Sector Analysis (Porter's 5 Forces)
Sector Analysis uses Porter's 5 Forces model to measure how competitive and profitable your industry, as a whole, is – regardless of how good your specific business may be.
What it's for
Competitor Analysis looks at specific companies; Porter's model examines the structure of the game in which they all compete. An industry can be difficult even if you are better than all direct competitors – for example, if it's very easy for anyone to enter, or if suppliers have total control over prices. This exercise clarifies whether you are entering a structurally favorable or challenging industry.
The five forces
- Rivalry Among Existing Competitors – how fierce the competition is among companies already operating in the sector.
- Bargaining Power of Suppliers – the extent to which your suppliers can dictate prices and terms.
- Bargaining Power of Buyers – the extent to which your customers can pressure for price, terms, or easily switch suppliers.
- Threat of New Entrants – how easy it is for a new competitor to enter your industry.
- Threat of Substitute Products or Services – how much different products or services can solve the same need for your customer.
How to evaluate each force
Click on a force to open its evaluation panel, where you assign a score from 1 to 5 (the higher the score, the more intense/unfavorable this force is for your business) and can record the reasoning behind the score. Each force also automatically receives a short label (e.g., "Saturated market" or "High risk of new competitors") that summarizes the interpretation of that score.
At the top of the page, the Competitive Intensity indicator shows the average of the five forces – the higher it is, the more competitive (and potentially less profitable) the industry tends to be.
Notes on the analysis
Below the five forces, the page provides text structured by force, followed by an Overall Assessment that summarizes what to do with this reading. This text block often contains the most practical recommendations from the exercise – it's worth reviewing even if you already have the five scores.
Tips
- Don't confuse "strong competitor" (Competitor Analysis) with "difficult industry" (Porter) – the two can point in different directions, and both matter.
- A high score in "Threat of New Entrants" is a signal to think about barriers to entry (brand, relationships, switching costs) and not just current competitors.
- Review this analysis if industry conditions change significantly (new regulation, new major player entering) – it does not update itself.
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