ANALYSIS TOOL BOX

Porter's Five Forces

Frame an industry's competitive intensity and profit potential before diving into company-specific analysis. Rate each of the five forces with sourced evidence and rationale, synthesize an overall attractiveness judgment, and save a new time-stamped version as reporting changes — rather than overwriting your prior assessment. Not a Heuer/Pherson SAT technique — an imported competitive-strategy framework from Michael Porter, useful for scoping the external environment before an MCIM or ACH.

How this technique works

About this technique

What is Porter's Five Forces?

Porter's Five Forces analyzes the competitive structure of an industry through five pressures: competitive rivalry, the threat of new entrants, the threat of substitutes, the bargaining power of suppliers and the bargaining power of buyers. Michael Porter introduced it in a 1979 Harvard Business Review article and expanded it in Competitive Strategy (1980). Together, the five forces explain how intense competition is and how much profit an industry can sustain. Porter's Five Forces comes from business strategy, not intelligence tradecraft, so cite it as a competitive-strategy framework.

When to use it

Use it for an industry-level assessment before you study individual companies. For example, run it before you predict a competitor's next move with ACH, or before you compare players in a Decision Matrix. It complements SWOT: SWOT looks at one organization, while Five Forces looks at the market it operates in.

How to use this tool

  1. Define the industry and time frame. Be specific, for example "regional last-mile delivery, mid-Atlantic U.S., Q3 2026." The industry is required before you can save a version.
  2. Rate each force Low, Medium or High. Rivalry, new entrants and substitutes form horizontal competition. Supplier and buyer power form vertical competition.
  3. Write an analytic rationale for each rating, and attach sourced evidence entries.
  4. Set the overall industry attractiveness based on the combined pressure of all five forces.
  5. Save a version and revisit as regulation, technology or market structure shifts.

Common pitfalls

  • Defining the industry too broadly. "Transportation" says little; "regional parcel delivery" says a lot.
  • Treating it as permanent. It's a point-in-time snapshot, so date it and revisit it.
  • Rating without evidence. A High rating needs a reason someone else can check.

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