Skip to content

Porter's Five Forces Model

<iframe src="https://dmccreary.github.io/tracking-ai-course/sims/porters-five-forces/main.html"  height="510px" scrolling="no"
  style="overflow: hidden;"></iframe>

Run the MicroSim

Edit the MicroSim

Self-Assessment Quiz

Test your understanding of Porter's Five Forces competitive analysis framework.

Question 1: What are the five forces in Porter's framework?

  1. Price, Product, Place, Promotion, People
  2. Threat of New Entrants, Supplier Power, Buyer Power, Threat of Substitutes, Competitive Rivalry
  3. Planning, Production, Pricing, Profit, Performance
  4. Marketing, Management, Manufacturing, Money, Metrics
Answer

B) Threat of New Entrants, Supplier Power, Buyer Power, Threat of Substitutes, Competitive Rivalry - These five forces determine the competitive intensity and attractiveness of an industry.

Question 2: What does "Threat of New Entrants" measure?

  1. How many employees are leaving the company
  2. How easily new competitors can enter the market and erode profitability
  3. How many new products a company launches
  4. How quickly technology changes
Answer

B) How easily new competitors can enter the market and erode profitability - High barriers to entry (capital requirements, regulations, brand loyalty) reduce this threat, while low barriers increase competitive pressure.

Question 3: How does AI potentially affect the "Threat of Substitutes" force?

  1. AI has no effect on substitutes
  2. AI can create new substitute products or services that disrupt existing markets
  3. AI eliminates all substitutes
  4. AI only affects manufacturing
Answer

B) AI can create new substitute products or services that disrupt existing markets - AI enables entirely new ways of solving customer problems, potentially creating substitutes for traditional products and services.

Question 4: Why is understanding supplier power important in AI strategy?

  1. Supplier power does not matter for AI
  2. AI infrastructure providers (cloud, chips, models) may have significant leverage over companies
  3. Suppliers are always willing to negotiate
  4. AI companies do not have suppliers
Answer

B) AI infrastructure providers (cloud, chips, models) may have significant leverage over companies - Companies relying on a few dominant AI chip makers, cloud providers, or model APIs may face high supplier power affecting costs and availability.

Question 5: How does Porter's Five Forces complement SWOT analysis?

  1. They are identical frameworks
  2. Five Forces provides structured analysis of industry competitive dynamics that SWOT does not capture
  3. Five Forces replaces SWOT entirely
  4. They cannot be used together
Answer

B) Five Forces provides structured analysis of industry competitive dynamics that SWOT does not capture - SWOT provides an internal/external overview, while Five Forces offers deeper analysis of the competitive forces that determine industry profitability.