DESIGN BUSINESS SCHOOL
FIVE FORCES ANALYSIS
DESIGN BUSINESS SCHOOL
Benefits of a Porter’s five forces competitive analysis
1. You gain awareness of some of the most significant forces that shape your strateg y to survive
and thrive.
2. Awareness of the five forces allows some stress relief because of reduced uncertainty and
implementation of ventures into new markets.
3. Identif ying supplier power will provide you the urgenc y to seek new suppliers or change
your relationship with your supplier to minimise risk.
4. If buyer power is high, this can determine potential weaknesses in your customer
relationship management and service offerings.
How to develop a five forces analysis
Developing a f ive forces competitive analysis allows you to work out the difficulty of maintaining
continued prof itability in a competitive environment. Because of the complexity of the model
compared to a SWOT analysis, it takes a bit more wor k and research.
Some people have star ted using a sixth force for Porter’s model, called Complements, that identifies
services that complement the services you sell. W hile Complements do not directly compete wi th what
you sell, they can be an oppor tunity or threat depending on your response.
Complements are essentially the ‘buy with’ ser vices that clients like. When a person buys a smart
phone, they of ten go to another store to buy power cords, phone covers, and even software. There are
online stores devoted to complementary products and they sometimes direct the customer to anot her
company to buy the primary product.
Complements can be a valuable part of strategy because they def ine a potential loss of sales or an
opportunity to grow and increase revenue.
Note that some research may need to be done to complete your five forces competition model.
