Value Chain Mapping

---
name: value-chain-mapping
description: "Structures a business's activities according to Porter's value chain model into primary and support activities, in order to see where value and margin come from and where competitive advantage can be built."
---

# Value Chain Mapping

## Purpose

Structures a business's activities according to Michael Porter's value
chain model into primary and support activities, in order to see where
value and margin actually arise in the organization, and in which activity
competitive advantage — cost leadership or differentiation — is genuinely
built.

## Anchored in research

- Porter, M. (1985), *Competitive Advantage: Creating and Sustaining
  Superior Performance* — the value chain model. Primary activities:
  inbound logistics, operations, outbound logistics, marketing & sales,
  service. Support activities: firm infrastructure, human resource
  management, technology development, procurement.
- The extended view: the value chain doesn't stop at the organization's
  boundary but extends into a **value system**, from suppliers all the
  way to the customer's own customers — competitive advantage can also
  arise from optimizing links outside your own chain.
- Same theoretical family: Porter's Five Forces, see
  `../../../opportunity-recognition/skills/competitive-and-five-forces-mapping/SKILL.md`.

## Method

1. **List the organization's primary activities** across Porter's five
   categories: **inbound logistics** (receiving and storing inputs/raw
   materials), **operations** (converting inputs into the finished
   product or service), **outbound logistics** (delivering the product/
   service to the customer), **marketing & sales**, and **service**
   (post-sale support and maintenance).
2. **List the support activities:** **firm infrastructure** (management,
   finance, quality, legal), **human resource management**, **technology
   development** (R&D, IT, product development), and **procurement**.
3. **Assess each activity's cost against the perceived value or
   differentiation it creates for the customer** — which activity brings
   the most value in the customer's eyes, and which is a pure necessary
   cost with no differentiation attached?
4. **Identify the source of margin:** in which activity does most of the
   margin actually arise, and in which activity is competitive advantage
   really being built — cost leadership (the cheapest execution) or
   differentiation (the best perceived value), per Porter's generic
   strategies? An activity can look cost-heavy without being where the
   advantage lives — trace margin to the activity, not just to the
   category it sits in.
5. **Map the linkages between activities** — how does improving one
   activity affect another (e.g. better quality control in operations can
   reduce service costs later; tighter procurement terms can compress
   inbound logistics costs)? Porter's chain is explicit that competitive
   advantage often comes from optimizing a linkage, not a single activity
   in isolation.
6. **Extend to the value system where relevant:** how does your own value
   chain connect to suppliers' value chains upstream, and to the
   distribution channel's/customer's value chain downstream? A cost or
   differentiation advantage that shows up only inside your own chain can
   still be captured by a supplier or channel partner if the system-level
   linkage isn't examined too.
7. **Use the result as the basis for a competitive-advantage analysis:**
   which activities are worth optimizing and investing in, which should be
   outsourced, and which should be discontinued entirely — and does the
   chosen generic strategy (cost leadership or differentiation) match
   where the analysis actually located the advantage?

## What this skill does NOT do

- Doesn't calculate exact cost or margin figures for you — it structures
  which activities they should be attributed to and where they should be
  sourced.
- Doesn't make the final competitive-strategy choice (cost leadership vs.
  differentiation) — it produces a structured basis for the decision.
- Doesn't replace industry-specific deep analysis — the generic model
  always needs to be adapted to context.

## Refinement notes

Areas to keep deepening with real practice:

- your own rules of thumb for where in the value chain hidden competitive
  advantage most often turns up in different industries
- concrete templates (into `../../references/`, e.g. a value-chain-map
  template)
- reference cases / your own examples
- what this skill deliberately does *not* do (guardrails, common mistakes) —
  add to the list above

Once this section is filled in and validated in practice, update the
`maturity` field in `skills_index.json` to `draft`, `validated`, or
`canonical` (see `../../../meta/maturity_levels.md`). **Don't add new
fields to the frontmatter** — `name` and `description` are the only ones
allowed (see `../../../meta/frontmatter_schema.md`).

## Continue from here

- Preceding skill in the same pack: `../layer-based-business-structuring/SKILL.md`
  — an alternative, layer-based way to structure the same business.
- Next in this pack: `../category-definition-and-modeling/SKILL.md` —
  models a product or business relative to market categories.
- Related skill in another pack (same theoretical family):
  `../../../opportunity-recognition/skills/competitive-and-five-forces-mapping/SKILL.md`
- This pack's shared guardrails: `../../CLAUDE.md`

## References

- `../../references/` — the pack's shared background material
- `../../CLAUDE.md` — the pack's shared guardrails