Porter's Five Forces and SWOT analysis are both tools commonly used by companies to conduct analyses and make strategic decisions. Each of the models seeks to define the company's position in the market. The major distinction is that Porter's Five Forces model is used to analyze the competitive environment within an industry, often focusing on external forces, while a SWOT analysis tends to look more deeply within an organization to analyze its internal potential. Porter's Five Forces are also generally more of a micro-tool, while SWOT analysis is comparatively macro.
SWOT analysis focuses on analyzing the strengths, weaknesses, opportunities and threats to a business, place, industry, product or person. It is a bird's-eye view meant to flesh out the viability of a concept from the inside out. Each piece of a SWOT analysis is used as one element of a comparison to existing solutions and competitors, but the focus remains on the internal fortitude of the concept. The SWOT analysis is often considered a more macro review, as it can give a sense of whether an objective is attainable. Users often go through a SWOT exercise simply to identify their own competitive advantages and disadvantages.
Porter's Five Forces include the threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers and intensity of competitive rivalry. Each of these forces can be seen as external in nature. The forces are generally analyzed against a micro concept such as an individual business line or idea.