Porter's Five Forces (Evidence-Cited)

Purpose

Read an industry's structure through Porter's Five Forces, with evidence: search plan → force-by-force ratings with signals → profit-pool implication → next-step options. Each force — competitive rivalry, threat of new entrants, threat of substitutes, buyer power, supplier power — is rated weak/moderate/strong and justified with documented signals, because a rating without signals is vibes. The analysis closes where it should have been aiming all along: where the profit pool sits and who is squeezing it. Five forces is an argument about where margin goes, not a diagram for slide four.

Input

Works best with: the industry or segment, named as precisely as you can ("clinical data management SaaS," not "healthcare"), and the decision this analysis should support. Also useful: a geographic boundary if the structure differs by region, and a [market-landscape-scan](../market-landscape-scan/SKILL.md) in session — the forces read builds on it and searches only gaps.

Input supplied inline with the invocation — text after the skill name, a pasted context dump, or an appended ARGUMENTS: line — counts as answers already given. Use it against the question budget; don't re-ask.

Arriving empty-handed? That works too. The skill opens with at most 3 questions (segment, decision, boundary) and proceeds on labeled assumptions if they go unanswered.

Example invocation: Five forces on mid-market field-service management software, North America — decision: whether we enter or partner.

Key Concepts

• Governing protocol: honors the [autonomous-investigation](../autonomous-investigation/SKILL.md)

contract — question budget of 3, search-plan gate, Fact/Inference/Assumption labels, Just Enough Mode (2-4 signals per force), stable schema, 4-option Final Step. Disciplines: FININT (concentration, margins, filings) + OSINT (analyst coverage, trade press) per [intelligence-collection-disciplines](../intelligence-collection-disciplines/SKILL.md).

• The framework (Porter, 1979): industry profitability is determined by five structural forces,

not by how hard incumbents work. Rivalry sets the intensity of margin competition; entry threat caps pricing; substitutes cap value; buyer power extracts margin downstream; supplier power extracts it upstream. Structure explains what negotiation skill cannot: pricing power is structural.

• Ratings must survive "how do you know?" Each weak/moderate/strong rating stands on documented

signals — concentration data, switching costs, entry examples and how they fared, substitute adoption curves, margin trends. Forces-with-signals is the difference between naming a framework and using one.

• AI-driven substitution is a named candidate, always. In most knowledge industries it is now

the substitute threat; assess it explicitly in the substitutes force rather than letting the analysis pretend it's 2015. Supplier power gets the same modern read: cloud, model, and platform dependencies are supplier concentration.

• Industry, not player: this reads what the structure does to everyone who plays.

[swot-analysis](../swot-analysis/SKILL.md) reads one company's position within it.

• When NOT to use: nascent categories with no stable structure — the forces are still forming;

run the landscape scan and revisit.

• Do-not-invent list: market share, margin data, entrant names, funding rounds, adoption figures.

Application

1. Credit inline context, then ask only the unanswered questions (max 3):

1. Which industry or segment, precisely? 2. What decision should this support? 3. Any geographic boundary?

1. Show the 3-bullet search plan — what you'll search per force, source types (filings, analyst

coverage, trade press, pricing pages, funding databases), fact/inference separation. Continue unless revised. If a landscape scan is in session, build on it; search only gaps.

1. Rate each force with signals, then emit the schema below exactly.

Output schema (do not reorder)

# Five Forces: [Industry / Segment]
**As-of date:** | **Boundary:** | **Decision supported:**

## 1. Competitive Rivalry — [weak / moderate / strong]
- Signals: [concentration, growth rate, differentiation, exit barriers — each with URL + label]
- What it means here: [one sentence]

## 2. Threat of New Entrants — [weak / moderate / strong]
- Signals: [entry barriers, capital needs, recent entrants and how they fared, regulation — each with URL + label]
- What it means here: [one sentence]

## 3. Threat of Substitutes — [weak / moderate / strong]
- Signals: [substitute adoption, price-performance trajectory, switching evidence — each with URL + label]
- AI-driven substitution, named and assessed: [labeled]
- What it means here: [one sentence]

## 4. Buyer Power — [weak / moderate / strong]
- Signals: [buyer concentration, switching costs, price transparency, backward-integration examples — URL + label]
- What it means here: [one sentence]

## 5. Supplier Power — [weak / moderate / strong]
- Signals: [supplier concentration (including cloud/model/platform dependencies), input differentiation — URL + label]
- What it means here: [one sentence]

## 6. The Profit Pool (the "so what")
- Where margin sits today, and the force squeezing it: [labeled]
- Structure trend: [tightening / loosening, on what evidence]
- For your decision: [2 sentences tying structure to the decision named above]

### Assumptions to Validate
- [Assumption 1] / [Assumption 2] / [Assumption 3]

A copy/paste fill-in version of this schema, with quality checks, lives in [template.md](template.md).

Final Step (offer exactly 4 options)

1. Trace the strongest force into your strategy's exposed assumptions
2. Run [market-landscape-scan](../market-landscape-scan/SKILL.md) to name the players behind each force
3. Feed the profit-pool read into an Ansoff growth-options analysis ([ansoff-matrix](../ansoff-matrix/SKILL.md))
4. Schedule-ready version: which force signals should a re-run watch?

Accept 1, 2, 3, 4, 1 and 3, Verbose Mode, or a custom path.

Examples

A rating that survives "how do you know?" (fictional):

## 4. Buyer Power — strong
- Signals: top 10 buyers account for ~60% of segment spend — Fact ([trade association data,
URL]); three publicized incumbent-to-rival switches in 18 months with no reported penalty —
Fact ([press coverage, URLs]); public rate cards make pricing fully transparent — Fact
([vendor pricing pages]); one major buyer built the capability in-house — Fact ([their
engineering blog, URL])
- What it means here: buyers can credibly threaten to leave or build, so list-price integrity is
an illusion in this segment — discounting pressure is structural, not a sales-discipline problem.

The profit-pool close doing its job: rivalry moderate, entrants weak, substitutes strong (AI agents absorbing the low-complexity tier), buyers strong, suppliers moderate. The pool sits in the regulated high-complexity tier — the only place two strong forces don't reach — Inference. For the entry decision: enter only via the regulated tier; the volume tier's margin is already spoken for by buyers below and AI substitution above.

See [examples/sample.md](examples/sample.md) for a complete worked five-forces read (fictional FSM-software market) that builds on the market-landscape-scan example and lands at a profit-pool close that changes the decision. [examples/sample-industrial.md](examples/sample-industrial.md) shows the forces inverting in an industrial market — read both to see the framework adapt instead of recite.

Common Pitfalls

• Ratings as vibes. "Rivalry: strong" because it feels crowded. Every rating stands on signals

with URLs, or the whole exercise is a diagram.

• Skipping the AI substitute. Assessing substitutes as adjacent products while an AI workflow

eats the category's low end. Name it and rate it, even when the rating is "weak — for now."

• Confusing competitors with structure. Listing who plays (that's the landscape scan) instead of

what the structure does to everyone who plays. The forces are about margin physics, not rosters.

• No profit-pool close. Five rated forces and no answer to "where does margin go?" The close is

the analysis; everything above it is evidence assembly.

• Forcing structure onto a nascent category. Rating forces that haven't formed yet produces

confident noise. Say "still forming," scan the landscape, revisit in two quarters.

References

• [autonomous-investigation](../autonomous-investigation/SKILL.md) (Workflow) — the governing protocol
• [intelligence-collection-disciplines](../intelligence-collection-disciplines/SKILL.md) (Component) — FININT/OSINT sources behind the signals
• [market-landscape-scan](../market-landscape-scan/SKILL.md) (Workflow) — who plays; this skill asks what the structure does to them
• [swot-analysis](../swot-analysis/SKILL.md) (Workflow) — one company's position within the structure
• [ansoff-matrix](../ansoff-matrix/SKILL.md) (Workflow) — growth options informed by the profit-pool read
• Michael E. Porter, "How Competitive Forces Shape Strategy" (Harvard Business Review, 1979)
• Adapted from market-intelligence/porters-five-forces-prompt.md in the

https://github.com/deanpeters/product-manager-prompts repo.