Five Forces Analysis Template
đź‘“ Five Competitive Forces Model Explained
The Five Forces analysis template is a business tool that helps visualize the data obtained from Porter’s industry examination.
Developed by Harvard Business School professor Michael Porter, the Five Forces model consists of, you guessed it, five elements. These are the factors that can facilitate a company’s decision-making process.
- Porter’s Five Forces reveal potential threats and opportunities, which are essential for entering a new market or coming up with a successful strategy.
- They also help analysts determine the accessibility of a particular industry and investment options.
- With this model, an organization can assume whether its services or products will pay off.
To see how students use this and similar models in their assignments, check our free essay database.
What Are the Five Industry Forces?
🙌 Why Should I Use Porter's 5 Forces Maker?
The Five Forces analysis template:
- Helps analysts and companies to understand the factors that play a role in affecting profitability in their industry.
- Assists business owners in decision-making. It shows whether to increase capacity in the market and what competitive strategy to follow.
- Allows students who deal with related assignments to create a business plan, develop a strategic management approach, or conduct a market analysis.
✒️ How to Conduct a Thorough Five Forces Analysis
Using our template, you can visualize your Five Competitive Forces model in several seconds. It is available 24/7 online, allowing you to polish your presentation, report, or another business project whenever you want.
Yet, you still have to identify potential threats and opportunities for your company. That’s why we’ve explained how to conduct a thorough Five Forces analysis below.
Step 1: Be Prepared
For meaningful analysis, the framework requires you to have detailed market knowledge. It would be perfect if you could talk to experts from customer service, sales, marketing, and other business areas. If not, you can always research the industry on your own, finding everything you can on each Porter’s force.
Step 2: Look out for New Entries
Every industry has well-established brands like Uber or Coca-Cola. Yet, is entering the market easy for a newcomer? See what barriers can prevent new companies from getting into your field:
You can also check whether any new entries have arrived recently. How did they do so?
Step 3: Consider the Substitutes
Now, evaluate your company’s product or service. Are these easy to replace with something better or cheaper from other industries?
Since you are likely aware of the most prominent substitutes for your products or services, analyze the following:
- their profitability;
- the quality of the alternative products;
- production costs;
- availability and distribution of these products;
- whether they can replace yours entirely.
Step 4: Evaluate Your Suppliers
To manufacture products and provide services, any company needs raw materials and reliable vendors. List all the existing suppliers your business has. Assess how powerful they are in terms of affecting your form:
Step 5: Examine Your Customers
Each business needs clients, so analyzing them is essential to strategic marketing and planning. Determine the buyers’ power to see how much pressure customers can place on the prices, support, and development. You can check what clients your company has already lost and why.
Also, find out whether your customers have:
- alternatives to your products;
- real influence on your prices;
- positive/negative feedback to your products;
- appreciation or loyalty to your brand;
- the necessity to buy your products or services.
Step 6: Identify the Competition
Once you know the power of buyers and suppliers and possible external threats, you can figure out the competitive rivalry in the market. This step of the analysis provides the most valuable conclusions.
Explore these questions:
Step 7: See What you Can Do
Suppose your company has a competitive advantage in the market; congratulations! If not, you should think of ways to fix that.
To outperform its rivals, your firm can do as follows:
- Change prices. If you increase or decrease the costs, you can gain a temporary advantage over others.
- Use channels of distribution differently. Find a new one, unusual for the industry, or try out vertical integration.
- Work closely with your suppliers. You can make your vendors deliver a higher quality of materials to improve your products.
- Add variety. Consider whether you can implement innovations, original features, or improved facets to the products or manufacturing process.
Thanks for reading! You can check the references below for more information on the Five Forces analysis. Our template above will always be available for you to use! Also, send this tool and article to your peers who may find it useful and try other study apps we’ve made.
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