Porter's Five Forces analysis tool
Rate 25 statements about your market from 1 (not true) to 5 (very true). The tool scores each of Porter's five forces, draws a radar and estimates how attractive the market is for profit.
How to use it
- Optionally start from an industry preset (23 industries).
- Rate each statement for your specific market: customer, product and geography.
- Read each force's level and the overall attractiveness score.
- Copy the summary into your SWOT or strategy document.
Method
Each force is the average of five statements. An average of 3.7 or above is high, 2.3 to 3.7 medium and below 2.3 low. Attractiveness is the inverse of the average pressure across all five forces, scaled to 0-100 (100 means every force is weak). The framework comes from Michael Porter's 1979 Harvard Business Review article, updated in 2008.
Worked example
A neighbourhood restaurant typically scores rivalry, new entrants, substitutes and buyer power high, and supplier power low: attractiveness around 25-35. A niche B2B software product often scores most forces medium: attractiveness around 45-60.
How to read the result
Strong forces tell you where margins leak. Build defences against the strongest one: loyalty and switching costs against buyer power, reputation and exclusive relationships against new entrants, outcome-based selling against substitutes.
Limitations
- Scores are judgements; involve people who talk to customers and suppliers.
- Define the market narrowly enough to be meaningful.
- Forces change with regulation and technology; revisit yearly.