── ── Startups
Value Chain Analysis
Porter (1985) separates firm activities into primary (inbound logistics, operations, outbound logistics, marketing/sales, service) and support (firm infrastructure, HR management, technology development, procurement). Competitive advantage — cost leadership or differentiation — emerges from performing one or more activities better than rivals. Margin is the residual after all activity costs are subtracted from customer willingness to pay.
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How it works
Produce a Value Chain Audit — mapped activities with cost allocation, differentiation sources, competitive comparison, and strategic recommendations.
Step 1: Map All Activities. List every primary and support activity using Porter's nine-module structure. Be specific — not "sales" but "enterprise direct sales in North America." Stop rule: if two people assign the same cost item to different activities, break down further.
Step 2: Allocate Cost. Estimate cost % of total for each activity. Identify top 3 cost consumers, below-benchmark (potential advantages), above-benchmark (value leakage). Regress-test: cannot estimate to ±50% → fix data or definition.
When to use it
- user asks 'where does our competitive advantage come from', 'why are our margins lower than competitors', 'which activities create value', 'how is the competitor doing it cheaper', 'cost structure analysis', 'make vs. buy decision', 'which activities should we outsource', or is evaluating an acquisition for synergies or designing competitive strategy
When not to use it
When the decision is routine and reversible, applying a formal method costs more than it returns.
Worked example
The AI Value Chain — Where the Margin Pools Sit (2024–2026)
The 2024–2025 generative-AI buildout is a rare case where a whole industry's value chain reorganized in real time, with unusually public data (chip vendor filings, hyperscaler capex disclosures, model pricing pages). Applying the framework treats "the AI stack" as one end-to-end chain — silicon → cloud/compute → foundation models → applications — and asks the framework's central question: which activities capture durable margin, and which see their value competed away?
Install this skill (free, MIT)
npx skills add deciqAI/knowledge-skillsUseful? Star the repo — stars help other builders find it.
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