Porter's five forces framework analyzes competition within an industry by looking at 5 factors: the threat of new entrants, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and rivalry among existing competitors. The framework helps determine an industry's profit potential and competitive intensity. For example, the threat of new entrants is lower if barriers to entry like regulations protect existing businesses from competition. The bargaining power of buyers is stronger in monopsony markets with few buyers. Rivalry depends on factors like differentiation through innovation and transparency around competitors' strategies.