If you’ve ever looked at two industries and wondered why one seems to have money flowing through it while the other is constantly caught in price wars, shrinking margins and endless competition, Porter’s Five Forces is one of the first frameworks I’d use to make sense of it. I find it far more useful when it is treated as a practical way of looking at a market rather than something that belongs only in a business-school textbook. In this guide, I’ll walk through what the model actually means, how each force affects a business and how I would approach a Porter’s Five Forces analysis from scratch. I’ll also use examples from Indian telecom, food delivery and the influencer marketing industry because the framework becomes much easier to understand once you see it working in real markets.

1. Understanding Porter’s Five Forces

1.1 What Is Porter’s Five Forces?

What then is Porter’s Five Forces? Simply put, it is a model that seeks to help determine the level of competition in an industry as well as its effects on the profitability of firms in that particular industry. There are five forces analyzed in the model: the threat of entry, supplier bargaining power, buyer bargaining power, threat of substitution, and competitive rivalry. I like thinking of these forces as the different pressures surrounding a company. You might have a great product, but if buyers can switch instantly, suppliers are expensive and ten competitors are selling almost the same thing, that product alone won’t protect your margins.

The five forces are:

• Threat of new entrants
• Bargaining power of suppliers
• Bargaining power of buyers
• Threat of substitutes
• Competitive rivalry

What makes the framework useful is that it forces me to look beyond the obvious competitor. A business isn’t competing only with the company selling something similar next door. Its customers, suppliers, potential entrants and alternative solutions can all influence how much money it can realistically make.

1.2 Where the Framework Came From

Michael Porter, a professor at Harvard Business School, introduced the framework in a 1979 Harvard Business Review article. He later revisited the idea and developed it further in his 2008 article, The Five Competitive Forces That Shape Strategy. His central argument was important because businesses had often focused too narrowly on their direct competitors. Porter looked at competition more broadly and showed how customers, suppliers, potential entrants and substitute products could also put pressure on profitability. If you want to read the framework from a source connected to Porter himself, the Institute for Strategy and Competitiveness at Harvard provides a useful explanation. The fact that Porter’s Five Forces is still taught in business schools, including in India, decades after it was introduced is a pretty good indication that the underlying idea has held up.

1.3 Why the Porter Five Forces Framework Still Matters Today

I’ve heard the argument that a model developed in 1979 must be outdated because today’s businesses operate through apps, algorithms, social platforms and constantly changing technology. I don’t completely buy that criticism. Technology changes quickly, but the basic economic pressures behind a market don’t disappear just because the technology does. Customers still want value. Suppliers still want better terms. New companies still try to enter profitable markets, and existing businesses still fight to keep their customers.

India is a good example. The country now has hundreds of millions of internet users, and businesses can appear, grow and change direction incredibly quickly. Yet underneath all that movement, the same questions remain. How difficult is it to enter the market? How much power do customers have? How dependent is a business on suppliers? What alternatives can customers choose? How aggressively are existing companies competing? For me, that’s why the Porter’s Five Forces framework remains useful. It gives me something stable to look at when the market itself feels anything but stable.

2. The Porter’s Five Forces Model Explained

2.1 Threat of New Entrants

The first force asks an easy question. What would be the challenge for a new entrant to come into the industry and compete with existing firms? If entry is simple, then existing firms face a threat as new entrants can come in, raise the supply and thus exert price pressure. Consider the example of a cloud kitchen. A person can get access to kitchen, employ some people, register himself as a firm in the delivery app and start functioning. Compare this with construction of a steel plant and a telecommunication network. The cost, effort, time and investments required here are huge.

When I look at this part of the Porter’s Five Forces model explained to a new team, I usually start by looking for the barriers protecting established companies. They might include heavy capital requirements, where a newcomer simply can’t afford the initial investment. Brand trust can matter just as much. Customers may be reluctant to move from a brand they already know, particularly when the purchase involves money, safety or long-term use. Government licences and regulations can create another barrier, while established distribution networks can make it difficult for a new business to reach customers. Then there are economies of scale: a large company may be able to produce or operate at a cost that a smaller entrant simply can’t match.

2.2 Bargaining Power of Suppliers

Suppliers are the businesses or people providing the materials, technology, products or services your company depends on. Their bargaining power largely comes down to alternatives. If I have ten suppliers available and switching between them is simple, I have room to negotiate. If only one or two companies provide something essential to my business, the situation changes completely. They have more leverage because I can’t easily walk away.

Another aspect of this which is also easy to underestimate is switching costs. Let’s take for example a company which after spending months on integrating their software with a certain vendor finds out that another vendor can provide services at lower costs. However, to switch vendors will require additional integration efforts as well as employee retraining and operational difficulties. So, this “simple” switching does not seem to be simple anymore. As far as supplier power assessment is concerned, I find two questions quite helpful: How easy is it to switch suppliers? How easy is it for suppliers to switch me?

2.3 Bargaining Power of Buyers

Bargaining power lies with customers when they demand a reduction in price, better service or better terms since they have enough substitutes. This becomes easier in case of online transactions. An Indian customer can go through different sellers on multiple sites within a short span of time. In case if any seller decides to increase the price and all other things are same, there could be no reason left for him/her to remain loyal.

Large buyers can have even more influence. A major retailer purchasing huge quantities from a small manufacturer can push hard for lower prices because losing that account would hurt the manufacturer significantly. Product similarity makes the problem worse. If customers see five brands as basically interchangeable, paying extra becomes difficult to justify. This is one reason I see brand building as a financial decision, not just a creative exercise. Strong brand preference can make customers less price-sensitive and give a company more breathing room when competitors begin discounting.

2.4 Threat of Substitutes

This is probably the force I see businesses overlooking most often. A substitute isn’t necessarily another company selling the same product. It is another way of solving the customer’s problem. That’s a subtle difference, but it matters enormoPaid SMS did not merely see some of its customers switch to another telecom company. Messaging apps redefined customer expectations in terms of communication. Streaming services changed how many consumers watched entertainment content, affecting traditional TV and cinema in a similar way. Substitution may come from a completely unrelated industry – hence making it easy to overlook.

When I am trying to identify substitutes, I pose a rather simplistic question. If my consumer does not buy from me, what else can they use their time and money for to achieve roughly the same end? The answer can often be quite telling. Should there be another option that is cheaper, easier, quicker or more convenient than mine, my consumer may simply not care whether I see it as competition or not.

2.5 Competitive Rivalry

The fifth force looks at the competition already happening inside the industry. Rivalry tends to become particularly aggressive when businesses are similar in size, the market isn’t growing quickly or leaving the industry is difficult and expensive. Price wars are the obvious example. When everyone is selling something that looks similar, lowering the price can become the easiest way to steal customers, even though everyone eventually pays for that decision through lower margins.

Indian airlines provide a familiar example. Airlines can have full flights and still struggle with profitability because operating costs are high and competition is intense. On the other hand, an industry controlled by only a small number of powerful companies may behave differently. Differentiation also changes the picture. If every brand looks and feels identical, price becomes the easiest comparison. If one company offers noticeably better service, a stronger community or an experience competitors can’t quickly copy, customers have a reason to choose something other than the cheapest option.

I often think rivalry gets the most attention because it’s visible. We can see competitors launching products, changing prices and running advertisements. But that visible battle is only one part of the picture. Supplier power, buyer power, substitutes and new entrants can quietly affect the same business underneath the surface.

3. How to Conduct a Porter’s Five Forces Analysis

3.1 A Simple Step-by-Step Process

If you’re considering ways of conducting a Five Forces Analysis without getting into an extensive research process, my advice would be to start with being realistic about what you are doing. First of all, set up boundaries – define the industry and geographic location you are working with. It won’t work to say “retail”, but “online grocery in tier-2 Indian cities” will give much more defined boundaries to your analysis. The next step will be to identify key players for each of the five forces.

After that, rate each force as low, medium or high and, more importantly, explain why you gave it that rating. Don’t just write “high buyer power” and move on. What makes buyers powerful? How easily can they switch? What alternatives do they have? What evidence supports your conclusion? Once all five forces are rated, compare them and look for the pressure that matters most. I would rather have one honest page of useful findings than twenty slides full of statements nobody acts on.

1. Define the industry and the market you’re studying.
2. Identify the main players behind each force.
3. Rate each force from low to high, with reasons.
4. Compare ratings to find where pressure is strongest.
5. Convert the findings into specific actions.

The final step is the one I would never skip. If the analysis tells you that buyers are extremely price-sensitive, what are you going to do differently? If new entrants can enter easily, how will you make your position harder to copy? A Porter’s Five Forces analysis becomes useful only when it changes a decision.

3.2 Where to Find Reliable Data

An analysis is only as good as the data that goes into it. Fortunately, India is a land of plenty when it comes to public data – all you need to do is go past the top result on Google. For telecom-related work, you can rely on the Telecom Regulatory Authority of India for subscriber statistics and market data. Annual reports can inform you about company expenses, profit margins, risks, and overall strategies. Industry associations like FICCI and CII also produce sector-specific reports that could help you get a grip on overall market trends.

However, that’s not where I would stop my quest for information. Customer feedback, news reports, and even social media posts could provide you with some interesting insights that won’t come from any official industry report. Your own salespeople will be extremely helpful since they listen to customer complaints every single day. If customers tell them that your product is too expensive or that changing companies is easy, then that should give you something to think about. The key is to verify all the data that you get.

3.3 Rating Each Force With Honesty

This is where I think many Porter’s Five Forces exercises go wrong. Teams become too generous when evaluating their own market because nobody wants to write down an uncomfortable conclusion. If you decide buyer power is low, I would want to see the evidence. Why can’t customers switch? What stops them? Is there a meaningful cost involved? If the answer is simply “we have a good brand”, I’d challenge that assumption.

It also helps to let someone outside the immediate team review the ratings. People who work inside a business every day can become blind to obvious weaknesses because those weaknesses have started to feel normal. Someone with fresh eyes may ask a question nobody else considered. I would also revisit the analysis rather than treating it as a document that gets created once and forgotten. A new technology, regulation or competitor can change the balance of a force surprisingly quickly. A six-month review is a sensible rhythm for many industries.

3.4 Common Mistakes to Avoid

One of the most common mistakes is defining the industry too broadly. Saying you’re analysing “retail” doesn’t give you much to work with. “Online grocery in tier-2 cities” is far more useful because the competitive landscape, buyers and barriers are much easier to identify.

Another mistake is ignoring substitutes because they don’t look like direct competitors. A business selling one product may be more threatened by a completely different way of solving the same customer problem than by another company selling an identical product. I also wouldn’t treat the framework as a checklist where you fill in five boxes and consider the job finished. The point is to understand how the forces interact.

Most importantly, don’t stop once the report looks good. A polished analysis sitting in a presentation folder isn’t a strategy. If the findings don’t influence pricing, positioning, marketing, product development or market entry decisions, the exercise hasn’t done much for the business.

4. Porter’s Five Forces Framework Examples From India

4.1 Indian Telecom: A Textbook Case

Indian telecom is one of the clearest Porter’s Five Forces framework examples because the market has gone through a dramatic transformation. Before 2016, several operators competed within a relatively established structure. Then Reliance Jio entered with extremely low prices and free data offers, changing customer expectations and forcing competitors to respond. The company reportedly crossed 100 million subscribers in roughly 170 days, and the consequences for the rest of the industry were significant. Prices fell, competitors consolidated and several smaller players disappeared.

The example also shows why the five forces shouldn’t be looked at separately. Buyer power increased because customers could switch operators more easily, while messaging apps such as WhatsApp reduced dependence on traditional calls and SMS. According to TRAI, India now has more than a billion wireless subscribers, although the number of major operators serving that huge market is much smaller than it once was. Looking at those changes through Porter’s framework makes the story easier to understand. A market can be enormous and still be extremely difficult to compete in.

4.2 Food Delivery and Passenger Cars

Food delivery presents a different version of the same framework. Zomato and Swiggy sit at the centre of the market, so competitive rivalry is obvious. Restaurants also depend heavily on these platforms for visibility and orders, which gives the platforms considerable influence. At the same time, customers can open two apps, compare delivery charges, discounts, restaurants and estimated times, then make a decision within minutes. That gives buyers plenty of power too.

New entrants face another problem. Building an app is one thing; convincing enough restaurants and customers to use it is something else entirely. Discounting can attract users, but maintaining that behaviour is expensive. Passenger cars have a different structure. Maruti Suzuki’s long-standing position in India has been supported by brand recognition, dealer networks, service infrastructure and years of operational scale. A new company can technically enter the market, but competing with those advantages requires enormous capital and patience. The lesson I take from both examples is that market size alone doesn’t tell me who is likely to succeed. The structure underneath it matters.

4.3 The Influencer Marketing Industry in India

This is where I find the framework especially interesting because influencer marketing India has changed so quickly. Industry estimates have placed the market at around ₹1,275 crore in 2022 and projected it to reach roughly ₹2,344 crore by 2026. Whether you’re looking at those figures or simply watching how brands use creators today, the growth is difficult to ignore. And whenever an industry grows quickly, new businesses naturally want a piece of it.

That makes the threat of new entrants relatively high. Someone with a laptop, industry contacts and a basic understanding of social media can call themselves an agency. The real challenge is building credibility, systems, creator relationships and measurable results. Supplier power sits largely with creators, especially creators with loyal audiences and strong engagement. A top influencer in India with millions of followers can command a premium because brands aren’t simply buying a piece of content; they’re buying access to a relationship that creator has built with an audience.

Brands, meanwhile, are the buyers. They increasingly want lower costs, better reporting and proof that influencer campaigns are producing something beyond vanity metrics. That creates pressure on agencies and platforms to demonstrate value rather than simply promise reach. In a crowded market, trust becomes incredibly important.

Substitutes make the picture even more complicated. If a creator campaign doesn’t produce the desired result, a brand can move that budget into paid advertising, search, email marketing or other channels. Competitive rivalry is also strong because agencies and platforms are chasing many of the same brand budgets. UGC videos have added another layer to the market because brands can now work with everyday creators to produce content that feels more natural than traditional advertising, often at a lower production cost. AI UGC tools are pushing that shift even further.

5. Using the Framework for Competitive and Industry Analysis

5.1 Building a Stronger Competitive Analysis

A competitive analysis shouldn’t simply become a list of competitor names, prices and Instagram handles. What I really want to know is why those competitors are behaving the way they are. Porter’s Five Forces analysis helps because it connects visible competitor behaviour to the pressure underneath it.

For example, if a competitor suddenly cuts prices, I’d want to know why before reacting. Are customers demanding lower prices? Is the competitor struggling with excess inventory? Has a new entrant changed the market? Is the company deliberately trying to gain market share? Those situations look similar from the outside but require completely different responses.

I also like combining Porter’s model with SWOT. SWOT helps me understand the strengths and weaknesses of the business itself, while the five forces help me understand the external pressures surrounding it. I’d also pay attention to smaller signals, such as the people competitors are hiring, the products they are launching and the kind of advertising they are suddenly investing in. Strategy often becomes visible in those details before a company publicly announces what it is doing.

5.2 Industry Analysis and Market Position

Industry analysis ultimately comes down to a question that sounds simple but isn’t: is this actually an attractive industry to enter? A market can be growing rapidly and still be terrible for profitability if buyers have enormous power, substitutes are everywhere and competitors are willing to sacrifice margins to gain market share.

Porter’s Five Forces analysis helps me look past the excitement surrounding a growing sector. Once I understand the pressure points, I can think more carefully about positioning. One business may decide to compete through lower costs. Another may differentiate itself enough to justify a premium. A third may avoid the crowded centre of the market altogether and focus on a narrow niche.

That last approach can work particularly well in influencer marketing. A regional campaign, for instance, may get better results from several small South Indian creators than from spending the entire budget on one national celebrity. A Kanjeevaram saree brand doesn’t necessarily need the biggest creator in India. It needs someone whose audience actually cares about the product. Sometimes being smaller and more relevant is a much stronger competitive position than simply being bigger.

5.3 Limits of the Model

I wouldn’t pretend that Porter’s Five Forces can explain every modern business problem. It has limitations. The framework tends to look at industries as relatively stable structures, while digital markets can change incredibly quickly. A technology shift can make yesterday’s competitive advantage almost irrelevant. Partnerships are another area where the model isn’t as strong. Companies can compete in one area while working together in another, which is increasingly common in digital ecosystems.

There is also a fair criticism around technology and government regulation. They can dramatically influence an industry without fitting neatly into one of the five forces. I think those criticisms are reasonable. But that doesn’t make the framework useless. It simply means I wouldn’t use it alone. I’d pair it with PESTLE, customer research, financial analysis and whatever direct market knowledge I can gather.

To me, Porter’s Five Forces is a lens. It’s a very useful one, but it isn’t the entire camera.

6. How Brands and Creators Can Use This Model

6.1 For Brands Planning Marketing Budgets

Porter’s Five Forces isn’t something I would keep locked inside a strategy presentation. It can influence everyday marketing decisions too. If buyer power is high in your category, for example, building trust and loyalty becomes much more important because customers have little reason to stay with you if another brand offers a cheaper alternative.

That’s one reason UGC videos can be useful. They give potential customers something more tangible than a polished advertising claim. When competition is intense, AI influencer marketing can also help brands test different creators, messages and audiences before committing a large budget to one campaign. At the same time, I wouldn’t ignore substitutes. If customers can easily move to a cheaper product or another solution, the marketing needs to communicate why your offer is worth choosing.

I’d rather test a smaller campaign, measure what happens and then increase the investment than spend heavily based on assumptions. The right partner can make that testing process much easier because the brand isn’t trying to manage every moving part alone.

6.2 For Creators Building a Career

Creators can use exactly the same way of thinking when planning their careers. I often see people ask how to become an influencer, but the difficult part isn’t opening an account and posting a video. Entry barriers are extremely low, which means thousands of people can enter the same space every day. The real challenge is giving people a reason to remember you.

That’s where positioning matters. A clear niche doesn’t guarantee success, but it gives you a much better chance of building an audience that knows what to expect from you. Brands become your buyers, so it also helps to understand what they actually want. Reach matters, but so do trust, audience relevance, engagement and evidence that your content can influence behaviour.

I also wouldn’t build an entire creator career around one platform. Algorithms change. Features disappear. Accounts can lose reach for reasons outside your control. Spreading your presence across relevant platforms is a bit like avoiding dependence on one supplier: you don’t want one external change to bring everything to a halt.

And there is no need to romanticise the industry. Viral moments are exciting, but consistent work, a recognisable niche and a professional approach usually have much more staying power.

7. Conclusion

7.1 Key Takeaways

Porter’s Five Forces remains one of the business strategy frameworks I would actually recommend using rather than simply memorising for an exam. Its biggest lesson is fairly straightforward: your company’s profitability isn’t determined only by how good your product is. The structure of the market around that product matters too.

By this point, you should have a clear understanding of what Porter’s Five Forces is, what each of the five forces means and how to carry out a basic analysis. If you want to put the framework to work, choose one industry and start gathering evidence. Don’t worry about making the first version perfect. What matters is being honest about where the pressure is coming from and then deciding what you can realistically do about it.

Here’s the short version I’d keep nearby:

• Porter’s Five Forces covers new entrants, suppliers, buyers, substitutes and rivalry.
• Define your industry narrowly before you start.
• Use real data from TRAI, annual reports and industry studies.
• Rate each force with written evidence, not gut feeling.
• Watch substitutes closely, since they often come from outside your industry.
• Revisit the analysis every six months.
• Combine the model with SWOT and PESTLE for a fuller picture.
• Turn insights into actions, or the exercise has no value.

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