porter's five forces analysis template

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FORCES DRIVING INDUSTRY COMPETITION

Porter’s Five Forces Model

The collective strength of these forces determines the

ultimate profit potential in the industry, where profit potential

is measured in terms of long run return on invested capital.

“

”Technological Economic

Political - Legal

Socio - Cultural

-- Michael E. Porter, 1980

Natural

3



An assessment of how

easy it is for suppliers to

drive up prices

Where close substitute products exist in a

market, it increases the likelihood of customers

switching to alternatives in response to price

increases

Profitable markets

attract new entrants,

which erodes

profitability

An assessment of how

easy it is for buyers to

drive prices down

NaturalTechnological Economic

Political - Legal

Socio - Cultural

4



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Industry Competitors

Rivalry Among Existing Firms

Suppliers Buyers

Potential Entrants

Substitutes

5





Suppliers Buyers

Potential Entrants

Substitutes

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6



New entrants to an industry bring new

capacity, the desire to gain market share, and often

substantial resources.

“

”



Suppliers Buyers

Potential Entrants

Substitutes


7



Buyers compete with the industry by forcing down

prices, bargaining for higher quality or more services, and playing competitors against

each other -all at the expense of industry profitability.

“

”



Suppliers Buyers

Potential Entrants

Substitutes


8



Substitutes limit the potential returns of an

industry by placing a ceiling on the prices firms in the

industry can profitably charge.

“

”



Suppliers Buyers

Potential Entrants

Substitutes


9



Suppliers can exert bargaining power over

participants in an industry by threatening to raise

prices or reduce the quality of purchased goods and

services.

“

”



Suppliers Buyers

Potential Entrants

Substitutes


10



Rivalry among existing competitors takes the familiar form of jockeying for position -

using tactics like price competition, advertising

battles, product introductions, and increased customer

service or warranties.

“

”



Suppliers Buyers

Potential Entrants

Substitutes


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WORKSHEET 1

Porter’s Five Forces

COMPETITIVE RIVALRY

• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5

THREAT OF NEW ENTRY


SUPPLIER POWER


BUYER POWER


THREAT OF SUBSTITUTION


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WORKSHEET 2


THREAT OF NEW ENTRY – Low / Medium / High• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5

COMPETITIVE RIVALRY – Low / Medium / High• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5

SUPPLIER POWER – Low / Medium / High


THREAT OF SUBSTITUTION – Low / Medium / High• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5

BUYER POWER – Low / Medium / High• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5

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Ability to control Impact Level Risk Level

COMPETITIVE RIVALRY


WORKSHEET 3 – 1/3


14


THREAT OF NEW ENTRY


THREAT OF SUBSTITUTION


WORKSHEET 3 – 2/3


15


SUPPLIER POWER


BUYER POWER


WORKSHEET 3 – 3/3


porter's five forces analysis template

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