How to Use Porter’s Value Chain to Find, Fix, and Maximize Profit

Most people try to grow profit by selling more or cutting costs.

That’s fine—but also lazy.

The better move? Map your business activities. Identify which ones add value—and which ones bleed it.

That’s where Porter’s Value Chain Analysis comes in. It’s one of the most useful (and underused) tools in strategy. And today, you’re going to learn how to apply it.

What’s a Value Chain?

Michael Porter introduced the Value Chain in 1985 as a way to break down a business into all the activities that create and deliver value to the customer.

He split it into two categories:

🔹 Primary Activities (Direct impact on product or service):

1. Inbound Logistics – Getting materials in
2. Operations – Making the product or delivering the service
3. Outbound Logistics – Getting the product to customers
4. Marketing & Sales – Creating demand
5. Service – Post-sale support, retention, satisfaction

🔹 Support Activities (Enable everything else):

1. Infrastructure – Finance, admin, leadership
2. Human Resources – Hiring, training, retention
3. Technology Development – IT, product R&D
4. Procurement – Vendor relationships, tools, software

Every function in your company fits somewhere on this chain.
Every function either adds value or subtracts it.

Why This Matters

Because most businesses aren’t failing at the product level.
They’re failing at the process level.

Margins shrink. Customers churn. Bottlenecks slow things down.
And leaders can’t figure out why—because they’re too close to it.

Value Chain Analysis is a way to step back and see the whole machine.

A Quick Example: Coffee Shop

See how everything is connected?

Any weak link—slow service, poor hiring, bad vendors—can ruin customer experience and squeeze your profits.

How to Use the Value Chain in 4 Steps

1. Map your activities.
List what you do in each of the 9 categories. Get specific. Don’t just write “Sales”—write “email campaigns, sales calls, CRM data entry.”

2. Rate each one.
Is it a strength, a cost center, a bottleneck, or a differentiator?

3. Look for gaps.
Are you overspending where it doesn’t matter? Underinvesting where it does? Can you automate, outsource, or eliminate?

4. Optimize.
Don’t cut for the sake of cutting. Improve for the sake of value creation.

Real Use Case: SaaS Startup

Let’s say you run a SaaS business:

It’s not about doing everything—it’s about fixing what drags you down, and doubling down on what works.

When to Use This

• Before scaling
• When margins are tight
• When customers are unhappy
• After a bad quarter
• During strategic planning
• Before raising prices or cutting costs

This is one of the best diagnostic tools in business—and it costs you nothing but time and focus.

Final Word

At Myford University, we’re not interested in theory for theory’s sake.
We care about what helps you run better, smarter, and more profitably.

Porter’s Value Chain gives you a blueprint for doing exactly that.
Use it to find hidden leaks, surface untapped strengths, and build a business that actually performs.

Because great businesses don’t just sell well—they operate well.

Want to read the full article? Find it here.