Good question. All of the "sub points" under a force do not need to hold true in order for you to say that one of the forces is exerting some influence on a firm or industry. To take your example, let's say you find that of the five or six things Porter says indicates barriers to entry, you only have information on two or three and nothing on the others. Let's further say that the 2-3 items point toward high barriers. Under this case, you might still conclude that barriers to entry are high. Depending on the information and the time frame given, you might even conclude that they are higher than they used to be. It would not seem, however, that having information on only half of the "sub-points" would allow you to conclude that barriers were at the very highest level possible.

Another situation you will encounter in class is that some of the "sub-points" will go one way and some will go the other. That is to say, one or more may indicate that barriers are high or increasing while others may indicate the opposite. This should not be a cause for concern or confusion. Rather it means you have to make note in your recommendation or analysis that there is some uncertainty or you have to look for additional information that would resolve it.

Ultimately, the important point to keep in mind is that Porter's Five Force is a theoretical "frameworks" and not theoretical "formula". As I see it, frameworks like Porter's can be used intelligently but not precisely, not in a way that allows you to plug in a few pieces of information and to get back out a definite answer. To use a metaphor, they are more like sun dials or sand clocks than stop watches. Your minds, your sense of judgement and experience, are the stop watches, the precision time keepers.

Finally, while it's nice to see that you are askign questions about the material, 1:12 AM is too late- or too early- for anyone to be thinking about Porter's Five Forces- even Michael Porter himself!

UPDATE 1: A student in section 2 posed these questions:

One thing I would like to add here is that when companies actually make decisions, do they think about these competitive forces? Don't you suppose that there are also other forces that Porter did not discuss? I think there are a lot of things. Competitive forces are many from my point of view. They are not limited to these five. For example, I think that corporate governance and the company's reputation is also a competitive force. These can also fall somewhere in Porter's forces, but I think that they should have been discussed. What do you think?

These are important questions. Please let me take them one at a time. First you ask: "..do (managers) think about these competitive forces?". My experience is that they definitely do. There are two reasons why. First and foremost is the fact that the five forces outlined by Porter are so utterly fundamental and foundational. It is inconceivable that a decent strategic analysis would fail to consider customers, suppliers, rivals, new entrants, substitutes and complements. The second reason is that managers use this model is that virtually everyone who has obtained an MBA in the last 25 years has been introduced to the five forces. So well- and widely-known is the framework, that It would be a disservice for me not to teach you something about it.

Secondly, you ask "Don't you suppose that there are also other forces that Porter did not discuss? I think there are a lot of things. Competitive forces are many from my point of view." . Absolutely there are other forces that Porter did not discuss. When I said that no strategic analysis is complete without consideration of the five forces, I didn't intend to leave the impression that this meant that nothing else should be considered. In fact, I would go so far as to say no decent strategic analysis is complete if it incorporates only Porter's Five Forces.

Your third question is "Competitive forces are many from my point of view. They are not limited to these five. For example, I think that corporate governance and the company's reputation is also a competitive force. These can also fall somewhere in Porter's forces, but I think that they should have been discussed. What do you think?" In short, this is one of the most important questions we'll address this term: If we accept that the five forces framework is incomplete, with what should we supplement it? I have written about this question last semester and I hope you don't mind that I refer you to those posts, plus one not on this blog.

The first of these posts is one on the BusinessPundit blog entitled "The Public Interest - Is it Porter's Sixth Force?". Youll note that I left a comment on post. There's no need to read it, however, because I expanded upon the ideas and posted them on my blog. That post is entitled "An Exchange of Ideas with BusinessPundit." The key idea I advanced here was that rather than add more forces to Porter, we should look for "forces" in other full frameworks rather than grafting additional forces onto Porter. One such framework, I noted, was Baron's Four-I's. I explained in greater detail the importance of that Baron's non-market environment theory in a post entitled "Hey Four Eyes!".