What to Do After a Five Forces Analysis: Test Before You Invest

The standard next move after rating five forces is to rank industry attractiveness and choose a position. The step worth taking first is to check whether the force ratings rest on evidence or assumption. Skip it, and the industry map looks precise on the slide but collapses when the first supplier or entrant behaves differently from the score.

I watched a strategy team at a building-products distributor complete a five forces analysis for a regional market they planned to enter. Supplier power scored low: three large manufacturers, long-standing contracts, stable pricing. The team used that score to justify thin margins on the product line, reasoning that input costs would stay predictable.

Nine months after launch, the largest supplier announced an exclusive distribution agreement with a competitor. The stable pricing evaporated. The "low power" rating had rested on a single assumption: that the current contract terms reflected the supplier's actual alternatives. Nobody had checked whether those suppliers were talking to other buyers. The force score was not a finding. It was a guess wearing a label.

The tool did what it was designed to do. It structured the competitive landscape into five categories. What it did not do, and was never designed to do, was test whether the evidence behind each category was sound. That test is the step most teams skip on the way to a strategy commitment.

1. Rewrite each force rating as a testable claim. "Supplier power is low" becomes "We believe our suppliers lack alternatives and will not reprice within 18 months."
2. Score each claim on influence and confidence. High influence + low confidence = the force rating that needs investigation before it shapes a position.
3. Investigate the high-risk ratings. One call to a supplier. One check on the entrant pipeline.
4. Choose a position only on verified force ratings. The Walk guides you through separating assumptions from evidence before the strategy meeting locks them in.
5. Assign ownership and a review trigger. Each verified position gets a named owner and the condition under which the force rating should be reassessed.

After a five forces analysis, the standard next step is to rank industry attractiveness and choose a competitive position. The step worth taking first is to test whether each force rating rests on evidence or assumption.

The standard next step: rank forces and choose a position

Porter's original framework, published as "How Competitive Forces Shape Strategy" in 1979, described five forces that determine the long-run profitability of any industry: rivalry among existing competitors, the threat of new entrants, the threat of substitutes, the bargaining power of suppliers, and the bargaining power of buyers. The analytical sequence taught in most strategy courses is straightforward: assess each force, rate its intensity, determine overall industry attractiveness, then select a position that either exploits favourable forces or defends against unfavourable ones.

The framework's endurance is remarkable. Porter's 2008 update in Harvard Business Review reaffirmed the same five-force structure nearly thirty years after the original. Dobbs provided practical templates for applying the framework in 2014, noting that many practitioners found the original presentation too conceptual for direct use. The templates retained the comprehensiveness of Porter's model but formatted it for managers who needed to fill in the forces and move to a decision.

That "move to a decision" step is where the trouble begins. The five forces give you a structural map. The map tells you which forces are strong and which are weak. The standard next step is to use that map as the basis for a strategic commitment: enter the industry, exit it, or position within it. What the map does not tell you is whether the ratings are right.

What the ranking step adds

The ranking step is a genuine contribution to strategy. Before Porter, industry analysis often meant listing competitors and guessing at market share. The five forces model introduced a structural logic: profitability is not determined by the product or the technology, but by the shape of the competitive arena. A force rated high means profit is being competed away, bargained away, or threatened away. A force rated low means the industry retains more value.

That structural lens matters. It tells a team considering a new market that supplier bargaining power is as important as rivalry, and that buyer leverage can erode margins even when the competitive set looks stable. It provides a vocabulary for discussing forces that shape profitability without reducing the conversation to "who are our competitors."

But the ranking step treats the force ratings as inputs to a decision. It does not ask where the ratings came from. A supplier scored "low power" because the team discussed it for five minutes in a workshop is treated identically to a supplier scored "low power" because someone checked the supplier's customer concentration, contract renewal dates, and switching costs. The framework accepts both ratings without distinction.

Rewrite the force rating your strategy rests on as a claim and test it before the industry map locks it into a position. Start the Walk →

Where the standard playbook breaks down

Grundy reviewed the practical use of five forces in 2006 and found that teams routinely treated the framework as a static snapshot. Forces were rated once, at a point in time, and the ratings were carried forward into strategy documents without revisiting whether conditions had changed. The model's elegance, Grundy argued, masked a dynamic reality that the static assessment could not capture. Forces shift. Suppliers gain alternatives. Entrants arrive sooner than expected. A rating that was accurate in January may be wrong by June.

The deeper problem is not just that forces change. It is that the original ratings may never have been accurate. I have seen teams complete a five forces industry analysis in a half-day workshop, assigning ratings based on the collective intuition of people who had not spoken to a single supplier, buyer, or potential entrant. The workshop produces a completed matrix. The matrix looks analytical. Nobody asks whether the inputs are verified because the structure itself feels like evidence.

Brandenburger and Nalebuff raised a different challenge. Their value net framework argued that Porter's model treats every player as a competitive threat, missing the cooperative relationships that shape real markets. A supplier might be a partner, not a force to be defended against. A complementor, a category the five forces framework ignores entirely, might determine whether the industry is attractive at all. When teams rate "supplier power" without considering whether that supplier is also a co-creator of value, the rating is incomplete before it is tested.

Consider a five forces example applied to food delivery in 2018. A team might have rated the threat of new entrants as moderate: the market required technology, logistics infrastructure, and restaurant partnerships. All three looked like barriers. Within two years, well-funded platforms had entered by subsidising all three. The "moderate" rating had assumed that barriers reflected real costs, not costs that a venture-backed entrant would simply absorb. The force score was accurate under one set of assumptions and wrong under another, and the team never identified which assumptions it was relying on.

I have watched this pattern across nearly fifty years of working with organisations that use structured frameworks to inform strategy. The more structured the output, the less likely anyone is to ask whether the inputs are sound. Five forces analysis is particularly vulnerable to this because the output, five labelled forces with ratings, looks complete. It has the shape of a finished analysis. The missing piece is not another force or a better rating scale. It is the question nobody asked: what are we assuming here?

The step to take first

The ranking step is not the problem. The problem is ranking before testing. Before a force rating enters the strategy conversation, it needs to survive a simple question: what evidence supports this score?

Take each force and rewrite the rating as a claim. "Supplier power is low" becomes "We believe our key suppliers lack credible alternatives and will not reprice within the planning horizon." Then ask two things about that claim: how much influence does it have on the strategic choice, and how confident are we that it is true? A force rated with high influence and low confidence is the one that needs investigation before it shapes a commitment.

A force you are confident about and that matters to the position can enter the strategy. A force you are guessing at and that carries the whole entry decision should not. The same test applies across all five forces. If the threat of substitutes is rated low because the team has not looked for them, that is not a finding. It is an absence of investigation wearing a score.

The building-products team from the opening would have listed supplier power as low. Rewritten as a claim: "We believe our three key suppliers will maintain current pricing and terms because they have no alternative distribution channels in this region." Influence on the decision: high, because the entire margin structure depends on it. Confidence: low, because nobody had spoken to the suppliers about their other options. That force needed investigation before it entered the attractiveness ranking, not after the product line was launched.

When I work with teams after a five forces analysis, the first thing I do is separate force ratings they have evidence for from ratings they are assuming. The separation takes ten minutes, and it changes which strategic positions survive scrutiny. Most teams have never been asked to make that distinction, because the framework does not require it.

This is the step between completing a five forces analysis and committing to the strategy it suggests. Separate assumptions from findings. Test the ones that carry the bet. The Universal Decision-Making Method calls this "recognise assumptions" and places it before any commitment, because a strategy built on an untested force rating is not a strategy.

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Grant Purdy is the co-author, with Roger Estall, of Deciding (2020), and the architect of the Universal Decision-Making Method.