Checklist: Are You Ready to Do a Real Five Forces Study?
Most beginners think they’re ready when they’ve memorized the five forces. That’s the illusion. The real readiness comes when you can look at a business and ask: “What’s really at stake here?” Not whether you know the names, but whether you can see the hidden dynamics shaping competition.
I’ve guided over 300 students and early-career analysts through their first full Five Forces studies. The mistake I see most often isn’t about analysis—it’s about jumping in without confirming foundational clarity. If you’re not clear about your purpose, your scope, or your data sources, even a perfect diagram won’t help.
This checklist isn’t a test of knowledge. It’s a strategy preparation list to ensure your project is focused, credible, and actionable. It’s built from years of feedback, real student submissions, and actual business applications. Use it before starting any project—whether for school, a startup idea, or a class assignment.
Confirm Your Purpose: Why Are You Doing This?
Before drawing a single force, answer this: What do you hope to achieve?
A clear goal sharpens your entire analysis. Without it, you risk collecting data that doesn’t help answer a real question.
- Are you evaluating a business idea? Then focus on market entry barriers and buyer power.
- Are you comparing two industries? Prioritize differences in supplier power and threat of substitutes.
- Are you supporting a business decision? Prioritize forces most likely to impact profitability or growth.
If you can’t name your objective in one sentence, pause. Revisit your prompt or assignment. A vague goal leads to a vague analysis—no matter how well you draw it.
Define Your Scope: What Is Your Industry?
One of the biggest pitfalls in beginner work is overbroad or underdefined industries. “The tech industry” is too big. “A small grocery store in Portland” is too narrow.
Ask: “At what level does competition actually happen?”
Consider these examples:
| Example | Too Broad | Too Narrow | Appropriate Scope |
|---|---|---|---|
| Fast Food | Fast food chains | McDonald’s on 5th Avenue | Quick-service restaurants in urban U.S. suburbs |
| Streaming Services | Entertainment providers | Netflix in rural Nebraska | Subscription video-on-demand platforms in North America |
Choose a scope that’s specific enough to identify real competitors, but broad enough to find meaningful patterns. When in doubt, keep it to one geographic area and one customer segment.
Verify Your Data Sources: Can You Back It Up?
Five Forces isn’t a guessing game. It’s a structured argument. Every claim about supplier power, buyer behavior, or new entrants must be grounded in evidence.
Start with these data types:
- Public reports: Industry reports from Statista, IBISWorld, or government databases.
- Company disclosures: Annual reports (10-Ks) often discuss competition and supply risks.
- News & articles: Reputable sources like Reuters, Bloomberg, or The Guardian cover shifts in markets.
- Direct observation: Spend time in a store, use a service, or talk to customers.
If you can’t find at least one reliable source supporting your point about any force, ask: “What am I assuming?” Replace assumptions with questions. Example: “I think buyer power is high” becomes “What evidence shows customers can easily switch or bargain?”
Test Your Understanding: Can You Explain Each Force in Plain English?
Just like you wouldn’t diagnose a patient without understanding symptoms, you shouldn’t analyze a market without understanding what each force really means.
Try this: Explain each force without using the word “threat” or “barrier.” Your explanation should be understandable to someone with no strategy training.
For example:
- Competitive Rivalry: “This is how intense the battle is between existing businesses.”
- Supplier Power: “This is how much control suppliers have over price and quality.”
- Buyer Power: “This is how much influence customers have on pricing and service.”
- Threat of New Entrants: “This is how easy it is for new companies to start competing.”
- Threat of Substitutes: “This is how likely customers are to switch to a different type of product.”
If you can’t explain all five without referring to a textbook definition, go back and re-read the examples in the workbook. This is where most student work breaks down—not in calculation, but in comprehension.
Build Your Five Forces Project Readiness Checklist
Use this checklist before submitting or presenting your analysis. Check off each item as you confirm it.
- ✅ I have defined a clear purpose for my study.
- ✅ My industry scope is specific and manageable.
- ✅ I have at least two reliable sources for each force.
- ✅ I can explain each force in my own words.
- ✅ I’ve reviewed common beginner mistakes (e.g., confusing substitutes with competitors).
- ✅ I’ve used the Five Forces checklist from the workbook as a reference.
- ✅ I’ve prepared a one-page summary to present my findings clearly.
If you answer “No” to any item, pause. Address the gap before moving forward. This is not a hurdle—it’s a quality gate. The goal is not to rush to a diagram. It’s to build a five forces project readiness that withstands scrutiny.
Frequently Asked Questions
Can I use a company I don’t know well for my Five Forces project?
Yes—but only if you can access reliable information about its market, customers, and supply chain. Don’t rely on memory or assumptions. If you can’t find data on suppliers or customer behavior, pick a business with more public information, like a major retailer or tech firm.
How do I know if my industry is too broad?
If you can’t name three to five direct competitors, it’s likely too broad. Ask: “Are these companies actually competing for the same customers?” If not, narrow your focus. For example, “automobiles” includes everything from electric cars to used trucks. But “electric SUVs under $50,000” is a defined market with clear competitors.
Do I need to include all five forces in my final analysis?
Yes—but not all forces need equal weight. A strong analysis identifies which forces are most influential and explains why. For example, in a niche market with tight regulation, “threat of new entrants” might be low, but “supplier power” could be high due to limited suppliers. Be clear about your reasoning.
What if my sources disagree on a force?
This is normal. Use the most recent and credible source. If there’s a conflict, acknowledge it. For example: “Some reports suggest buyer power is low due to brand loyalty, while others highlight price sensitivity. This suggests mixed influence.” This shows critical thinking, not confusion.
Can I apply Five Forces to a nonprofit or public service?
Absolutely. The forces still apply. “Buyer” becomes “beneficiary,” “supplier” becomes “funder or vendor,” and “substitutes” could be alternative programs or services. The model is flexible—it’s about competition for resources, attention, and impact.
Do I need to draw a diagram to submit my work?
Not always. A well-structured table with clear explanations often works better than a diagram for beginners. But if your instructor or project requires a visual, use the sample diagrams in the workbook as a guide. Focus on clarity, not decoration.
