The short answer
The short answer
Value Chain analysis examines the connected activities through which a business creates, delivers, and retains value. It looks at activities and their handoffs, including sourcing, production, distribution, marketing, and service, supported by organizational capabilities. Its purpose is to identify where the system strengthens differentiation, adds cost, or loses value.
01
Why should you examine the handoffs?
A product can be well designed but badly forecast, compellingly marketed but unavailable, or widely distributed without attractive contribution. Follow a real customer proposition across functions and identify where decisions, information, inventory, and costs move.
Leadership estimates of activity contributions can reveal beliefs, but they are not measured profit allocations or a budget recommendation. Validate important claims using relevant customer and financial evidence.
02
How should channel economics be compared?
Compare the contribution left after the relevant costs of reaching and serving customers. Consider demand creation, acquisition, delivery, returns, inventory risk, service, partner deductions, and working capital where applicable. A higher gross margin does not establish better total economics.
Define each channel's role and examine incremental demand and learning, not just sales shifted between routes. Connect efficiency changes to the distinctive customer promise so lower costs do not undermine preference or reliability.
Further clarity
Questions owners ask
Should every activity be made distinctive?
No. Some activities provide necessary support, while others create the customer difference. Improve common infrastructure where it helps the distinctive system work, and protect the activities behind a credible advantage.
Further reading
Sources & references
MOAT Stacking editorial content · Published 2026-10-10
This reference is educational. Use the evidence and context of your own business when applying these ideas.