Transcript Added Value - Brighouse High School

Added Value
Today…
• Understand what added value is
• Understand why added value is used in a
business
What is Added Value?
It is the difference between what a business pays
its suppliers, and the price that it is able to
charge for the product/service.
Materials are bought,
business costs are
paid (eg suppliers,
electricity)
Something is
“added”
Product or service
is sold to the
customer
Sources of Added Value
• Businesses can add value to their
product/service by doing something with
the raw materials and providing something
‘different’.
Task
Make a spider diagram with all the different ways
you can think of that a business can ‘add value’
Sources of Added Value
Think of all the reasons why a business can sell a
product or service for more than what they paid
for it in the first place.
Design
Quality
Speed of Service
Unique Selling Point
(USP)
Branding
Convenience
Quality
USP
(unique selling
Point)
Design
Sources of
Added
Value
Convenience
Branding
Speed
Example of Added Value
Chocolate bar sold to
customers
Ingredients purchased
1.20p per bar
30p per bar
Ingredients made into a
chocolate bar
+ 20p per bar
Value Added = 70p per bar of chocolate
Example of Added Value
Meal sold to
customers
Ingredients purchased
£15 per meal
£3 per meal
Ingredients made into a
meal; café furnished
+ £6 per meal
Value Added = £6 per meal
Importance of value
added
• Every business must add value to survive
and be successful
• The higher the added value, the more
likely it is that a business will survive, grow
and be successful in the long term
Complete the activity ticking the
correct column – for each
statement, is the action adding
value?
Complete the worksheet by
showing how the three
businesses could add value.
• Jacob Simms is a solo singer who tours the
country appearing at concerts and revues.
Select ONE answer.
The added value of his singing is:
A – the total cost of putting on the concerts minus the
revenue earned from selling tickets
B – what he makes in fees plus his costs such as petrol
and hotels
C – the total cost of his concerts at which he appears
minus what he has to pay to concert hall owners
D – the revenue he earns minus what he spends
• Jacob Simms is a solo singer who tours
the country appearing at concerts and
revues. Select ONE answer.
The added value of his singing is
D – the revenue he earns minus what he
spends
Which two of the following might be a source
of added value for a farming business?
A – Quality of products grown on the farm
B – The wages of the farm workers
C – The profit earned by the farmer
D – Speed of delivery from harvesting to the
customer
E – The receipts from the sales of the farm
produce
Which two of the following might be a source
of added value for a farming business?
A – Quality of products grown on the farm
D – Speed of delivery from harvesting to the
customer
Why is added value important for the survival of a
business? Select one answer
It is important because….
A – added value allows a business to target its
customers successfully
B – added value always means a better quality of
product
C – a business that has value added is one that is
likely to make enough money to make a profit
D – all businesses have to have a unique selling
point
Why is added value important for the
survival of a business? Select one answer
It is important because….
C – a business that has value added is one
that is likely to make enough money to
make a profit