porters-five-forces

This skill performs a Porter's Five Forces analysis to evaluate the structural attractiveness of an industry and identify the competitive dynamics that determine profitability. It solves the problem of assessing market attractiveness in a rigorous, repeatable way by examining five forces: competitive rivalry, supplier power, buyer power, threat of substitutes, and threat of new entrants. The skill frames the work from the perspective of a competitive strategist analyzing a given industry or market supplied as arguments.

For each of the five forces, the skill lays out the conditions that make it high versus low and the strategic implications that follow. Competitive rivalry considers factors like the number and size of competitors, industry growth, differentiation, fixed and exit costs. Supplier and buyer power examine concentration, switching costs, integration threats, and bargaining leverage. Threat of substitutes weighs the availability, performance, and switching costs of alternatives, while threat of new entrants looks at barriers to entry, margins, economies of scale, network effects, and regulation. The output process guides the analyst to rate each force as High, Medium, or Low, assess overall industry attractiveness, note each force's current state and trend, prioritize the two or three most critical forces, and develop strategic responses and positioning opportunities.

This skill targets product managers, strategists, founders, and analysts evaluating industry dynamics or market entry. It expects inputs such as an industry or market definition, current competitors and positioning, the supplier and customer landscape, potential substitutes and new entrants, and product specifics. Stated caveats include that no industry is universally attractive or unattractive because position matters, the same industry can differ by company, and forces change over time and should be re-assessed. It also recommends combining Porter's Five Forces with SWOT and PESTLE for a more comprehensive analysis.