Glossary
Porter's Five Forces
Michael Porter's framework for analyzing industry structure through five competitive forces.
Porter's Five Forces analyzes the attractiveness of an industry by examining: the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, and rivalry among existing competitors. Each force either adds or removes profit potential from the category, and the combined picture explains why some industries are structurally more lucrative than others.
For SaaS, the framework is still useful but needs translation. "Supplier power" often becomes cloud infra and talent; "substitutes" includes spreadsheets, internal tools, and status quo inertia; "new entrants" is the AI-era realization that a well-funded team can ship a clone in months. Used well, Five Forces is a diagnostic lens, not a checklist — it tells you where your profit pool is most at risk.
Why it matters
Founders and product leaders who understand their industry's force structure make better bets on where to invest, which moats to build, and when to exit a losing category.
Related terms
Competitive Moat
A durable structural advantage that makes it hard for competitors to erode your market position.
Market Share
The percentage of total category revenue or customers captured by a given company.
Red Ocean Strategy
Competing in an existing, crowded market by outperforming rivals on shared dimensions of value.
SWOT Analysis
A framework that maps Strengths, Weaknesses, Opportunities, and Threats to summarize a strategic situation.
Pricing Strategy
The deliberate set of choices about how a product is priced, packaged, and positioned on value relative to alternatives.