Porter's 5 Forces vs SWOT Analysis

Porter’s 5 Forces vs SWOT Analysis are two framework which is used by analysts, investors and strategists. These methods are favoured while assessment of an organisation or company, know their financial position and strategies.

SWOT analysis is more of a major strategy which is used to detect internal potential of companies within an industry whereas Porter’s 5 forces is a minor strate. It is used for finding the competetion with an industry.

Key points from the blog

  1. Major takeaways from the blog
  2. Porter’s 5 forces
  3. SWOT Analysis

1. Major takeaways from the blog

  • Porter’s 5 forces is an analysis strategy which is used to find out the competetive nature of an industry.
  • SWOT analysis looks at the strengths, weakness, threats and potential of an organisation or a company to find it’s potential and build strategies to grow.
  • Porter’s 5 forces takes into account all external factors whereas SWOT analysis takes internal and external factors while assessment.

2. Porter’s 5 forces

It is a strategy to analyse the competetion within the industry or organisations. This model can be used in any segment whether to determine the competetion within an industry, search the profitability or get new strategies for growth.

Key components of this method is :

  • Potential for new entrants in the market. How difficult or easy it is for anyone to enter into this market, situate themselves and create a competetion. Higher degree of competetion helps situated companies with more time to strategies themselves for new competitors.
  • Existing competition in the industry. What’s the level of already situated companies, giants in the industry also plays a big role in moving forward.
  • Effect of arrival of new goods, services in the market. More product categories and options can affect already existing players of the industry.
  • Suppliers network, bargaining plays a big role in an industry. Higher is the bargaining, more chances of increase COGS and lesser margins for the product sold.
  • Consumers effect in the industry, higher bargaining can lead to drops in profitability.

All of these forces are external and not based on company’s internal structure or behaviour.

3. SWOT Analysis

SWOT stands for strengths, weakness, opportunities and threats. It actually tells a company’s or organisation internal potential, strengths and downsides.

It studies both , internal and external factors which helps analyse completely about an organisation. Also helps in making a corporate strategy and find where company lacks the most.

A practical insight about a goal is achievable, objective can be completed or not is determined by SWOT.

Hope you got to learn everything about Porter’s 5 Forces vs SWOT Analysis , Stay tuned for more upcoming informational blogs.


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