Business frameworks explained: Porter's Five Forces, SWOT, 4Ps and more

Five Forces explains why some industries are more profitable than others by looking at the pressure from five directions: rivalry among existing competitors, the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, and the threat of substitutes. Use it in market entry and M&A cases to judge whether an industry can sustain good margins. For example, US airlines face intense rivalry, powerful suppliers (aircraft and engine makers) and price-comparing buyers, which helps explain why their margins have historically been thin.

The 3Cs frame strategy around the customer (needs, segments, willingness to pay), the competitors (who they are, how they win) and the company (capabilities, costs, brand). A strategy works where the company can meet customer needs better than competitors. It is a solid first structure for market entry or new product questions.

Product (what you sell), price (what you charge), place (where and how customers buy) and promotion (how you communicate). Use them to diagnose why sales are weak or to plan a launch. They overlap with go-to-market thinking; see the go-to-market framework.

Rarely as the main structure. SWOT lists internal strengths and weaknesses and external opportunities and threats, but it does not tell you what to do, and items often fit more than one box. It works as a closing summary or a quick sanity check, not as the way to crack a case.

It plots each business unit by market growth and relative market share. Stars (high growth, high share) deserve investment. Cash cows (low growth, high share) fund others. Question marks (high growth, low share) need a decision. Dogs (low growth, low share; Henderson originally called them pets) are candidates for exit. It is most useful in portfolio questions, such as which divisions a conglomerate should keep.

Porter's value chain splits a company into primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) and support activities (infrastructure, HR, technology, procurement). Use it to locate where costs sit or where a company differentiates. It is a good MECE skeleton for cost reduction and operations cases.

The 7S model checks whether strategy, structure, systems, shared values, style, staff and skills are aligned. It is useful for reorganizations, mergers and HR cases. Jobs to be done asks what "job" a customer hires a product to do, such as a commuter "hiring" a coffee to stay alert. It is useful for product and marketing questions where customer motivation is the real issue.

• When it does not fit the question. Five Forces does not diagnose a falling margin at one store.
• When you would recite it by name without tailoring the buckets. Interviewers see this constantly.
• When an equation exists. If profit = revenue − costs answers the question, use that; it is MECE by construction.