Porter 5 Forces Analysis

Five Forces Diagram Generator

To use our Five Forces diagram generator, you need to take 3 steps: add the required data, choose the design, and download the result.

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🤓 How to Use Five Forces Diagram Generator

This Five Forces diagram generator is a real find! Take the 3 steps below to get a customized report:

  1. Add the required data. Type in all the factors that you have found while researching the industry.
  2. Choose your favorite design. Decide which alignment and color palette is more to your taste.
  3. Download the result. Save the diagram on your device in docx, pdf, png, or jpeg format.

âś… Porter's Five Forces Diagram Explained

Porter's Five Forces is a model used to evaluate 5 competitive forces that form every industry. It helps to determine the advantages and disadvantages of the industry. We will explain how to use this model below.

What Are the Porter Five Forces?

Porter's 5 Forces include:

  • The threat of substitute products or services.
  • The threat of established rivals (competitive rivalry or competition in the industry).
  • The threat of new entrants (potential of new entrants).
  • The bargaining power of suppliers (supplier power).
  • The bargaining power of customers (buyer power).

Who Is the Buyer in Porter's Five Forces?

In Porter's Five Forces, buyers are the customers or the clients that can potentially buy the company's product or service. Buyer power is determined by:

  • Buyers' concentration
  • Switching costs
  • Price sensitivity
  • Threats of backward integration

Low bargaining power indicates a good business environment for a company.

How to Do a Five Forces Analysis?

As the Five Forces analysis studies the whole market, you need to conduct some prior research.

Step #1 Review the industry, key players, target market, and current trends.
Step #2 Analyze what regulations, costs, and other barriers new entrants might face. Analyze what motivates them to enter the market.
Step #3 Study what goods or services are similar to what your company offers. Look at the market from the point of view of customers and suppliers.
Step #4 Evaluate the competition in the market.
Step #5 Make conclusions based on your findings.

Note that you can combine Porter's Five Forces analysis with SWOT, PESTEL, SOAR, or VRIO analysis for more effectiveness.

How Does the Five Forces Diagram Generator Work?

This free online tool helps to organize your findings and present them clearly. The generator makes a Porter Five Forces diagram using the data you enter. It gives you several visual templates and fonts to choose from. This generator is also completely free to use and download.

🌟 5 Forces Diagram Generator Tips

  1. Define the goals. Before conducting the analysis, ensure you understand how to implement its results. Your diagram will have a clear focus if you do so.
  2. Brainstorm. Before researching the matter, brainstorm the chosen company using your knowledge. Write down all the aspects that you think are worth attention.
  3. Factcheck. Make sure you rely on complex data from reliable sources. Also, pay attention to the publication date of the sources you use. Some of the information you will find is no longer relevant.
  4. Repeat your analysis. One analysis might not be enough as the situation on the market can spontaneously change. Conduct analysis regularly to be updated on the company's external environment.
  5. Decide which forces are in your favor. Each force positively, negatively, or doesn't at all affect a company in the chosen industry. Define the strength of influence of each of the forces.

đź“ť Five Forces Diagram Generator Results

Now it's time for a short example. Imagine you need to perform a Porter's Five Analysis for Starbucks's snacks. Here's a summary of Porter's Five Forces analysis of the snack food industry:

  1. The threat of new entrants – low.
    • High financial requirements.
    • Stringent regulations.
    • Complex distribution channels.
    • High competition.
  2. The bargaining power of buyers – moderate.
    • The ease of switching to other brands.
    • Strong brands don't risk losing brand loyalty.
  3. The bargaining power of suppliers – moderate.
    • Low during summer: many suppliers.
    • High during winter: few suppliers, import from other countries.
  4. The threat of substitute products – high.
    • Competition with cocoa, chocolates, soft drinks, and candy.
    • Similar retail and distribution channels with snack manufacturers.
    • Consumers might prefer homemade food due to their health conditions.
  5. The intensity of rivalry – high.
    • Low growth in revenue in the market during the last 3 years.
    • Some companies have recently downsized their operations.
    • High storage, transport, and energy expenses.
    • Companies use price reduction strategies and strong advertising.

✍ 5 Forces Analysis Essay Examples

In the below section, you’ll find a list of essay examples that use 5 Forces framework to analyze various businesses. Use them for reference and inspiration.

🖇️ References

  1. Porter's 5 Forces Explained and How to Use the Model
  2. How to Use Porter’s Five Forces Analysis to Create a Business Strategy - 2022 - MasterClass
  3. The Five Forces - Institute For Strategy And Competitiveness - Harvard Business School
  4. Competitive Rivalry: What Is It and Why Is It Important? | Indeed.com