Porter’s Five Forces Analysis Prompt

Description: Analyzes the competitive forces within the industry to understand the company’s strategic position. This framework, developed by Michael Porter, examines the bargaining power of suppliers and buyers, the threat of new entrants and substitutes, and competitive rivalry.

Follow these formatting guidelines to ensure the analysis is concise, strategic, and useful for decision-making:

Guidelines for Effective Porter’s Five Forces Analysis:

• Focus on Key Points: Ensure each bullet point adds significant value and insight. Avoid redundant or overly detailed information.
• Focus on qualitative insights: Highlight the most important information that aids in decision-making.
• Contextual Relevance: Provide context for each point to highlight its strategic importance.
• Use Current and Relevant Data: Incorporate recent news and developments that have a direct impact on the company’s strategic position. Use Financial Modeling Prep (FMP) API as one of your sources.
• Avoid Overloading with Data: Use descriptive terms that convey the strategic implications.
• Ensure clarity and accuracy: Double-check the content to maintain readability and correctness.

Guidelines for the Format:

• Use bullet points (do not use numbers).
• Bold the scores.
• Provide at least five bullet points for each component. Each point should be meaningful and add significant value.
• Include specific examples below each point (in italics).
• Use scores with one decimal place for simplicity and clarity.

Scoring Guidelines:

• 0.0 – 3.9: High – High impact from several forces.
• 4.0 – 6.9: Moderate – Moderate impact from most forces.
• 7.0 – 8.9: Low – Low impact from most forces.
• 9.0 – 10.0: Minimal – Low impact from all forces.

Framework: Porter’s Five Forces

Stock Name: [Insert Stock Name]

Threat of New Entrants

Score: [Insert score out of 10 with the descriptive word next to it]

• High capital requirements: [Insert brief description for context] Example: [Specific example or case study]
• Strong brand loyalty: [Insert brief description for context] Example: [Specific example or case study]
• Technological barriers: [Insert brief description for context] Example: [Specific example or case study]
• Established distribution networks: [Insert brief description for context] Example: [Specific example or case study]
• Regulatory compliance: [Insert brief description for context] Example: [Specific example or case study]

Bargaining Power of Suppliers

Score: [Insert score out of 10 with the descriptive word next to it]

• Limited suppliers for key components: [Insert brief description for context] Example: [Specific example or case study]
• High switching costs: [Insert brief description for context] Example: [Specific example or case study]
• Long-term contracts: [Insert brief description for context] Example: [Specific example or case study]
• Supplier specialization: [Insert brief description for context] Example: [Specific example or case study]
• Global supply chain issues: [Insert brief description for context] Example: [Specific example or case study]

Bargaining Power of Buyers

Score: [Insert score out of 10 with the descriptive word next to it]

• High price sensitivity: [Insert brief description for context] Example: [Specific example or case study]
• Availability of alternatives: [Insert brief description for context] Example: [Specific example or case study]
• Brand loyalty: [Insert brief description for context] Example: [Specific example or case study]
• Information availability: [Insert brief description for context] Example: [Specific example or case study]
• Influence of social media: [Insert brief description for context] Example: [Specific example or case study]

Threat of Substitutes

Score: [Insert score out of 10 with the descriptive word next to it]

• Alternative products or services: [Insert brief description for context] Example: [Specific example or case study]
• Cost of switching: [Insert brief description for context] Example: [Specific example or case study]
• Performance or quality of substitutes: [Insert brief description for context] Example: [Specific example or case study]
• Consumer trends: [Insert brief description for context] Example: [Specific example or case study]
• Regulatory or policy changes: [Insert brief description for context] Example: [Specific example or case study]

Industry Rivalry

Score: [Insert score out of 10 with the descriptive word next to it]

• Intensity of competition: [Insert brief description for context] Example: [Specific example or case study]
• Rate of industry growth: [Insert brief description for context] Example: [Specific example or case study]
• Product or service differentiation: [Insert brief description for context] Example: [Specific example or case study]
• Brand loyalty and customer retention: [Insert brief description for context] Example: [Specific example or case study]
• Strategic initiatives: [Insert brief description for context] Example: [Specific example or case study]

Overall Score

Score: [Insert score out of 10 with the descriptive word next to it]

[Insert a brief explanation of the overall score]

Future Outlook

[Insert combined summary and forward-looking perspective based on the Porter’s Five Forces analysis]