Consulting framework: Porter’s 5 Forces

« Five Forces » Market Analysis

  • Barriers to entry
    • Economies of scale, capital costs, cost advantage of existing competitors, barriers to exit, patents
  • Market Rivalry
    • Number and size of competitors, industry growth rate, product differentiation factors, industry margins/pricing
  • Buyer power
    • Significance of purchase relative to cost structure, switching costs, purchase volume, threat of backward integration
  • Supplier power
    • Number and size of suppliers switching costs/product differentiation, availability of substitutes, possibility of forward integration
  • Substitutes
    • Relative price/value of substitute compared to industry’s product, cost of switching to substitute, buyers’ propensity to switch
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