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Documentation Index

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Goal: Evaluate industry attractiveness and competitive intensity using Porter’s Five Forces framework.

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Tools Required

This skill runs using CORE memory only. No integrations required.

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Trigger

Trigger: Run on demand when the user asks to analyze competitive landscape, evaluate industry attractiveness, or assess strategic positioning against rivals.

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Setup

Search memory for any previously stored information:
  • “What industry or market does the user operate in?”
  • “Who are the main competitors?”
  • “What products or services does the user offer?”
If nothing is found, ask once:
“To analyze competitive forces, I need to understand your industry and what you sell. What market are you in, and who are your main competitors?”
Store the response in memory. Do not ask again in future runs.

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Step 1: Map Industry and Competitive Set

Define the industry/market scope and identify the key players. Clarify:
  • Industry definition (be specific: “cloud-based HR for mid-market” not just “HR software”)
  • Threat Level: Who are direct competitors (head-to-head), and who are indirect competitors (solving similar problems differently)?
  • Market size and growth rate (if known)
  • Major customer segments and purchasing power
If the user is uncertain about competitors → ask them to name their top 3–5 closest rivals. Output: Clear definition of the competitive set and market scope.

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Step 2: Assess Supplier Power

Evaluate how much power suppliers have over your business. Analyze:
  • Concentration of suppliers: Are there many suppliers or few? If few → high supplier power
  • Switching costs: How easy is it for you to switch to alternative suppliers? Easy → low supplier power for them
  • Threat of integration: Could suppliers enter your market and compete? Yes → higher power
  • Input criticality: How important are these inputs to your product/service? Critical → higher supplier power
  • Supplier alternatives: Can you substitute inputs or suppliers easily? Yes → lower power
Document 2–3 key suppliers or supplier categories and their power level (high/medium/low). If the user is unfamiliar with their supply chain → flag this as a knowledge gap and suggest a follow-up conversation. Output: Supplier power assessment with rationale.

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Step 3: Assess Buyer Power

Evaluate how much power customers have over your business. Analyze:
  • Buyer concentration: Do a few customers account for most revenue? Yes → high buyer power
  • Switching costs: How expensive or difficult is it for customers to switch to competitors? Easy → high buyer power for them
  • Price sensitivity: How price-sensitive are your customers? Very sensitive → higher power
  • Threat of integration: Could customers build/provide your product themselves? Yes → higher power
  • Alternative products: How many alternatives exist? Many → higher buyer power
Document your top customer segments and their power level (high/medium/low). If you have no customer concentration data → ask: “Do any single customers or customer types represent >10% of your revenue?” Output: Buyer power assessment segmented by customer type if relevant.

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Step 4: Assess Competitive Rivalry

Evaluate the intensity of direct competition in your market. Analyze:
  • Number and diversity of competitors: Many similar-sized competitors → high rivalry. One dominant player → moderate rivalry
  • Market growth: High-growth markets → lower rivalry (room for all). Flat/declining → higher rivalry (zero-sum)
  • Differentiation: How much do competitors differ? High differentiation → moderate rivalry. Commoditized → high rivalry
  • Fixed costs: High fixed costs → competitors fight hard on price → higher rivalry
  • Exit barriers: Can unprofitable competitors exit easily? No → they stay and fight → higher rivalry
Rate overall competitive rivalry (high/medium/low) with 2–3 supporting factors. Output: Competitive rivalry assessment with key dynamics.

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Step 5: Assess Threat of New Entrants

Evaluate how easily new competitors can enter the market. Analyze:
  • Barriers to entry: Capital requirements, regulatory licensing, brand moat, technology, distribution access
  • Economies of scale: Do incumbents have cost advantages from scale? Yes → high barrier
  • Network effects: Is the product more valuable with more users? Yes → high barrier for newcomers
  • Switching costs: Do customers have high costs to leave? Yes → high barrier
  • Access to inputs: Can new entrants easily secure suppliers, talent, technology? No → high barrier
Assess threat level (high/medium/low). If high → expect new competitors soon. If low → you’re relatively protected. Flag specific entry vectors (e.g., well-funded startups, adjacent incumbents, international entrants). Output: Threat of entry assessment with key barriers and vulnerabilities.

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Step 6: Assess Threat of Substitutes

Evaluate whether customers have alternatives to your product/service that serve the same need. Analyze:
  • Functional substitutes: Different products solving the same problem (e.g., email vs. Slack for communication)
  • Price/value substitute: More cost-effective alternatives (e.g., open-source vs. commercial)
  • Behavioral substitutes: Customers doing the job differently or in-house instead of outsourcing
  • Switching costs: How easy is it to switch to a substitute? Easy → high threat
  • Performance/quality parity: Are substitutes approaching feature/quality parity? Yes → higher threat
Rate threat level (high/medium/low). Identify the top 2–3 substitute categories. If substitutes are indirect or unclear → brainstorm with the user: “What’s an alternative way customers could solve this problem?” Output: Substitute threat assessment with specific examples.

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Step 7: Synthesize and Recommend Strategy

Combine all five forces into an overall attractiveness and strategy recommendation.
  • Market attractiveness: If most forces are high → market is unattractive (everyone’s fighting). If most are low → attractive (room to grow).
  • Strategic implications: Which force is the biggest headwind? Focus on mitigation strategies there.
Recommend positioning:
  • If buyer power is high → differentiate to reduce price pressure
  • If supplier power is high → invest in supply chain resilience or vertical integration
  • If rivalry is high → defend on brand, service, or niche differentiation
  • If threat of entry is high → invest in barriers (brand, switching costs, scale advantages)
  • If threat of substitutes is high → emphasize unique value and lock-in
Output: Overall industry attractiveness rating and strategic recommendations.

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Output Format

Porter’s Five Forces Analysis — [Industry/Market] Market Definition
  • Industry: [Specific industry definition]
  • Geographic scope: [Regions/markets covered]
  • Customer segments: [Key buyer types]
Force 1: Supplier Power
  • Rating: [High/Medium/Low]
  • Key suppliers/inputs: [2–3 critical suppliers or input categories]
  • Rationale: [Why suppliers have this level of power]
  • Strategic implication: [How this affects your business]
Force 2: Buyer Power
  • Rating: [High/Medium/Low]
  • Buyer concentration: [Top customers represent [X]% of revenue]
  • Switching costs: [High/Medium/Low]
  • Rationale: [Why customers have this level of power]
  • Strategic implication: [How this affects your pricing and service]
Force 3: Competitive Rivalry
  • Rating: [High/Medium/Low]
  • Key competitors: [2–3 direct competitors]
  • Market growth: [Growing/Flat/Declining]
  • Rationale: [Why rivalry is at this level]
  • Strategic implication: [Competition intensity and required differentiation]
Force 4: Threat of Entry
  • Rating: [High/Medium/Low]
  • Key barriers: [2–3 main barriers protecting incumbents]
  • Potential entrants: [Types of new competitors to watch]
  • Rationale: [Why entry threat is at this level]
  • Strategic implication: [How to strengthen moats against new entrants]
Force 5: Threat of Substitutes
  • Rating: [High/Medium/Low]
  • Substitute categories: [2–3 alternative solutions]
  • Price/performance parity: [Yes/No/Approaching]
  • Rationale: [Why substitute threat is at this level]
  • Strategic implication: [How to defend against substitution]
Overall Industry Attractiveness: [Attractive/Moderate/Unattractive] Strategic Recommendations
  1. [Recommendation to address highest threat]
  2. [Recommendation to leverage favorable force]
  3. [Recommendation to strengthen competitive position]

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Edge Cases

  • Nascent industry: If the market is very new, some forces may be uncertain or undefined. Note which forces are speculative and recommend monitoring as the market matures.
  • Highly regulated industry: Regulatory entry barriers may be artificially high, limiting threat of entry. Flag this as a force unique to your industry.
  • Horizontal/two-sided market: If you operate a platform (e.g., app marketplace), assess each side separately (supplier = app developers, buyer = end users) and note interactions.
  • Oligopolistic market: If a few large players dominate, rivalry may be lower but buyer power may be concentrated. Note the dynamic explicitly.
  • Global vs. local scope: If the market is global, assess both global and local competitive forces; they may differ significantly.
  • Rapid disruption: If the industry is undergoing technological or business model change, flag which forces are in flux and recommend quarterly reassessment.