Porters Five Forces Analyzer

Porter's Five Forces Analyzer

> Industry-structure analysis that explains why some markets are profitable and others aren't.

What this skill is

A workflow that applies the Five Forces framework developed by Michael Porter with quantitative pressure scoring (1-5 per force) and the structural drivers behind each score. It surfaces the dominant force, identifies where the company can move the structure in its favor, and produces a positioning recommendation that goes beyond "the industry is attractive or unattractive."

What it solves

• Industry analysis that stops at "competition is intense" without identifying which force matters most
• Strategy memos that ignore supplier or buyer power
• Treating substitutes only as direct competitors (missing adjacent threats)
• Static analysis with no view on how forces are evolving
• Recommendations disconnected from the structural levers identified

When to invoke

• Entering a new vertical, geography, or product category
• Pre-Mergers and Acquisitions (M&A) diligence in an unfamiliar industry
• Defending current strategy when challenger dynamics shift
• Annual strategic plan industry-context refresh
• Board memo justifying a market exit or entry

Phase 1: Define the industry boundary

Industries are not obvious - and a bad boundary choice invalidates the analysis. Decide:

• Product or service scope - what's in, what's out (e.g., "Business-to-Business (B2B) fleet telematics" vs. "vehicle hardware")
• Geography - global, regional, country-specific
• Customer segment - enterprise versus small and medium business; consumer versus industrial
• Value chain stage - manufacturer, distributor, retailer, service provider

Different boundaries can produce different forces. Document the choice explicitly.

Phase 2: Force 1 - Supplier power

Score 1 (weak) to 5 (strong) and explain drivers:

| Driver | Pushes power UP | Pushes power DOWN | |--------|-----------------|-------------------| | Supplier concentration | Few, dominant suppliers | Many fragmented suppliers | | Switching costs | High (proprietary inputs) | Low (commodity) | | Forward integration threat | Credible | Not feasible | | Importance of industry to supplier | Small customer for them | Large customer | | Substitute inputs | None | Many viable | | Differentiation of inputs | Highly differentiated | Commoditized |

Cite specific suppliers when known (e.g., Taiwan Semiconductor Manufacturing Company (TSMC) for advanced silicon).

Phase 3: Force 2 - Buyer power

| Driver | Pushes power UP | Pushes power DOWN | |--------|-----------------|-------------------| | Buyer concentration | Few large buyers | Many small buyers | | Switching costs | Low for buyer | High (lock-in, contracts) | | Backward integration threat | Credible | Not feasible | | Price sensitivity | Product is large percent of buyer's cost | Small share | | Product differentiation | Commoditized | Highly differentiated | | Buyer information | Full price transparency | Asymmetric |

Sub-segment buyers - enterprise behaves differently from small and medium business.

Phase 4: Force 3 - Threat of new entrants

| Barrier | High barrier | Low barrier | |---------|--------------|-------------| | Economies of scale | Required | Not required | | Capital requirements | Heavy | Light | | Network effects | Strong | None | | Switching costs for buyers | High | Low | | Access to distribution | Locked up | Open | | Brand and customer loyalty | Strong | Weak | | Regulatory licenses | Required, scarce | None | | Proprietary technology or data | Defensible | Replicable | | Incumbent retaliation | Credible | Unlikely |

Score the net entry barrier 1 (low → high entry threat) to 5 (high → low threat).

Phase 5: Force 4 - Threat of substitutes

Substitutes are alternative solutions to the same customer job - not direct competitors. Examples:

• Video conferencing → in-person meetings, asynchronous video, written documents
• Ride-sharing → public transit, walking, owning a car, working from home

| Driver | Pushes threat UP | Pushes threat DOWN | |--------|------------------|--------------------| | Substitute price-performance | Improving | Degrading | | Buyer propensity to substitute | High | Low (entrenched habits) | | Cost of switching to substitute | Low | High |

Map the performance trajectory of substitutes over the next 3-5 years.

Phase 6: Force 5 - Rivalry intensity

| Driver | Higher rivalry | Lower rivalry | |--------|---------------|---------------| | Competitor concentration | Many similarly-sized | Few, with clear leader | | Industry growth | Slow or declining | Fast | | Fixed costs or capacity | High (drives price competition) | Low | | Product differentiation | Low | High | | Exit barriers | High (forces stay-and-fight) | Low | | Strategic stakes | High for multiple players | Low |

Phase 7: Aggregate and dominant force

| Force | Score (1-5) | Dominant drivers | Trajectory (3 years) | |-------|------------:|------------------|----------------------| | Supplier power | x | | ↑↓→ | | Buyer power | x | | ↑↓→ | | New entrants | x | | ↑↓→ | | Substitutes | x | | ↑↓→ | | Rivalry | x | | ↑↓→ |

Identify:

• Dominant force - the one most depressing industry profitability
• Industry attractiveness - sum scores; under 12 attractive, 12-18 moderate, over 18 difficult
• Direction of travel - net force pressure trajectory

Phase 8: Strategic implications

The point of the Five Forces is not just "what's the industry like?" but what to do about it. For each force, identify the strategic lever:

| Force | Strategic moves | |-------|-----------------| | Supplier power | Vertically integrate, multi-source, build alternatives, build internal capability | | Buyer power | Differentiate, raise switching costs, segment, build ecosystem | | Entrants | Raise barriers (scale, network effects, intellectual property), pre-empt, M&A consolidation | | Substitutes | Improve relative price-performance, redefine the job, partner with substitutes | | Rivalry | Differentiate, segment, consolidate via M&A, signal credibly to discourage price wars |

Output

• Five-force scorecard with drivers cited
• Industry boundary statement and trajectory of each force
• Dominant force identification and reasoning
• Industry attractiveness rating
• Strategic recommendation: where to invest to reshape the forces in your favor
• 3 leading indicators to monitor that would change the analysis

Operating rules

Always

• State the industry boundary explicitly
• Score each force on a 1-5 scale with drivers cited
• Identify the dominant force, not a generic "competition"
• Project a 3-year trajectory per force
• Translate analysis into specific strategic moves

Never

• Treat the Five Forces as a static one-time exercise
• Confuse substitutes with direct competitors
• Conflate industry attractiveness with company performance
• Skip the boundary definition
• Stop at description without recommending action

Source & license

This open-source skill is cataloged on AgentStack and links to its original source — we do not rehost the code.

• Author: varunk130
• Source: varunk130/claude-code-skills
• License: MIT

Install and usage instructions live in the source repository linked above.