Stop Watching Rivals: Track the Five Forces That Actually Matter

Who This Is For

You track competitors like it's your job—because it is. But if you're only watching rivals, you're missing the real threats. The strongest competitive pressure often comes from suppliers, buyers, new entrants, or substitutes, not the company you see in your rearview mirror. That's the argument Michael Porter made back in 1979, and it started a revolution in strategy (Harvard Business School). So here's the contrarian take: stop tracking competitors. Start tracking the five forces.

Step 1: Define Your Industry Boundaries

Before you can track anything, you need to know where your industry ends. The threat of new entrants, supplier power, buyer power—all of it depends on how you draw the lines. Total addressable market (TAM) is crucial here, because it sharpens the areas to focus on and shapes the direction of your analysis (IBISWorld). For example, if you run a regional airline, your TAM isn't 'travel'—it's the specific routes you serve. That makes videoconferencing a substitute, not a rival (Harvard Business School). So start by mapping your TAM. It forces you to see who's really competing for the same dollar.

Step 2: Track the Five Forces, Not Just Rivals

Now build your tracking system around the five forces. Here's the list I use:

• Rivalry: current competitors, their pricing, and their moves.
• New entrants: startups, adjacent players, and barriers to entry.
• Suppliers: who controls your inputs, and how much power they have.
• Buyers: your customers' leverage, concentration, and switching costs.
• Substitutes: products that meet the same need in a different way.

For each force, ask one question: Is it getting stronger or weaker? For example, if a new technology makes switching cheaper for buyers, that's a rising threat. If a supplier consolidates, that's a red flag. This is the core of Porter's framework (Investopedia).

Step 3: Use the Right Frameworks for Each Force

Porter's Five Forces is the backbone, but it's not enough. Use SWOT to assess your internal position within the industry—your strengths and weaknesses, plus the opportunities and threats the forces create (Investopedia). The two frameworks are complementary: Five Forces explains the structural forces, while SWOT assesses your company's position within that industry (Investopedia). For example, a weakness like high employee turnover (CFI) makes you more vulnerable to supplier power if your best people are hard to replace. PESTEL helps with the macro context: political, economic, social, technological, environmental, and legal factors (CFI). And if you're deciding which product lines to defend or phase out, the BCG Matrix is your friend. The cutoff for market growth rate is typically 10%—above that is high growth, below is low (CFI). But remember, the matrix assumes that higher relative market share leads to more cash flow through cost advantages from experience (CFI). So use it to decide where to invest—not as a crystal ball.

Step 4: Benchmark What Matters

Once you know which forces to track, benchmark your performance against the ones that matter. That means comparing metrics like revenue growth, win rate, customer satisfaction (NPS), pricing, and market share against competitors (IBISWorld). But don't just copy numbers. Analyze market share trends and time series data to benchmark your operations and set goals—this can also signal when an industry is entering decline (IBISWorld). For example, if your win rate is sliding while your NPS is flat, that's a sign that buyer power is shifting. Dig into why.

Step 5: Turn Insights into Action

The point of all this tracking is to act. A competitive analysis helps you learn how to differentiate from competitors to attract a larger market (IBISWorld). So after each review, write down one thing you'll do differently. Maybe you'll invest in a new capability that raises switching costs for buyers. Or you'll renegotiate with a supplier before they gain more leverage. The value chain is a useful lens here—identify your primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) and support activities (firm infrastructure, HR, procurement) to find where you can create value or cut costs (CFI). That's where differentiation lives.

What Can Go Wrong

Here's the trap: you'll fall back into watching rivals only. It's comfortable. But remember, the threat of new entrants can force you to keep prices down and spend more to retain customers—that puts a cap on your profit potential (Harvard Business School). If you're not tracking that, you're blind. Another mistake is overcomplicating it. You don't need a hundred metrics. Start with the five forces and a handful of benchmarks. And don't forget the tools—IBISWorld, Crunchbase, PitchBook, SimilarWeb, SEMrush—but use them to answer the five-force questions, not to spy on rivals (IBISWorld).

The single most important thing to remember: competitor tracking is not a goal. It's a means to understand the five forces that shape your industry's profit potential. Track the forces, not the rivals.

Sources

• Investopedia - https://www.investopedia.com/ask/answers/041015/whats-difference-between-porters-5-forces-and-swot-analysis.asp
• IBISWorld - https://www.ibisworld.com/blog/how-to-do-a-competitive-analysis/
• Harvard Business School (Five Forces) - https://www.isc.hbs.edu/strategy/business-strategy/Pages/the-five-forces.aspx
• CFI (BCG Matrix) - https://corporatefinanceinstitute.com/resources/management/boston-consulting-group-bcg-matrix/
• CFI (Value Chain) - https://corporatefinanceinstitute.com/resources/accounting/value-chain/