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