Porter’s Five Forces Template

Pros and Cons of the Five Forces Analysis

The Five Forces model was introduced by Harvard’s Michael E. Porter, as an alternative to the SWOT analysis and was first published in Harvard Business Review in 1979.

The five forces are horizontal:

• Threats from substitute products or services
• The threat of new entrants
• The state of industry rivalry

and vertical:

• The bargaining power of suppliers 
• The bargaining power of buyers or customers

The objective of the Five Forces Analysis is to assess whether a product or service can adequately enter and excel in the market. If the forces are too strong, the conditions may be unattractive for profitability. A market that is optimal to enter is one where competition can coexist and reasonable profit margins are achievable for new players. The Five Forces is a great way to assess these forces.

Five Forces Analysis has been critiqued for the broad perspective it takes, excluding the specifics of an industry, and the relational forces between industries, or industry clusters. This analysis also does not focus on the actions or opportunities that can be taken in the face of these macro-level forces. Later in the 90s, a 6th force named “complementors” has been introduced by Yale academics Nalebuff and Brandenburger. This addition to the five forces addresses the possibility of strategic alliances, which is relevant for today’s complex landscape interconnected with tech-driven businesses. 

How to use Porter’s Five Forces Analysis Template?

Click on Xtensio’s Five Forces Analysis Template and you will see two sections.

The bottom section comes with instructional text to help you research and address the dynamics of each of the five forces. You can use this part as a worksheet to populate with all your findings.

XTENSIO TIP: Click and add text without worrying about the length or fitting all your findings on a single page. Xtensio pages are infinitely scrollable like web pages, so don’t be afraid of formatting or design as you brainstorm.

The top section is a more visual section where you can post the summary of your findings, the most vital points that you can view and share with others. This part then becomes a good piece to include in presentations, and among other strategy and planning documents to present to stakeholders and discuss. 

XTENSIO TIP: You can click the three dots to the left and copy this work to other projects.

The Five Forces Analysis is one of the alternatives to the popular SWOT analysis (Learn how to do a SWOT analysis here). It is most effectively used by marketing strategists or business consultants when accompanied by other strategic frameworks and models like the value chain analysis, or Competitive Analysis. It is important to make use of analytical exercises like the Five Forces Analysis to obtain a broad perspective of the industry and general marketplace your organization is striving to exist in. That said, the fragility of global economic, social, and political systems calls for an adaptive mindset, and a creative ability to fill in the gaps left by traditional business frameworks.