Porter's Five Forces is a framework for analysing the competitive intensity and attractiveness of an industry. It was developed by Michael Porter at Harvard Business School back in 1979. Trust me, it's not just some dusty old academic theory. It's a powerful tool that can help you understand the dynamics of your industry, identify potential threats and opportunities, and develop a sustainable competitive advantage.

If you are competing in a market, you really need to understand what you're competing against, so that you can best position yourself to be in the strongest spot to win.

The framework looks at five key forces:

1. Threat of New Entrants: How easy is it for new competitors to enter your market? Are there high barriers to entry, such as significant capital requirements, strong brand loyalty, or government regulations?
2. Bargaining Power of Suppliers: How much power do your suppliers have? Can they dictate prices and terms? Are there many suppliers to choose from, or are you reliant on a few key players?
3. Bargaining Power of Buyers: How much power do your customers have? Can they demand lower prices or better terms? Are there many buyers to choose from, or are they concentrated?
4. Threat of Substitute Products or Services: Are there other products or services that could meet the same needs as yours? How easy is it for customers to switch to these alternatives?
5. Rivalry Among Existing Competitors: How intense is the competition in your industry? Are there many players vying for market share? Is price competition fierce?

By analysing these five forces, you can gain a clear understanding of the competitive environment in your industry. You can identify the factors that are driving profitability and the factors that are eroding it. You can also identify potential opportunities to differentiate yourself from your competitors and gain a competitive advantage.

This PDF and Google Sheet resource provides a structured template for conducting your own Porter's Five Forces analysis.

It's designed to be practical and actionable, helping you to:

• Assess the intensity of each of the five forces.
• Identify the key drivers of competition in your industry.
• Develop strategies to mitigate threats and capitalise on opportunities.

Download the Template

Choose either the PDF or Google Sheet format. The Google Sheet is great for collaborating with your team.

Define Your Industry

Start by clearly defining the industry you're analysing. Be as specific as possible. Don't just say "the technology industry." Say "the cloud-based CRM software industry."

Assess Each Force

Work through each of the five forces, assessing the intensity of each one. Use the template to document your findings and provide evidence to support your conclusions.

1. Threat of New Entrants: Consider factors such as barriers to entry, economies of scale, and government regulations.
2. Bargaining Power of Suppliers: Consider factors such as the number of suppliers, the availability of substitutes, and the importance of your industry to the suppliers.
3. Bargaining Power of Buyers: Consider factors such as the number of buyers, the availability of substitutes, and the importance of your product to the buyers.
4. Threat of Substitute Products or Services: Consider factors such as the price and performance of substitutes, the switching costs for customers, and the availability of new technologies.
5. Rivalry Among Existing Competitors: Consider factors such as the number of competitors, the size of the market, and the degree of product differentiation.

Prioritise

Once you've assessed each force, prioritise the ones that have the greatest impact on your industry. These are the ones you need to focus on in your strategic planning.

Develop Strategies

For each of the prioritised forces, develop strategies to mitigate the threats and capitalise on the opportunities. How can you strengthen your competitive position? How can you differentiate yourself from your competitors?

Review and Update

The competitive landscape is constantly changing, so you need to review and update your Porter's Five Forces analysis regularly – at least once a year.

Don't try to do this in isolation. Involve your team in the process to get a wider range of perspectives.

Be objective. Don't let your biases cloud your judgement.

Focus on the key drivers of competition. Don't get bogged down in the details.

Use the analysis to inform your strategic decisions. Don't just file it away and forget about it.

And remember, Porter's Five Forces is just one tool in your strategic arsenal. Use it in conjunction with other frameworks and analyses to get a complete picture of your industry.