Purpose
Produce a rigorous competitive analysis that applies Porter's Five Forces and PESTEL to a specific company and market — rating each force, mapping each macro factor, and synthesizing them into a clear position assessment and ranked strategic recommendations. Replaces vague "we should watch competitors" thinking with a defensible, board-ready strategic read.
When to Use
Invoke this skill when the user asks to:
- Analyze a company's competitive position in a market
- Evaluate the attractiveness or profitability of an industry before entering
- Build the competitive landscape or strategy section of a business plan, deck, or memo
- Assess threats and opportunities from new entrants, substitutes, or shifting macro forces
- Decide whether to enter, exit, defend, or double down on a market
- Run a structured strategic review using Porter's Five Forces and/or PESTEL
Inputs Required
Before starting, collect:
- Company: The business being analyzed (name and 1–2 sentence description of what it does)
- Market/industry: The specific market, segment, or category in scope
- Geographic scope: Local / National / Regional / Global
- Key competitors: 3–5 named competitors, if known
- Strategic question: What decision this analysis informs (enter, defend, scale, exit, reposition)
- Known constraints: Budget, regulatory limits, capabilities, or time horizon
- Time horizon: Analysis window (e.g., next 12–18 months, 3-year view)
If competitors are unknown, infer the most likely 3–5 players from the market description and flag them as assumptions. If the strategic question is missing, default to "assess overall market attractiveness and the company's defensibility."
Instructions
Step 1: Scope and Framing
Restate the company, market, geographic scope, and strategic question in 2–3 sentences. Define the boundary of the "market" precisely — analyses fail when the market is drawn too broadly (every category looks competitive) or too narrowly (every player looks dominant). State the boundary explicitly.
Step 2: Porter's Five Forces Analysis
Analyze each of the five forces. For each force:
- Provide 2–4 specific drivers grounded in this company and market — not textbook generalities
- Assign an intensity rating: Low / Moderate / High
- State the implication for profitability or defensibility in one sentence
Force 1 — Threat of New Entrants Assess barriers to entry: capital requirements, economies of scale, brand loyalty, switching costs, regulatory hurdles, access to distribution, proprietary technology. High barriers protect incumbents.
Force 2 — Bargaining Power of Suppliers Assess supplier concentration, uniqueness of inputs, switching costs to change suppliers, threat of forward integration, and how critical the input is. Concentrated, irreplaceable suppliers compress margins.
Force 3 — Bargaining Power of Buyers Assess buyer concentration, price sensitivity, switching costs, availability of alternatives, and threat of backward integration. Powerful buyers force down prices and demand more.
Force 4 — Threat of Substitutes Assess substitute products or services that meet the same need differently, their relative price-performance, and buyer propensity to switch. Substitutes cap how much the industry can charge.
Force 5 — Competitive Rivalry Assess number and balance of competitors, industry growth rate, fixed cost structure, product differentiation, exit barriers, and pricing dynamics. Intense rivalry erodes profitability for everyone.
Composite read: After rating all five, state the overall structural attractiveness of the industry (Attractive / Mixed / Unattractive) and name the 1–2 forces that dominate the picture.
Step 3: PESTEL Macro-Environmental Analysis
Map each of the six macro factors. For each factor, identify 1–3 specific, current forces relevant to this company and market, label each as a Tailwind (helps) or Headwind (hurts), and note the time horizon over which it matters.
- Political: Government policy, trade posture, political stability, taxation, lobbying dynamics
- Economic: Growth rate, interest rates, inflation, exchange rates, consumer spending, labor costs
- Social: Demographics, lifestyle shifts, attitudes, buying behavior, workforce expectations
- Technological: Emerging tech, automation, R&D intensity, rate of obsolescence, platform shifts
- Environmental: Sustainability pressure, climate impact, resource scarcity, ESG expectations
- Legal: Regulation, compliance, IP protection, antitrust, employment and data law
Net macro read: Summarize whether the macro environment is net favorable, neutral, or hostile, and name the single most consequential factor.
Step 4: Synthesis — Competitive Position Assessment
Integrate the two frameworks into one paragraph plus a position statement:
- Where does the company sit relative to the industry's strongest forces?
- Which macro factors amplify or offset the company's structural position?
- Is the company's current position Defensible / Contested / Vulnerable?
- Name the company's single biggest structural advantage and single biggest exposure.
Step 5: Ranked Strategic Recommendations
Produce exactly 5 recommendations, ranked by expected impact. For each:
- The move: A specific, concrete action — not "improve differentiation"
- Which force or factor it addresses: Tie it directly to a finding from Step 2 or 3
- Expected effect: What it changes about the company's position
- Time horizon: Near-term (0–6mo) / Mid-term (6–18mo) / Long-term (18mo+)
End with a one-sentence bottom-line verdict on the strategic question from Step 1.
Output Format
- Structure: Scope framing → Five Forces (force-by-force with ratings) → PESTEL (factor-by-factor) → Synthesis → 5 ranked recommendations → verdict
- Length: 1,100–1,500 words
- Format: Structured document — Five Forces and PESTEL presented as labeled sections with intensity/tailwind labels; recommendations as a numbered ranked list
- Sections: Scope & Framing → Porter's Five Forces (5 sub-sections + composite read) → PESTEL (6 sub-sections + net read) → Competitive Position Assessment → Ranked Strategic Recommendations → Bottom-Line Verdict
- Tone: Strategy consultant — analytical, decisive, evidence-led; states a position rather than hedging
Quality Checklist
Before delivering output, verify:
- [ ] All five forces are rated Low / Moderate / High with specific drivers — not generic textbook descriptions
- [ ] All six PESTEL factors are addressed, each with a Tailwind/Headwind label
- [ ] The synthesis names a single biggest advantage and a single biggest exposure
- [ ] Exactly 5 recommendations are present, ranked by impact, each tied to a named force or factor
- [ ] The market boundary is explicitly defined in the framing
- [ ] A clear bottom-line verdict answers the strategic question — no hedging
Notes
- The most common failure is drawing the market boundary wrong — fix the boundary in Step 1 before analyzing anything.
- If two forces are both High, the analysis should explain which one binds first; they rarely matter equally.
- PESTEL factors with no material impact should be stated briefly as "low relevance" rather than padded — selectivity signals rigor.
- When competitors are inferred rather than provided, label them clearly so the buyer can correct the input and re-run.
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