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Porter's Value Chain

L1Business analysisEnvironmentdiagnosticStages 3 to 5

Reference model

Porter’s value chainFour support activities (firm infrastructure, human resource management, technology development and procurement) run across the top. Beneath them five primary activities run left to right: inbound logistics, operations, outbound logistics, marketing and sales, and service. An arrow to the right shows the margin that is left.SUPPORT ACTIVITIESFirm infrastructureHuman resource managementTechnology developmentProcurementPRIMARY ACTIVITIESInboundlogisticsReceiving,storinginputsOperationsTurninginputs intothe productOutboundlogisticsDelivering tobuyersMarketingand salesMaking buyersaware andable to buyServiceKeeping valueafter saleMarginprice − total cost

Five primary activities carry the product from inputs to the customer; four support activities run under all of them. What is left over is the margin.

About this model

Splits a business into the nine activities that create value and cost, so you can see exactly where margin and competitive advantage come from — and where money is spent without earning an edge.

Michael E. Porter — Competitive Advantage · 1985

How to read it

  • Primary activities (along the bottom) make and deliver the product; support activities (above) serve every primary activity.
  • For each activity, record what you do, what share of cost it takes and how you compare with rivals. Advantage lives where you are ahead on something customers value or where you cost less.
  • Margin is the gap between what customers pay and the total cost of all nine activities. Look for activities that cost a lot and earn no edge.

What this does

Breaks the business into primary and support activities to see exactly where margin and differentiation are actually created internally.

When to use it

Growth through Maturity, when cost or differentiation isn't obviously coming from anywhere in particular and needs tracing activity by activity.

What happens next

Identified margin/cost drivers feed the Financial Model's cost-structure assumptions.

Golden thread

Builds on ←

    A starting point: it needs no earlier tool.

    Feeds into →

    • financial

    Framework library: Strategy and environment (layer L1), lifecycle stages 3 to 5.

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    Hand-built by Eccellere and reviewed by Eccellere on 02/11/2026. Guidance, not advice: apply your own judgement.