Comparing by fit
Two ways of thinking, side by side. There is no winner here — read across each row and choose the one that fits your situation.
Strategy
Explain why an industry is profitable — or isn't — before you commit to competing in it.
By 6days
Strategy
Sort what you know about a decision into four buckets so the gaps become obvious.
By 6days
When to use — Porter's Five Forces
Use it before entering an industry, before a major capital commitment, or when strong execution is somehow producing weak margins and you need to know whether the problem is you or the structure you are operating inside.
When to use — SWOT Analysis
Use it early, when a group needs to pool what it collectively knows before choosing a direction — entering a market, responding to a competitor, or opening annual planning. It is most valuable when the people in the room hold different pieces of the picture and have never assembled them in one place.
When not to use — Porter's Five Forces
Avoid it for short-term or tactical calls — it describes structure, which moves over years. It fits industries with recognisable boundaries better than fluid ecosystems and platforms, where roles blur and today's supplier is next year's competitor. It also says nothing about your own capabilities, and it is a snapshot of a structure that will keep moving after you present it.
When not to use — SWOT Analysis
Avoid it when you need a decision rather than an inventory: SWOT ranks nothing and will not tell you what to do. It rewards confident assertion, so it degrades badly in rooms with a strong seniority gradient. And it is a snapshot — for anything fast-moving it dates quickly, and a stale SWOT presented as current is worse than none.
Teams evaluate a market by looking at direct rivals and market growth, then are surprised when a fast-growing market turns out to make nobody any money. Profitability is structural. If suppliers can raise prices at will, or customers can switch on a whim, or anyone with modest capital can enter, then competence will not save you — the structure will take the margin regardless of how well you execute.
A team knows a great deal about its own situation, but the knowledge is scattered across people and half-remembered conversations. When a decision arrives, discussion circles: someone raises a threat, someone counters with a strength, and nobody can tell whether the group has covered the ground or simply argued loudly. What is missing is not intelligence but a shared inventory.
The five forces model explains industry profitability through the pressures that compete for its margin: rivalry among existing players, the threat of new entrants, the threat of substitutes, supplier power, and buyer power. Each force is a claim on the money the industry produces. Analysed together they answer a question growth rates cannot — whether there is profit available here structurally, and where it currently goes. Strong forces mean a hard industry no matter how good you are; weak forces mean margin is available to whoever can serve the customer.
SWOT sorts everything you know into four buckets along two axes: helpful versus harmful, and internal versus external. Strengths and weaknesses are things you control. Opportunities and threats come from outside and will happen whether or not you act. The value is less in the four lists than in what the sorting exposes — an empty quadrant usually means a blind spot rather than an absence, and a strength that maps onto no opportunity is a capability you are not using. Treat it as a structured inventory that sets up a decision, never as the decision itself.
State exactly which industry you are analysing, at what level, in what geography. Draw it too wide and every force reads as moderate and the analysis says nothing; too narrow and you will miss the substitute that eventually takes your customers.
Take the forces one at a time and argue each from evidence rather than impression. Supplier power is not 'high' because a supplier is large; it is high when few alternatives exist, switching is costly, or the supplier could plausibly do your job themselves.
Follow the money. In many industries the profit does not sit with the visible brand but with a component supplier, a distribution gatekeeper, or the buyer who plays everyone against each other. Naming who currently captures the margin is usually the analysis's most uncomfortable output.
Ask what would need to be true for the structure to shift in your favour — an entry barrier you could build, a supplier dependency you could break, a switching cost you could create. This turns a diagnosis into strategy. If nothing on the list is achievable, that is a finding.
Not specified
A two-by-two matrix. The horizontal axis runs from Internal on the left to External on the right; the vertical axis runs from Helpful at the top to Harmful at the bottom. Top-left: Strengths — Things you control that help you, Capabilities, assets, relationships. Top-right: Opportunities — Outside forces you could exploit, Openings in the market or moment. Bottom-left: Weaknesses — Things you control that hurt you, Gaps, constraints, liabilities. Bottom-right: Threats — Outside forces that could hurt you, Competitors, regulation, shifts.
Worked example — Porter's Five Forces
A hardware startup plans a premium smart-home speaker. Rivalry: intense, with entrenched players subsidising devices to win the ecosystem. Entrants: hardware is capital-heavy, but contract manufacturing lowers the wall considerably. Substitutes: the phone already in every pocket does most of the job adequately. Suppliers: one vendor controls the voice-processing chip. Buyers: retailers dictate shelf terms and switch brands without cost. Four of five forces are hostile and the margin sits with the chip vendor and the retailer. The conclusion is not 'execute harder' but that the device is only viable as an entry point to something with better structure — a service relationship the speaker creates rather than the speaker itself.
Worked example — SWOT Analysis
A regional logistics firm considers opening a second depot. Strengths: dense driver network, 20-year customer relationships. Weaknesses: ageing fleet, no software team. Opportunities: a competitor has just exited the region. Threats: fuel costs, an incoming emissions rule. Crossing the quadrants does the real work — the driver network against the competitor's exit argues for moving now, while the ageing fleet against the emissions rule says the depot must not be funded by deferring fleet replacement. The four lists alone would have said neither.
Introduced by economist Michael Porter in the late 1970s and developed in his subsequent writing on competitive strategy, the model applies industrial-organisation economics to firm-level decisions. Unlike many business frameworks its authorship is clear and undisputed. It has been extended by others since, most commonly with a sixth force covering complements.
SWOT emerged from corporate planning research in the United States around the 1960s, and is often associated with work done at Stanford Research Institute in that period. Attribution to any single author is disputed, and the framework has been reshaped by decades of practice since. It is best treated as a common inheritance of business planning rather than anyone's proprietary method.
Name precisely what you are analysing and over what period. 'Our company' is too broad to produce anything useful. 'Our position in the mid-market segment over the next eighteen months' gives every later item a test for relevance. Most weak SWOTs fail here, not later.
List strengths and weaknesses — the things within your control. Push for specifics with evidence attached. 'Strong brand' is a comfortable phrase that survives because nobody checks it; 'we win 60% of head-to-head deals against our closest competitor' can be argued with, which is what makes it useful.
List opportunities and threats — forces that exist independently of you: regulation, competitor moves, shifts in what customers expect, technology, cost of capital. The discipline is to record them as they are rather than as you would like them to be.
A quadrant with nothing in it is a signal about your attention, not about reality — teams under pressure routinely produce no weaknesses. A quadrant with thirty entries means you have not prioritised. Both are findings worth more than the lists themselves.
Pair items deliberately: which strength lets you take which opportunity? Which weakness leaves you exposed to which threat? This is where a SWOT stops being a list and starts producing candidate actions. Carry only the pairs into the decision, not the raw inventory.