You might wonder what makes Porter's five forces matrix a popular business framework. This unique tool analyzes an industry as a whole by focusing on the five competitive forces. The 5 forces matrix gives business students and everyone interested in finance a deeper understanding of how a market operates.
No doubt conducting such an extended analysis can be time-consuming. We developed Porter's five forces matrix tool to help you build this framework in a few easy clicks. Get ready to learn more!
1️⃣ Porter's 5 Forces Matrix Tool
The list of Porter's 5 forces matrix tool benefits includes:
- It is free and has no hidden payments.
- It has plenty of template designs to choose from.
- It adjusts to the type of business you analyze.
- It is online and available on any electronic device.
- It saves you time and does all the work for you.
2️⃣ What Is Porter's 5 Forces Matrix?
Before making a five forces matrix yourself, you should understand what lies in the foundation of this framework. In this section, we'll discuss the key elements the matrix includes.
What is Porter's 5 Forces Analysis?
Porter's 5 forces matrix was created and published by Michael Porter, a Harvard Business School professor. The tool indicates an industry's weaknesses and strengths. You can apply this technique to any segment of the economy to measure the level of competition.
Five forces analysis is an essential part of many students' thesis papers and a helpful tool for people who want to start their businesses. Conducting this analysis allows you to evaluate a competitive environment and enhance a company's long-term success.
Porter's Five Competitive Forces
Consider these five elements of Porter's matrix. Understanding them allows a business to evaluate the competitive landscape and stay relevant.
|Competition in the industry||The first element refers to the number of competitors within an industry and their ability to undermine a company.|
|Potential of new entrants into a market||The potential of new entrants considers the time and money it costs for a business to enter a market.|
|Power of suppliers||One more element, the power of suppliers, focuses on the number of suppliers within an industry and their unique inputs.|
|Power of customers||The next factor addresses the customers' needs within an industry and the size of a potential client base.|
|The threat of substitutes||The last factor focuses on substitutes, meaning the goods and services that can threaten a company's products.|
3️⃣ 5 Forces Analysis Template
The 5 forces analysis template is a powerful tool that can help discover the best market for a business. With the help of visualization, it evaluates the competitive environment and finds better strategies for development.
The template may exist in various designs, but the structure stays the same. It has five fields to fill in, according to each force. Having them connected makes it possible to see a broader picture.
Check our designs below.
5 Forces Template #1
5 Forces Template #2
5 Forces Template #3
4️⃣ Benefits and Limitations of Porter's 5 Forces Matrix
Porter's 5 forces matrix is a helpful tool to consider if you want to start your own business. However, there are some limitations you should know.
- It is used to form a business strategy to increase competitive advantage.
- It has simple visualization and is easy to understand.
- It can be complemented by other business tools, like SWOT analysis, VRIO, or PESTLE.
- It is helpful when designing corporate strategy and vision.
- It should be regularly updated since the market environment is rapidly changing.
- It doesn't provide quantitative data and lacks some measurables.
5️⃣ Porter's 5 Forces Analysis Examples
This section contains a collection of Porter's 5 Forces analysis examples published in our essay database. You might want to use them for reference.
- Amazon Company’s Porter’s Five Forces Analysis
- Coca-Cola Company’s Porter’s Five Forces Analysis
- Apple’s PESTEL, SWOT, Five Forces, VRIO Analyses
- Nike Company: Porter’s Five Forces Model and PESTEL