By 6days · v1.0 · Updated 7/20/2026
Explain why an industry is profitable — or isn't — before you commit to competing in it.
Fill this in for your own situation — a private worksheet only you can see.
When to use
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 not to use
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.
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.
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.
Framework by 6days on 6days — https://6days.apexaion.ai/framework/porter-s-five-forces
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.
Worked example
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.
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.
Related ways to think about this.
Sort what you know about a decision into four buckets so the gaps become obvious.
Use when 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.
Avoid when 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.
Compete somewhere else: redraw the offer so the current rivalry stops being the question.
Use when Use it in a commoditised market where competitors are near-indistinguishable and margins are eroding, or when a large population plainly declines to buy from anyone in the category and you want to know why.
Avoid when Avoid it in a young market where the rules are not yet settled — there is no convergence to escape. Be wary of it as a rationalisation: 'we compete differently' is the most comfortable thing a losing company can tell itself, and the framework supplies attractive language for it. The literature also selects heavily on winners, so the base rate for this working is far lower than the case studies imply.
Scan the six external forces that will shape your market whether or not you act.
Use when Use it when entering an unfamiliar market or geography, when setting strategy over a multi-year horizon, or when a business is heavily exposed to regulation, commodity prices, or public sentiment. It pairs naturally with a competitive analysis, which handles the forces PESTEL deliberately ignores.
Avoid when Avoid it for operational or short-horizon decisions, where macro forces move too slowly to matter and the exercise becomes theatre. It also has no opinion about your competitors, your customers, or your own capabilities — mistaking a completed PESTEL for a strategy is the standard failure.