Value Chain Diagram (Porter's Framework)
Porter's primary and support activities that build a product's competitive margin.
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7 connected components you can rename, recolor, and extend with AI.
A value chain diagram visualizes Michael Porter's framework for the activities a company performs to deliver a product and create margin. It splits work into five primary activities: Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, and Service. These are supported by Firm Infrastructure, Human Resource Management, Technology Development, and Procurement that run across the whole chain.
Strategy teams, operations leaders, and MBA students use the value chain diagram to find where cost advantage or differentiation is created. Mapping each activity reveals bottlenecks, outsourcing candidates, and the steps that genuinely add value versus those that only add cost.
Great for
- Strategy reviews
- Cost reduction analysis
- MBA coursework
- Operations audits
- Competitive analysis
Frequently asked questions
What is a value chain diagram?+
It is a strategic map of the activities a business performs to design, produce, market, deliver, and support its product, used to locate sources of competitive advantage.
What are the components of Porter's value chain?+
Five primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) plus four support activities (firm infrastructure, HR, technology development, procurement).
How is a value chain different from a supply chain?+
A supply chain tracks the physical flow of goods between organizations, while a value chain focuses on the internal activities that add value and margin within one firm.
Why use value chain analysis?+
It pinpoints where you can cut cost or differentiate, guiding decisions on outsourcing, investment, and process improvement.
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