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:

Cite specific suppliers when known (e.g., Taiwan Semiconductor Manufacturing Company (TSMC) for advanced silicon).

Phase 3: Force 2 - Buyer power

Sub-segment buyers - enterprise behaves differently from small and medium business.

Phase 4: Force 3 - Threat of new entrants

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

Map the performance trajectory of substitutes over the next 3-5 years.

Phase 6: Force 5 - Rivalry intensity

Phase 7: Aggregate and dominant force

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:

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