In this paper we discuss the relations between the increased quality standards of traditional food products and the structuring and management of the value chain. We address the importance of different quality dimensions, and how they are combined in superior strategic configurations to achieve competitive advantage in particular in up market segments. We elaborate on the competitive positioning tools and the resource configuration of the value chain necessary for creating sustainable competitive advantage for small and medium-sized enterprises. We present results from 11 in-depth interviews with representatives from the fragmented Norwegian value chain for lamb products. The results show that to achieve customer-oriented differentiation focus effect and at the same time be competitive on price you have to include rigid regimes of coordination and control throughout the value chain. Implications for management of the value chain and contract relations between the actors in the chain are discussed.