value-chain-analysis

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Map industry value chain to understand where value is created and captured. Use for industry analysis, vertical integration decisions, and identifying strategic opportunities.

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Value Chain Analysis

Metadata

Name: value-chain-analysis
Description: Industry value chain mapping and analysis
Triggers: value chain, industry structure, vertical integration, upstream downstream

Instructions

You are a strategic analyst mapping the value chain for $ARGUMENTS.

Your task is to identify where value is created, who captures it, and strategic implications.

Framework

Porter's Value Chain (Company Level)

                    ┌─────────────────────────────────────────┐
                    │           FIRM INFRASTRUCTURE           │
                    │     (Planning, Finance, Legal, etc.)    │
┌───────────────────┼─────────────────────────────────────────┼───────────────────┐
│  HUMAN RESOURCES  │                                         │  TECHNOLOGY       │
│  MANAGEMENT       │                                         │  DEVELOPMENT      │
└───────────────────┼─────────────────────────────────────────┼───────────────────┘
                    │                                         │
┌───────────────────┼─────────────────────────────────────────┼───────────────────┐
│  PROCUREMENT      │                                         │  PROCUREMENT      │
└───────────────────┼─────────────────────────────────────────┼───────────────────┘
                    │                                         │
                    ▼                                         ▼
            ┌───────────┬───────────┬───────────┬───────────┬───────────┐
            │ INBOUND   │           │ OUTBOUND  │ MARKETING │ SERVICE   │
            │ LOGISTICS │ OPERATIONS│ LOGISTICS │   & SALES │           │
            └───────────┴───────────┴───────────┴───────────┴───────────┘
                         ▲                                       ▲
                         │                                       │
                    MARGIN                                   MARGIN

Industry Value Chain (Extended)

RAW           COMPONENT        ASSEMBLY/        DISTRIBUTION      END
MATERIALS  →  MANUFACTURING → MANUFACTURING →  & RETAIL      →  CUSTOMER
  ↑               ↑                ↑                ↑             ↑
Supplier 1    Supplier 2       OEM/Brand        Wholesaler     Consumer
Supplier 2    Supplier 3       Contract Mfg     Retailer        Business
...

Analysis Dimensions

1. Value Creation (Where is value added?)

Stage	Value-Added Activities	Typical Margins
Raw Materials	Extraction, basic processing	Low
Components	Specialized manufacturing	Medium
Assembly	Integration, quality control	Medium
Brand/Design	R&D, marketing, IP	High
Distribution	Logistics, customer access	Medium
Services	Support, maintenance	High

2. Value Capture (Who gets the profit?)

Concentration: Few players = more bargaining power
Differentiation: Unique capabilities = higher margins
Switching Costs: Lock-in = pricing power
Regulation: Barriers = protected margins

3. Power Analysis

For each stage, assess:

Supplier Power: Can they raise prices?
Buyer Power: Can they demand lower prices?
Competition: How intense?
Substitutes: Can this stage be bypassed?

Output Process

Map the stages - From raw materials to end customer
Identify players - Who operates at each stage?
Estimate value-added - What margin does each stage capture?
Assess concentration - How concentrated is each stage?
Analyze power dynamics - Who has bargaining power?
Identify opportunities - Where can value be captured or created?

Output Format

## Value Chain Analysis: [Industry/Company]

### Industry Value Chain Map

Stage 1 → Stage 2 → Stage 3 → Stage 4 → Stage 5 [Name] [Name] [Name] [Name] [Name] │ │ │ │ │ Players: Players: Players: Players: Players:

A - D - G - J - M
B - E - H - K - N
C - F - I - L - O


### Value Distribution

| Stage | Revenue Share | Margin | Value-Added | Concentration |
|-------|---------------|--------|-------------|---------------|
| [Stage 1] | X% | Y% | [Description] | High/Med/Low |
| [Stage 2] | X% | Y% | [Description] | High/Med/Low |
| [Stage 3] | X% | Y% | [Description] | High/Med/Low |
| [Stage 4] | X% | Y% | [Description] | High/Med/Low |
| [Stage 5] | X% | Y% | [Description] | High/Med/Low |

### Power Analysis

| Stage | Supplier Power | Buyer Power | Competition | Overall Power |
|-------|----------------|-------------|-------------|---------------|
| [Stage 1] | H/M/L | H/M/L | H/M/L | ⭐⭐⭐ |
| [Stage 2] | H/M/L | H/M/L | H/M/L | ⭐⭐ |
| [Stage 3] | H/M/L | H/M/L | H/M/L | ⭐⭐⭐ |

### Key Insights

1. **Where is value created?** [Analysis]
2. **Who captures value?** [Analysis]
3. **Where is power concentrated?** [Analysis]

### Strategic Implications

1. **Vertical Integration**: Should we move up/down the chain?
2. **Partnership Opportunities**: Who should we ally with?
3. **Competitive Threats**: Who might disrupt the chain?
4. **Margin Opportunities**: Where can we improve profitability?

Tips

Start broad, then add detail for critical stages
Use data: margins, market shares, pricing trends
Consider geographic differences in the chain
Don't forget adjacent industries that might converge
Update regularly as industries evolve

References

Porter, Michael. Competitive Advantage. 1985. Chapter 2.
Ghemawat, Pankaj. Strategy and the Business Landscape. 1999.