STUDENT NAMES:__________________________________________________________________

Porter’s 5 Forces Framework Worksheet

Competition in an industry is rooted in its underlying economics determined by the

competitive forces existing in the industry. The state of competition is the key to
determine the competitive rules, the strategies potentially available to the firm and the
profit potential that can be exploited. Use this worksheet to perform strategic analysis
to help determine whether your retailer can be successful.

SUMMARY OF CASE FACTS AND PRIMARY ISSUES

COMPANY
INDUSTRY COMPETITION – RIVALRY
A rivalry in an industry is considered intense when the [Bullet Point illustration of the
following exist: applicable points to the left]
1. Numerous or equally balanced competitors
2. Competition is a market share game
3. High fixed or storage costs
4. Lack of differentiation
5. Switching costs exist
6. Capacity augmented in large increments (intermittent over-
capacity)
7. Diverse competitors
8. High strategic stakes
9. High exit barriers
Also consider: brand identity, industry growth, informational
complexity.
STUDENT NAMES:__________________________________________________________________

THREAT OF NEW ENTRY

Major sources of barriers to entry, which serve to limit the [Bullet Point illustration of the
threat of new entry are: applicable points to the left]
1. Economies of scale/vertical integration
2. Product differentiation
3. Brand identity
4. Capital requirements
5. Switching costs
6. Access to distribution channels
7. Access to necessary inputs
8. Cost advantages or disadvantages independent of scale
9. Government policy
10. Expected retaliation by existing firms
11. An entry deterring price
12. Experience (learning) curves
BARGAINING POWER OF BUYERS
Buyers can force down prices, bargain for better quality or [Bullet Point illustration of the
service, or play competitors against one another. A buyer has applicable points to the left]
power when the following exist:
1. Concentrated or purchases large volumes relative to seller
sales
2. Products purchased from the industry represent a
significant fraction of the buyer’s costs or purchases
3. Products purchased from the industry are standard or
undifferentiated
4. Few switching costs
5. Buyers are knowledgeable and/or have access to pertinent
information
6. Earns low profits
7. Backward integration is a threat
8. Purchases can impact quality/performance
9. Buyer firms concentrated
Also consider: brand identity (of seller and buyer), pull
through, price sensitivity, buyer profit levels, decision-
makers’ incentives, other forms of bargaining leverage.

THREAT OF SUBSTITUTES
Substitutes limit potential returns because they place a ceiling [Bullet Point illustration of the
on prices. Substitute products that deserve the most attention applicable points to the left]
are:
1. Those subject to improving the price-performance tradeoff
with the industry’s product
2. Those produced by industries earning high profits
Also consider: relative price performance of substitutes,
switching costs, and buyer propensity to substitute.
STUDENT NAMES:__________________________________________________________________

BARGAINING POWER OF SUPPLIERS

Suppliers can exert influence on a firm by threatening to raise [Bullet Point illustration of the
prices or reduce quality or service and can squeeze profit out applicable points to the left]
of an industry. LABOR IS AN INPUT, supplied by
employees. Suppliers have power when:
1. The suppliers dominate the industry and are more
concentrated than the industry it is selling to
2. It is not obligated to contend with other substituted
products for sale to the industry
3. Industry not an important customer
4. Volume represented by buyer is not of high importance to
supplier
5. Supplier’s product is an important part of the buyer’s
business
6. The supplier’s products are differentiated or it has built up
switching costs
7. Forward integration is a threat
Also consider: cost relative to total purchases in the industry,
impact of inputs on cost or differentiation (labor is an input
supplied by employees).

Article adapted from MBA Boost: https://www.mbaboost.com/porter-5-forces-framework-

worksheet/