Want FREE Templates on Organization, Change, & Culture? Download our FREE compilation of 50+ slides. This is an exclusive promotion being run on LinkedIn.


We have assembled 5 documents in the Porter's Five Forces Analysis Toolkit. All documents are displayed below on this page.
Take a look at the Top 100 Best Practices in Strategy & Transformation of 2024. It covers all levels of Strategy (Corporate, Business, Product, Marketing); Planning and Execution; Transformation; and Innovation.

  Open all 5 documents in separate browser tabs.
  Add all 5 documents to your shopping cart.

Renowned economist and business strategist Michael Porter has been notorious for his assertion, "The essence of strategy formulation is coping with competition, competition that is far from perfect and is often intense." Indeed, Porter's Five Forces Analysis serves as an imperative tool for leaders in the corporate world, particularly those at the helm of Fortune 500 companies. This management strategy effectively measures market dominance, and is relevant to key business initiatives such as Strategic Planning, Digital Transformation, Operational Excellence, Risk Management, and Performance Management.

A Brief Overview of Porter's Five Forces Analysis

Porter's Five Forces Analysis is a framework that aids executives to understand the five crucial forces shaping their industry's competitive environment: competitor rivalry, the power of suppliers, the power of buyers, the threat of new entrants, and the threat of substitutes.

Insight into Porter's Five Forces

  1. Rivalry among existing competitors: Identifying the number of competitors and their capability in terms of size and power provides insight into the current competitive scene in the industry.
  2. Bargaining power of suppliers: If suppliers have the capacity to dictate terms, it shifts the market dynamics. They might hike costs, affect supply, or reduce product quality, challenging a company's profitability.
  3. Bargaining power of buyers: Buyers can demand lower prices or higher quality, disrupting the company's market position. They impact the pricing, quality, and essentially the profitability of the company.
  4. Threat of new entrants: An industry prone to easy entries will face constant disruption and competition. Such industries often lack restrictions, allowing newbies to challenge existing businesses with innovative products, price cuts, and fresh marketing strategies.
  5. Threat of substitutes: Substitute products challenge the market presence of existing products by fulfilling the same customer needs, often at better prices or quality.

Strategic Application

The use of Porter's Five Forces Analysis operates from a macro-level perspective, proffering valuable insights into the power dynamics of an industry and the potential for profitability. It aids in protecting a company's competitive advantage and steering their strategic direction. However, equally vital is recognizing the Analysis's limitation—it doesn’t account for alliances and cooperation among competitors, commonly evident in today's increasingly networked market.

Best Practices in Applying Porter's Five Forces Analysis

A Unique Insight and Key Principle: The Sixth Force

While Porter’s five forces offer valuable insights, many experts discuss a sixth force: Complementors. These can significantly alter market dynamics. Recognizing this facet of the model is an important exercise in thought leadership. A Complementor is an entity that directly sells a product or service that complements your product or service, thus enhancing its value. Therefore, Forging strategic alliances with such complementors can bolster your competitiveness and profitability.

Strategically Leveraging Porter's Model

Always bear in mind that Porter's Five Forces Analysis is a strategic tool—not a solution in itself. It should be used to assist in understanding the industry context and initiating strategic conversations concerning market competition. It advises business leaders on market entry or exit, the feasibility of new projects, and informs Mergers and Acquisitions strategy.

While Porter's Five Forces Analysis may involve an intensive understanding of the industry, if undertaken meticulously, it can significantly help in reigniting a stagnant Corporate Strategy, nurturing innovation and staying ahead of the curve in an increasingly competitive world.


Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes across the world—in over 130 countries. Below is just a very small sample of our customer base.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Browse our Business Toolkits
to quickly find the documents you need.
Each business toolkit is a collection of documents around a common management topic.


  Show all available toolkits.

Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.