Porter's 5 Forces Assessment

Porter's 5 Forces Analysis | Introductory Guide

This tool is a scoring system designed to bring objectivity to the Porter’s Five Forces analysis by quantifying the attractiveness of an industry. Questions span across the 5 Forces sections - Threat of New Entrants, Supplier Power, Buyer Power, Threat of Substitutes and Competitive Rivalry

Instructions

Rate each statement according to the scoring system from 1-5. The meaning of each grading score is provided in front of each question.

After completing the assessment, review the results summary.

Review the level of industry attractiveness as computed based on the results and provide recommendations on how your company can strengthen its position in the market by addressing the key forces identified.

Outline potential next steps, such as strategic partnerships, investment in innovation, or diversification to improve the company’s competitive advantage.

Section 1 of 5

Force 1: Threat of New Entrants

1. What are the expected costs or investments for new entrants to compete effectively? 2. How difficult is it for new players to gain access to distribution channels, suppliers, or customers? 3. How strong are brand loyalty and customer switching costs in this industry? 4. How regulated is the industry (e.g., legal barriers)? 5. Are there any proprietary technologies or patents held by incumbents?

Force 2: Bargaining Power of Suppliers

1. How many suppliers exist in the industry, and what is their market dominance? 2. Are there alternative suppliers readily available? 3. Do suppliers have the ability to integrate forward into your industry and become competitors? 4. How differentiated are the inputs (raw materials, services) provided by suppliers? 5. How important are your purchases to the supplier's revenue?

Force 3: Bargaining Power of Buyers

1. How concentrated is the buyer base? Do a few large buyers control most of the purchasing power? 2. How price sensitive are your customers? Do they have alternatives or substitutes? 3. How easy is it for customers to switch to competing products or services? 4. How well informed are customers about market offerings? 5. Do buyers have the ability to integrate backward into your industry?

Force 5: Competitive Rivalry

1. How many direct competitors are there in the space? 2. How intense is the price competition in the market? Are there frequent price wars or discounting strategies? 3. How similar are competitors' products or services? 4. What is the rate of industry growth? 5. How expensive are exit barriers for competitors?

How attractive is this industry for profitable and sustainable business growth?

Section	Calculated Score	Obtainable Score	Score Meaning
Threat of New Entrants	14	25	Moderate barrier to entry - threat of new entrants is imminent
Bargaining Power of Suppliers	16	25	Moderate supplier power - threat of disruption to supply dynamics imminent
Bargaining Power of Buyers	17	25	Moderate buyer power - threat of disruption to buyer dynamics imminent
Threat of Substitutes	14	20	Manageable substitutes - threat of replacement imminent
Competitive Rivalry within the Industry	16	25	Moderate rivalry - threat of displacement imminent
Total	77	120	MODERATE Industry Attractiveness

Overall Industry Attractiveness: Scoring Guide

Calculated Score = [Sum of all five forces scores]

Interpretation:

80-120: HIGH Industry Attractiveness

High barriers to entry, low buyer/supplier power, few substitutes, low rivalry. Industry offers high profitability and growth potential.

41-79: MODERATE Industry Attractiveness

Some barriers to entry, moderate power of buyers/suppliers, manageable substitutes, moderate rivalry. Industry offers opportunities with some risks.

40 and below: LOW Industry Attractiveness

Low barriers to entry, high buyer/supplier power, many substitutes, high rivalry. Industry has significant challenges and may not be sustainable longterm.