Porters Five ForcesPorters Five Forces

Porter's Five Forces Template

Estimate your competition and develop a business strategy.

About Porter's Five Forces template

What are the Porter's Five Forces?

  1. Supplier power: this force is an assessment of how easy it is for suppliers to drive prices up. It’s typically completed by determining the number of suppliers who can offer the same supply, the cost of switching suppliers, and any unique aspects of benefits the supplier can offer.

  2. Buyer power: Next, you determine how easy it is for buyers to drive prices down. This is determined by the total number of buyers your business has, customer acquisition cost, customer lifetime value, and other factors that may give the buyer (customers) leverage to negotiate for lower prices, or go elsewhere.

  3. Rivalry among existing competitors: The main drivers of this force are the number of and capability of competitors in the market. More numerous and powerful competitors with larger market share diminishes the power of any one smaller company, and gives both customers and suppliers more leverage (because of their ability to go elsewhere).

  4. Threat of substitute products/services: When close substitute products exist in a market, it increases the likelihood of customers switching to alternative products in response to price increases.

  5. Threat of new entrants: Profitable markets attract new entrants, which in turn erodes profitability. Unless incumbents have strong and durable barriers to new entrants, profitability will decline. Conversely, the more unique your product is from other competitors, the less threat is posed by new entrants.

Why is Porter's Five Forces analysis important?

Porter’s Five Forces forces model is useful because it can provide insight on various parts of a business:

  • Determine the factors affecting profitability: Completing a Five Forces analysis will help a business understand the specific factors that may be hindering growth or profitability, and then find new competitive advantages.

  • Make better decisions on expansion or capacity: If you’re considering expanding your business in some way, you’ll want to understand the competitive forces at play and how they may affect you. A Five Forces analysis provides organizations with the information to make good decisions relating to entering a specific industry, or whether to increase.

  • Inform your overall strategy: By understanding what shapes the overall market and what determines profitability, you can craft a strategy that plays to the strengths of your industry and accounts for the weaknesses.

How to Use Porter’s 5 Forces

With Miro’s Five Forces analysis template, you can easily complete the analysis on your own. Here’s how you do it:

Step 1: Consider threats of new entry

How easily could others enter your market and threaten your company’s position? Who are your new competitors? How much does it cost to enter your market? What are the barriers to entry? Is your market tightly regulated? What does it take to scale?

Think about the amount of competition your company faces: the number of competitors you have and how their products or services compare to yours. If your market has few competitors, that can seem attractive, but keep in mind it might be short-lived. If your market is highly competitive, that can seem unattractive, but it might push you to improve your products and your pricing.

Step 2: Consider threats of substitution

What is the likelihood that your customers will replace your product or service with a different one? Are there any viable substitutes on the market? What is the cost of switching to a substitute? 

When you map out threats of substitution, analyze how your product has impacted your customers’ lives. As their behavior changes, see if you can adapt your product accordingly. You might be able to offer a new service or a cheaper alternative.

Step 3: Consider the bargaining power of suppliers

What would happen if your suppliers increased their prices? Is that likely to happen? How easily could you switch to an alternative supplier? 

It’s important to keep in mind that your supplier is a business too. They are performing the same strategic calculations that you are. If your supplier offers a niche service, they could charge you more and impact your bottom line.

Step 4: Consider the bargaining power of buyers

How many buyers do you have? Could your buyers switch suppliers? How many would need to switch suppliers to impact your bottom line? How important is your product or service to your buyers?

Like your supplier, your buyers’ calculations could seriously impact your bottom line too. These questions help you figure out how much leverage your buyers have. Even if your buyers are not businesses, it’s important to treat them that way. They are business-savvy, often shopping around to see how your competitors measure up.

Step 5: Consider competitive rivalries.

Who are your existing competitors? How strong are they? How do their products or services compare to yours? What sets your company apart? What would it cost your customer to switch to a competitor?

Draw out your current competitive landscape. Understand how your competitors are succeeding and why they’re failing. Many businesses make the mistake of only analyzing what makes them better than their competition. It is crucial to understand what makes your competition better than you. Be honest! It’s the only way you can get ahead.

Porter's Five Forces Template

Get started with this template right now. It’s free

Related Templates
product-backlog-thumb-webproduct-backlog-thumb-web
PreviewMore info

Product Backlog

Development teams are often juggling many products at once. A product backlog is a project management tool that helps teams keep track of projects in flight as they build and iterate, so you can store everyone's ideas, plan epics, and prioritize tasks. The highest-priority tasks are at the top of the product backlog, so your team knows what to work on first. Product backlogs make it easier for teams to plan and allocate resources, but it also provides a single source of truth for everyone to know what development teams are working on.

Product Backlog
Decision Tree ThumbnailDecision Tree Thumbnail
PreviewMore info

Decision Tree

Making difficult decisions gets easier when you can look clearly at your choices and visualize the outcomes. That’s just what a decision tree will help you do, empowering you to invest your time and money with confidence. A decision tree is a flowchart that looks just how you’d imagine—with “branches” that represent your available choices. It provides a stylized way to play out a series of decisions and see where they lead before you commit your real-world resources, which is especially valuable for startups and smaller companies.

Decision Tree
Timeline Workflow ThumbnailTimeline Workflow Thumbnail
PreviewMore info

Timeline Workflow

A timeline is a visual tool that chronologically plots out projects step by step. It’s an ideal tool for your team to tell stories (such as an overview of events in your organization) and visualize your projects or processes. The Timeline Workflow template is perfect for any project that relies on visual content. You may find it beneficial to use with your team and also to share with other stakeholders or clients to keep them in the loop on your progress.

Timeline Workflow
social-media-calendar-thumb-websocial-media-calendar-thumb-web
PreviewMore info

Social Media Calendar

Most businesses have a social media presence, but many of them aren’t using social media as a competitive differentiator. The Social Media Calendar template allows you to plan, schedule, and craft posts for LinkedIn, Twitter, Facebook, Instagram, and Pinterest, so you can leverage social media as a strategic tool to promote your brand. Use the Social Media Calendar template to plan out your social content a week, month, or quarter in advance. Collaborate with the marketing team, prepare for product launches and major initiatives, and share draft social posts.

Social Media Calendar
Target Audience ThumbnailTarget Audience Thumbnail
PreviewMore info

Target Audience

The Target Audience template helps you to understand your potential customers. Who is interested in your company or service? What types of people might buy your product? How can you market to them effectively? Target audience analysis involves describing your audience in terms of a variety of demographics, including age and gender, as well as income, education, and location, or psychographics like interests and opinions. Analyzing your target audience provides valuable insights for most business functions.

Target Audience
Stakeholder Map ThumbnailStakeholder Map Thumbnail
PreviewMore info

Stakeholder Map

A stakeholder map is a type of analysis that allows you to group people by their power and interest. Use this template to organize all of the people who have an interest in your product, project, or idea in a single visual space. This allows you to easily see who can influence your project, and how each person is related to the other. Widely used in project management, stakeholder mapping is typically performed at the beginning of a project. Doing stakeholder mapping early on will help prevent miscommunication, ensure all groups are aligned on the objectives and set expectations about outcomes and results.

Stakeholder Map