers |
Many small buyers |
| Switching costs |
Low for buyer |
High (lock-in, contracts) |
| Backward integration threat |
Credible |
Not feasible |
| Price sensitivity |
Product is large percent of buyer's cost |
Small share |
| Product differentiation |
Commoditized |
Highly differentiated |
| Buyer information |
Full price transparency |
Asymmetric |
Sub-segment buyers - enterprise behaves differently from small and medium business.
Phase 4: Force 3 - Threat of new entrants
| Barrier |
High barrier |
Low barrier |
| Economies of scale |
Required |
Not required |
| Capital requirements |
Heavy |
Light |
| Network effects |
Strong |
None |
| Switching costs for buyers |
High |
Low |
| Access to distribution |
Locked up |
Open |
| Brand and customer loyalty |
Strong |
Weak |
| Regulatory licenses |
Required, scarce |
None |
| Proprietary technology or data |
Defensible |
Replicable |
| Incumbent retaliation |
Credible |
Unlikely |
Score the net entry barrier 1 (low → high entry threat) to 5 (high → low threat).
Phase 5: Force 4 - Threat of substitutes
Substitutes are alternative solutions to the same customer job - not direct competitors. Examples:
- Video conferencing → in-person meetings, asynchronous video, written documents
- Ride-sharing → public transit, walking, owning a car, working from home
| Driver |
Pushes threat UP |
Pushes threat DOWN |
| Substitute price-performance |
Improving |
Degrading |
| Buyer propensity to substitute |
High |
Low (entrenched habits) |
| Cost of switching to substitute |
Low |
High |
Map the performance trajectory of substitutes over the next 3-5 years.
Phase 6: Force 5 - Rivalry intensity
| Driver |
Higher rivalry |
Lower rivalry |
| Competitor concentration |
Many similarly-sized |
Few, with clear leader |
| Industry growth |
Slow or declining |
Fast |
| Fixed costs or capacity |
High (drives price competition) |
Low |
| Product differentiation |
Low |
High |
| Exit barriers |
High (forces stay-and-fight) |
Low |
| Strategic stakes |
High for multiple players |
Low |
Phase 7: Aggregate and dominant force
| Force |
Score (1-5) |
Dominant drivers |
Trajectory (3 years) |
| Supplier power |
x |
|
↑↓→ |
| Buyer power |
x |
|
↑↓→ |
| New entrants |
x |
|
↑↓→ |
| Substitutes |
x |
|
↑↓→ |
| Rivalry |
x |
|
↑↓→ |
Identify:
- Dominant force - the one most depressing industry profitability
- Industry attractiveness - sum scores; under 12 attractive, 12-18 moderate, over 18 difficult
- Direction of travel - net force pressure trajectory
Phase 8: Strategic implications
The point of the Five Forces is not just "what's the industry like?" but what to do about it. For each force, identify the strategic lever:
| Force |
Strategic moves |
| Supplier power |
Vertically integrate, multi-source, build alternatives, build internal capability |
| Buyer power |
Differentiate, raise switching costs, segment, build ecosystem |
| Entrants |
Raise barriers (scale, network effects, intellectual property), pre-empt, M&A consolidation |
| Substitutes |
Improve relative price-performance, redefine the job, partner with substitutes |
| Rivalry |
Differentiate, segment, consolidate via M&A, signal credibly to discourage price wars |
Output
- Five-force scorecard with drivers cited
- Industry boundary statement and trajectory of each force
- Dominant force identification and reasoning
- Industry attractiveness rating
- Strategic recommendation: where to invest to reshape the forces in your favor
- 3 leading indicators to monitor that would change the analysis
Operating rules
Always
- State the industry boundary explicitly
- Score each force on a 1-5 scale with drivers cited
- Identify the dominant force, not a generic "competition"
- Project a 3-year trajectory per force
- Translate analysis into specific strategic moves
Never
- Treat the Five Forces as a static one-time exercise
- Confuse substitutes with direct competitors
- Conflate industry attractiveness with company performance
- Skip the boundary definition
- Stop at description without recommending action
1---2name: porters-five-forces-analyzer3description: Performs a rigorous Porter's Five Forces analysis: industry structure, supplier power, buyer power, threat of new entrants, substitutes, and rivalry intensity, with quantified pressure scoring and a strategic-positioning recommendation. Use when entering a new market, defending an existing position, evaluating an industry's structural attractiveness, advising on Mergers and Acquisitions (M&A) in a new vertical, or preparing a competitive strategy memo.4---56# Porter's Five Forces Analyzer78> Industry-structure analysis that explains why some markets are profitable and others aren't.910## What this skill is1112A workflow that applies the Five Forces framework developed by Michael Porter with quantitative pressure scoring (1-5 per force) and the structural drivers behind each score. It surfaces the dominant force, identifies where the company can move the structure in its favor, and produces a positioning recommendation that goes beyond "the industry is attractive or unattractive."1314## What it solves1516- Industry analysis that stops at "competition is intense" without identifying which force matters most17- Strategy memos that ignore supplier or buyer power18- Treating substitutes only as direct competitors (missing adjacent threats)19- Static analysis with no view on how forces are evolving20- Recommendations disconnected from the structural levers identified2122## When to invoke2324- Entering a new vertical, geography, or product category25- Pre-Mergers and Acquisitions (M&A) diligence in an unfamiliar industry26- Defending current strategy when challenger dynamics shift27- Annual strategic plan industry-context refresh28- Board memo justifying a market exit or entry2930## Phase 1: Define the industry boundary3132Industries are not obvious - and a bad boundary choice invalidates the analysis. Decide:33- **Product or service scope** - what's in, what's out (e.g., "Business-to-Business (B2B) fleet telematics" vs. "vehicle hardware")34- **Geography** - global, regional, country-specific35- **Customer segment** - enterprise versus small and medium business; consumer versus industrial36- **Value chain stage** - manufacturer, distributor, retailer, service provider3738Different boundaries can produce different forces. Document the choice explicitly.3940## Phase 2: Force 1 - Supplier power4142Score 1 (weak) to 5 (strong) and explain drivers:4344| Driver | Pushes power UP | Pushes power DOWN |45|--------|-----------------|-------------------|46| Supplier concentration | Few, dominant suppliers | Many fragmented suppliers |47| Switching costs | High (proprietary inputs) | Low (commodity) |48| Forward integration threat | Credible | Not feasible |49| Importance of industry to supplier | Small customer for them | Large customer |50| Substitute inputs | None | Many viable |51| Differentiation of inputs | Highly differentiated | Commoditized |5253Cite specific suppliers when known (e.g., Taiwan Semiconductor Manufacturing Company (TSMC) for advanced silicon).5455## Phase 3: Force 2 - Buyer power5657| Driver | Pushes power UP | Pushes power DOWN |58|--------|-----------------|-------------------|59| Buyer concentration | Few large buyers | Many small buyers |60| Switching costs | Low for buyer | High (lock-in, contracts) |61| Backward integration threat | Credible | Not feasible |62| Price sensitivity | Product is large percent of buyer's cost | Small share |63| Product differentiation | Commoditized | Highly differentiated |64| Buyer information | Full price transparency | Asymmetric |6566Sub-segment buyers - enterprise behaves differently from small and medium business.6768## Phase 4: Force 3 - Threat of new entrants6970| Barrier | High barrier | Low barrier |71|---------|--------------|-------------|72| Economies of scale | Required | Not required |73| Capital requirements | Heavy | Light |74| Network effects | Strong | None |75| Switching costs for buyers | High | Low |76| Access to distribution | Locked up | Open |77| Brand and customer loyalty | Strong | Weak |78| Regulatory licenses | Required, scarce | None |79| Proprietary technology or data | Defensible | Replicable |80| Incumbent retaliation | Credible | Unlikely |8182Score the **net entry barrier** 1 (low → high entry threat) to 5 (high → low threat).8384## Phase 5: Force 4 - Threat of substitutes8586Substitutes are alternative solutions to the same customer job - not direct competitors. Examples:87- Video conferencing → in-person meetings, asynchronous video, written documents88- Ride-sharing → public transit, walking, owning a car, working from home8990| Driver | Pushes threat UP | Pushes threat DOWN |91|--------|------------------|--------------------|92| Substitute price-performance | Improving | Degrading |93| Buyer propensity to substitute | High | Low (entrenched habits) |94| Cost of switching to substitute | Low | High |9596Map the **performance trajectory** of substitutes over the next 3-5 years.9798## Phase 6: Force 5 - Rivalry intensity99100| Driver | Higher rivalry | Lower rivalry |101|--------|---------------|---------------|102| Competitor concentration | Many similarly-sized | Few, with clear leader |103| Industry growth | Slow or declining | Fast |104| Fixed costs or capacity | High (drives price competition) | Low |105| Product differentiation | Low | High |106| Exit barriers | High (forces stay-and-fight) | Low |107| Strategic stakes | High for multiple players | Low |108109## Phase 7: Aggregate and dominant force110111| Force | Score (1-5) | Dominant drivers | Trajectory (3 years) |112|-------|------------:|------------------|----------------------|113| Supplier power | x | | ↑↓→ |114| Buyer power | x | | ↑↓→ |115| New entrants | x | | ↑↓→ |116| Substitutes | x | | ↑↓→ |117| Rivalry | x | | ↑↓→ |118119Identify:120- **Dominant force** - the one most depressing industry profitability121- **Industry attractiveness** - sum scores; under 12 attractive, 12-18 moderate, over 18 difficult122- **Direction of travel** - net force pressure trajectory123124## Phase 8: Strategic implications125126The point of the Five Forces is not just "what's the industry like?" but **what to do about it**. For each force, identify the strategic lever:127128| Force | Strategic moves |129|-------|-----------------|130| Supplier power | Vertically integrate, multi-source, build alternatives, build internal capability |131| Buyer power | Differentiate, raise switching costs, segment, build ecosystem |132| Entrants | Raise barriers (scale, network effects, intellectual property), pre-empt, M&A consolidation |133| Substitutes | Improve relative price-performance, redefine the job, partner with substitutes |134| Rivalry | Differentiate, segment, consolidate via M&A, signal credibly to discourage price wars |135136## Output137138- Five-force scorecard with drivers cited139- Industry boundary statement and trajectory of each force140- Dominant force identification and reasoning141- Industry attractiveness rating142- Strategic recommendation: where to invest to reshape the forces in your favor143- 3 leading indicators to monitor that would change the analysis144145## Operating rules146147**Always**148- State the industry boundary explicitly149- Score each force on a 1-5 scale with drivers cited150- Identify the dominant force, not a generic "competition"151- Project a 3-year trajectory per force152- Translate analysis into specific strategic moves153154**Never**155- Treat the Five Forces as a static one-time exercise156- Confuse substitutes with direct competitors157- Conflate industry attractiveness with company performance158- Skip the boundary definition159- Stop at description without recommending action
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