Mini Project 1: Pick a Business You Know Well

When I first started guiding teams through competitive strategy, I noticed something surprising: most people don’t struggle with the theory—they struggle to see the forces in action. The moment you stop thinking abstractly and pick a business you’ve actually used, everything clicks. This is where your real learning begins.

This exercise is not about memorizing definitions. It’s about shifting from passive learning to active observation. You’ll use a company you know well—your local coffee shop, a favorite e-commerce brand, or even a school cafeteria. The goal is simple: apply five forces to real example with clarity, confidence, and real insight.

By the end, you’ll have built a working analysis that shows how competition, customers, suppliers, and alternatives shape a real business. This is the foundation of strategic thinking. You’ll also develop a habit of looking deeper—beyond prices and promotions—into the hidden forces at play.

Step 1: Choose a Business You Know Well

Start with a company you interact with regularly. It doesn’t need to be big or famous. What matters is that you’ve used its product or service at least three times and can answer basic questions like:

• What do they sell?
• What makes you choose them over others?
• How often do you use them?

Examples: A neighborhood bakery, a mobile app you use daily, a campus bookstore, or a laundry service on your street. Choose one that feels familiar and manageable.

Why this works: You’re not analyzing a case study—you’re investigating a real experience. That means you’re already partway through the analysis. Your observations are data. Your feelings about pricing or wait times? That’s insight.

Step 2: Apply the Five Forces One by One

Use this checklist to guide your thinking for each force. Be specific. Avoid vague statements like “competition is strong.” Instead, ask: Who exactly is competing? How do they differ? What’s their pricing? How do customers choose between them?

1. Competitive Rivalry

Identify who else offers the same product or service. Ask:

• Are there local stores, online platforms, or apps competing with this business?
• Is the market fragmented (many small players) or concentrated (few big ones)?
• Do customers switch easily between options? What’s the cost of switching?

Tip: Think about what would happen if your local shop closed. Would customers go to one main chain, or split among several?

2. Threat of New Entrants

Consider how hard it would be for a new competitor to enter the market. Ask:

• Does this business require a large investment to start (e.g., equipment, licenses, real estate) ?
• Are there strong brand loyalties or customer lock-in?
• Are there patents, exclusive contracts, or regulatory barriers?

Example: Opening a new coffee shop in a busy downtown strip is hard due to rent, permits, and established chains. But launching a mobile delivery app might be easier.

3. Bargaining Power of Suppliers

Who provides the inputs? Ask:

• Do they supply essential ingredients, materials, or software?
• Are there only a few suppliers? Can the business switch easily?
• If prices rise, can the business pass them on to customers?

Example: A coffee shop depends on a single roasted bean supplier. If that supplier raises prices, the shop might absorb the cost, or pass it on—but only if customers don’t react.

4. Bargaining Power of Buyers

Who pays? Consider:

• Do customers have many choices?
• Do they buy in large volumes or in bulk?
• Is the product commoditized (e.g., generic coffee) or unique (e.g., a specialty latte)?

Example: If you’re a student buying coffee every morning, you may not compare prices much. But if your school buys 100 cups a day, the buyer has more power.

5. Threat of Substitutes

What alternatives meet the same need? Ask:

• Could customers use something else instead?
• Is the substitute cheaper, faster, or more convenient?
• Is the cost of switching low?

Example: A coffee shop might be threatened by energy drinks, tea, or even a cold brew made at home. If a substitute is just as satisfying and cheaper, the threat is high.

Step 3: Create Your Five Forces Summary Table

Use this simple table to organize your findings. Keep it clear and concise. You can do this by hand or in a digital tool like Google Docs or Excel.

Force	Key Factors	Impact Level
Competitive Rivalry	Limited to 3 local cafes; chain dominates. High price sensitivity.	High
Threat of New Entrants	High rent, permits, and brand recognition act as barriers.	Low
Supplier Power	Relies on 1 specialty coffee roaster. No direct alternatives.	Medium
Buyer Power	Individual customers have low power; no bulk buying.	Low
Substitute Threat	Energy drinks, homemade coffee, tea. Low switching cost.	Medium

Use this to compare forces. The higher the impact, the more it shapes the business’s strategy.

Step 4: Reflect and Learn

Now, ask yourself:

• Which force is strongest? Why?
• Which one is weakest? Does that surprise you?
• If you were the owner, what would you do to reduce risk from the top force?

Real insight comes not from the numbers, but from asking the right questions. If buyer power is low, the business can raise prices. But if substitution is high, they must innovate or differentiate.

This is your first real business project activity. You didn’t just read about competition—you experienced it. You didn’t just fill a template—you thought like a strategist.

Frequently Asked Questions

How do I know if I’m applying five forces to real example correctly?

Ask: Do my answers relate to actual decisions the business makes? If you say “buyers have high power” but the business raises prices every year, your analysis may be off. Look for real behavior—pricing, product variety, advertising—rather than assumptions.

Can I use a big company like Amazon or Starbucks for this exercise?

Yes, but focus on one aspect. For example, analyze the “local coffee shop” arm of Starbucks, or Amazon’s “same-day delivery” service. The goal is to apply the model to a defined segment, not the whole company.

What if I don’t see clear competition or substitutes?

Don’t panic. Look deeper. A coffee shop might seem unique, but substitutes exist: tea, energy drinks, homemade coffee. Competition could include nearby bakeries offering drinks. Dig into customer behavior—what do they actually want? That reveals hidden forces.

How detailed should my answers be?

One to two clear sentences per point. Be specific. Instead of “suppliers matter,” say: “The bakery uses a single flour supplier. If that supplier raises prices, the bakery must absorb the cost or raise prices—potentially losing customers.”

Is this just for small businesses?

No. The model works for any business, big or small. The key is to ground your analysis in reality. A student analyzing a university cafeteria gains insights just as valuable as a manager analyzing a global brand.

Can I do this exercise again with a different business?

Yes! Doing this multiple times is the best way to build fluency. Try a grocery store next, then a mobile app. Each one teaches you something new about how markets work.