Framework library
Porter’s Five Forces
How to use it
Define the industry, then assess rivalry, entrants, substitutes, and the bargaining power of buyers and suppliers. Identify which force can change price, cost or investment requirements.
Worked example
Pet stores and clinics can switch brands, and customers can buy online. Map which alternatives actually constrain the brand’s terms.
Common pitfall
A competitor inventory misses substitutes and bargaining power. Revisit the boundary when buyers solve the same job differently.
- Frame the questionWho can change the terms on which this business earns a margin?
- Apply the frameworkUse Porter’s Five Forces on the worked example above.
- Produce an answerIdentify the mechanism, who benefits from it and the strongest substitute or competitor response.