Five Forces Analysis Template

Create a custom report online with our Five Forces analysis template! Add the data, choose your favorite template, and enjoy the result.

Table of content

👓 Definition
🙌 Why Use the Tool?
✒️ How to Analyze
📍 References

👓 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?

✅ Competition	This factor refers to the number of competitors in the field and the company’s competitive position. Competition can provide deals, lower prices, and discounts for customers. When it is low, the organization can charge higher fees for its services and products.
✅ New Entries	The less money and time it takes for a new competitor to enter the market, the weaker the company's position will be. Thus, the threat of a new entry can affect an organization’s place and revenue.
✅ Supplier’s Power	This factor accounts for how easily vendors can drive the cost. Besides, it discloses how easy it is for a company to switch to another supplier.
✅ Customer’s Power	This is the force that potential and current customers have. It shows how significant each client is to a company. A smaller customer base means that each individual has a way to negotiate lower prices and deals.
✅ Substitutes	This aspect shows how substitute goods and services can threaten a company. When a replacement is available, customers have options and can buy products from competitors or another industry.

🙌 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:

❔	Does the government regulate the market?
❔	Can entering or exiting the industry be cost-efficient?
❔	Are businesses interrelated?
❔	Are the services and products in the market complicated?
❔	Can any company get the required assets?
❔	Are distribution channels restricted?

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:

❔	Can you find another supplier for the same price or cheaper?
❔	Are the materials they provide common or rare?
❔	Do your suppliers have customer support?
❔	How many suppliers do you have? Can you lower the number?

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:

❔	Who are your direct competitors? Are there many of them?
❔	Can this industry sustain numerous successful firms?
❔	What are the exit barriers?
❔	Does your sector grow? How?
❔	Has your competitive position dropped? Why or why not?

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.

Updated: Apr 9th, 2024