How to Conduct a Competitive Analysis Using Porter’s Five Forces

Competitive Analysis Using Porter’s Five Forces

Every successful business strategy begins with a clear understanding of the competitive landscape. Whether you're launching a new product, entering a contract market, or preparing a government proposal, a competitive analysis provides insight into your position and your risks.

At SSRJ Consulting, we apply classic MBA frameworks like Porter’s Five Forces to help our clients conduct a deep analysis of competition in federal, state, and commercial markets.

This article breaks down how to use Porter’s model for competition analysis, especially in government contracting, where policy, procurement rules, and price sensitivity shape market forces.

What Is a Competitive Analysis?

A competitive analysis is a structured review of external forces that influence your company’s ability to compete. It considers:

• Who your direct and indirect competitors are

• What advantages or threats do they pose

• How market forces shape pricing, margins, and win probability

A well-executed analysis of competition supports smarter bidding, better teaming, and clearer differentiation.

Using Porter’s Five Forces for Competition Analysis

Developed by Harvard Business School professor Michael E. Porter, the Five Forces model provides a powerful framework for analyzing the intensity of competition and the profit potential within an industry.

Let’s apply each force to the world of government contracting and small business strategy.

1. Competitive Rivalry

This force assesses the number and strength of competitors in your market.

In Government Contracting:

• How many vendors are bidding on similar opportunities?

• Are incumbents entrenched with strong past performance?

• Are competitors undercutting prices to win?

SSRJ Insight: Use RFP archives, award databases (like FPDS), and teaming announcements to map competitor behavior. Analyze past awards, NAICS code overlap, and pricing patterns.

2. Threat of New Entrants

This force examines how easy it is for new competitors to enter the market.

In Government Contracting:

• Are barriers to entry high or low in your niche?

• How hard is it to get a GSA Schedule or federal certification?

• Are large primes expanding into your territory?

SSRJ Insight: Entry barriers may be low in professional services, but higher in regulated or capital-intensive contracts (e.g., cybersecurity, construction). Certifications like SDVOSB or DVBE can be strategic barriers to entry—protect them.

3. Bargaining Power of Suppliers

Suppliers affect your cost structure and delivery capability.

In Government Contracting:

• Are you relying on expensive or niche subcontractors?

• Do your software, data, or labor vendors have pricing leverage?

• Are small primes at risk of squeezed margins due to partner dependencies?

SSRJ Insight: Create flexible teaming structures and develop backup vendors to reduce supplier concentration. Track subcontractor rates and prepare justification memos when they fluctuate.

4. Bargaining Power of Buyers

This force reflects how much influence buyers (government agencies) have over your pricing and service delivery.

In Government Contracting:

• Are solicitations mostly LPTA (Lowest Price Technically Acceptable)?

• Do agencies require GSA or schedule-based pricing?

• Can buyers easily switch to another vendor?

SSRJ Insight: Build long-term relationships, invest in CPARS scores, and differentiate with service value—not just cost. Use bid/no-bid matrices that consider buyer behavior and procurement patterns.

5. Threat of Substitutes

Substitutes are alternative solutions that can fulfill the same need differently.

In Government Contracting:

• Could the agency insource your service?

• Is AI or automation replacing manual labor?

• Are larger primes bundling services and crowding out niche vendors?

SSRJ Insight: Monitor technology trends, stay updated on agency modernization plans, and develop value propositions that emphasize speed, flexibility, and veteran/small business advantages.

Putting It All Together: Strategic Takeaways

A complete competitor and competitive analysis using Porter’s Five Forces helps government contractors:

✅ Avoid red ocean bidding wars
✅ Choose smarter teaming strategies
✅ Position as indispensable to agencies and primes
✅ Justify pricing and technical approaches with confidence

At SSRJ Consulting, we apply these principles to help veteran-owned, small, and emerging contractors win more and waste less.

Need Help Analyzing the Competition?

Whether you're planning a proposal, developing a GSA strategy, or entering a new NAICS code market, we can help you assess the landscape and act strategically.

📞 Contact SSRJ Consulting today for a competitive analysis tailored to your contracting goals.