Porter's Five Forces template
Analyze competitive forces shaping your industry and make smarter strategic decisions.
Every business operates within a complex web of competitive forces that shape its market position and potential for success. Running a business isn't just about watching what your competitors are doing. You must think about supplier relationships, potential new entrants, and more to get a clear picture of all the factors affecting your business.
Porter's Five Forces is a proven framework for analyzing the key competitive forces shaping your market position. Conducting Porter’s Five Forces analysis in Confluence whiteboards allows you to systematically evaluate each force and understand how they interact, giving you the insights needed to build a more resilient and competitive business.
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What are Porter's Five Forces?
Devised by Harvard Business School professor Michael Porter in the late 1970s, the Five Forces model has become a fundamental tool for understanding industry competition and profitability. The framework examines five key forces. By analyzing these forces together, you can better understand what drives competition in your industry and where to focus your strategic efforts:
Threat of new entrants
Could a startup disrupt your market tomorrow? This force examines the barriers that either protect established companies or leave the door open for new competition. Capital requirements, brand loyalty, and government regulations can influence a new company's ability to gain market share in your industry.
Running a risk assessment can help you evaluate these factors and prepare for new potential competitors.
Bargaining power of suppliers
A business' suppliers can impact its pricing strategy and bottom line. Look at how many suppliers operate in your industry, their unique products or services, and their ability to set prices and terms.
When you heavily depend on a few key suppliers, they have more use to influence your costs and quality standards.
Bargaining power of buyers
How much power do your customers hold? This force examines factors like the concentration of your customer base, what it costs them to switch to competitors, and what alternatives they have available.
Buyers can demand better prices and terms when they have many options and low switching costs.
Threat of substitute products or services
Sometimes, your biggest threat isn't a direct competitor — it's an entirely different solution to the same problem. Think about alternatives that could replace your product or service. How easily can customers switch? What makes your offering unique? Understanding potential substitutes helps you differentiate your business.
Industry rivalry
This force examines the competitive intensity within your industry. It considers factors like the number of competitors, market growth rate, and difficulty exiting the industry.
High rivalry often means more aggressive pricing and marketing, while low rivalry can lead to more stable profits.
What is Porter's Five Forces template?
Porter's Five Forces template provides an easy-to-follow way to visualize and analyze competitive forces. This roadmap helps you understand the complex dynamics shaping your industry and breaks down abstract market forces into concrete elements you can evaluate and act on.
Why use Porter's Five Forces template?
Creating a template for Porter's Five Forces strengthens your project management approach and eliminates the guesswork in competitive analysis. Instead of relying on hunches, you get a systematic approach to understanding market forces and their impact on your business, which can inform decision-making. Porter's Five Forces template is a tool for project planning and building a strong competitive strategy.
Benefits of using Porter's Five Forces template
Clarifies competition
Porter's Five Forces template helps you see beyond the obvious competitors to understand all the forces affecting your success. This comprehensive view gives you a competitive advantage by revealing opportunities and threats others might miss.
Guides strategic decisions
Armed with a clear understanding of competitive forces, you can make smarter, faster choices about pricing, marketing, and other business strategies. This structured approach helps strengthen your time management, goal-setting, and decision-making processes.
Identifies industry threats
Regular analysis using Porter's 5 forces template helps you identify emerging threats early. Whether it's a new market entrant or the threat of substitute solutions, you'll be better positioned to respond proactively rather than reactively.
Strengthens market position
Understanding competitive forces helps you build on your strengths and address weaknesses in your strategy. Identifying where you have advantages over competitors allows you to focus on reinforcing them while protecting against potential threats.
This clarity improves strategic planning since you know which initiatives will best defend and enhance your competitive position.
Optimizes resource allocation
Porter's Five Forces template helps you focus resources where they'll have the most impact. Understanding which competitive forces matter most allows you to prioritize more effectively and create a solid action plan. This clear framework improves project collaboration by giving teams a shared understanding of where to invest time and effort.
For improved planning, check out our resource planning template.
How to create Porter's Five Forces analysis
Identify the industry
Clearly define which market you're analyzing. Be specific. For example, "luxury electric vehicles" will give you more valuable insights than just "automobiles." Narrowing your focus ensures your analysis is tailored to the right competitors, customers, and trends.
Draw a central circle
Place your industry in the middle of your diagram to form the core of your analysis. This acts as the anchor point for organizing the framework and keeping your focus on the central market context.
Create five sections around the circle
Draw five sections around your central circle, one for each force. This creates a clear visual structure for your analysis, helping you and your team focus on each component individually while maintaining a holistic view of the framework.
Label each force
Label each section with its corresponding force from the framework. These labels—supplier power, buyer power, competitive rivalry, threat of substitutes, and threat of new entrants—will guide your team in systematically exploring each area.
Analyze each force
Dig into each force's specifics. Use market data and team insights to evaluate their impact on your business. To uncover key details, incorporate tools like surveys, market reports, and SWOT analysis. Gather important decision-makers and create a focused meeting agenda to collect stakeholder input.
Rate the forces
Score each force as weak, moderate, or strong (or low, moderate, or high) to help you quickly identify which forces need attention most. Following project collaboration best practices, involve key team members in rating each force's impact.
Refine and interpret
Review your analysis and use these insights to shape your strategy. Focus on actionable takeaways, like bolstering areas where your business is vulnerable or capitalizing on areas of strength. Remember, this is a living document, so update it as market conditions change to keep your strategy relevant.
Confluence whiteboards provide a flexible and collaborative space to map your Porter’s Five Forces analysis visually. Teams can brainstorm in real-time, add sticky notes, draw connections between forces, and organize insights directly on the board. This dynamic tool makes it easy to involve key stakeholders, share updates, and refine your analysis as market conditions evolve.
Example of Porter's Five Forces
Let's see how Porter's Five Forces work in practice by analyzing a digital marketing agency. This example will show you how each force affects an agency's competitive position and profitability:
- Threat of new entrants: Strong: The digital marketing industry has relatively low barriers to entry. With remote work now common, new agencies can start with minimal overhead. While enterprise clients might prefer established agencies, smaller businesses are often willing to work with newcomers who demonstrate expertise. Established agencies must constantly innovate and showcase proven results to maintain their position.
- Supplier power: Weak to Moderate: Marketing agencies rely primarily on human talent and digital tools. While premium talent can command high salaries, a large pool of marketing professionals is available. Digital tools and platforms (analytics, automation, design software) are typically standardized, with multiple options available. The main challenge is retaining top talent who might be tempted to start their own agencies or work for the competition.
- Buyer power: Strong: Clients have many options and can easily compare agencies online. With low switching costs and increased transparency around pricing and results, clients can demand competitive rates and proven ROI. Agencies must differentiate through specialization, industry expertise, or unique methodologies. However, long-term contracts and deep integration with client teams can reduce this power.
- Substitute threats: Strong: Companies have multiple alternatives to hiring an agency — building in-house teams, using freelance marketplaces, subscribing to DIY marketing platforms, or leveraging AI-powered marketing tools. More and more platforms are becoming user-friendly, and various tools make it easier for companies to handle some marketing functions internally. Agencies need to offer strategic value that these alternatives can't match.
- Industry rivalry: Strong: Competition is intense among agencies of all sizes. Large agencies compete for enterprise clients, while boutique firms target specific niches or industries. Agencies compete on expertise, pricing, industry knowledge, and results. Success often depends on building strong client relationships and developing specialized expertise.
This analysis shows why marketing agencies must carefully position themselves in the market. Understanding these Five Forces helps agencies identify where they can create lasting advantages in a crowded market.
Conduct Porter's Five Forces analysis with Confluence whiteboards
Ready to analyze your industry and uncover growth opportunities? Improve project collaboration with Confluence whiteboards — your shared space for creating and refining your Porter's Five Forces analysis. The digital canvas provides all the tools to draw diagrams, add notes, and work together in real-time.
With features that promote a collaborative culture and team alignment, you can easily create, share, and update your analysis with anyone who needs to see it. Brainstorm without boundaries, turn ideas into action, and connect workstreams – all within the Confluence whiteboard collaborative space.
Conduct Porter's Five Forces analysis in Confluence for free
