Learning objective
By the end of this lesson, you can explain a force through its structural driver and economic effect rather than a generic high/medium/low score.
Why it matters
“Buyer power is high” does not tell a team what to do. A useful diagnosis explains why buyers have power and how that pressure changes price, service cost, investment or risk.
Core concept: driver → behaviour → economics
For every force, build a three-part claim:
- Driver: a structural condition.
- Behaviour: what the actor can credibly do.
- Economics: how value shifts.
Example:
Buyers are concentrated (driver), so a few groups can credibly switch or demand custom terms (behaviour), reducing supplier margin and increasing service cost (economics).
Visual explanation
Worked example
Northstar initially rates supplier power “high” because it uses third-party messaging.
The team deepens the claim:
- Driver: two platforms account for 85% of message delivery in target clinics.
- Behaviour: platforms can change API terms or pricing with limited short-term alternatives.
- Economics: Northstar may absorb higher unit cost or pass it to customers; migration requires engineering investment.
- Response: create an abstraction layer, negotiate volume tiers and monitor concentration.
The response now follows the mechanism. “Find more suppliers” may not be viable if credible alternatives do not exist.
Common mistake
Mistake: counting competitors and calling rivalry high.
Rivalry depends on drivers such as differentiation, capacity, switching, growth and exit barriers. Ten differentiated, capacity-constrained firms may create less price pressure than three undifferentiated firms fighting for a stagnant market.
Quick check
Which statement is a complete force analysis?
A. There are many suppliers.
B. Supplier power is medium.
C. A patented input is available from one supplier, allowing it to raise price without an immediate substitute and increasing our variable cost.
D. We should negotiate.
Answer: C. It connects a driver, leverage and economic consequence.
Practical prompt
Select the force you believe is strongest. Write one sentence for:
- the structural driver;
- the behaviour it enables;
- the economic effect;
- one assumption that needs evidence.
Summary
- Force labels are not enough.
- Structural drivers explain actor leverage.
- Strategic response should target the economic mechanism.
Next lesson
Continue to SWOT Analysis to compare the industry pressures with your organisation’s actual strengths and weaknesses.