1. AS Business
Transforming resources into goods
and services

2. Starter

3. Objectives
• To understand the
terms “Adding value”
and “added value”
• Explain how a business
can add value to
resources
• Be able to apply the
classification of
business activity by
sector

4. Spot the difference…
£8,750 £99

5. What is added value?
• Added value is the increased worth
that a business creates for itself
For example:
If it costs Cadbury’s £0.25p to make
this
And they sell it for £0.75p.
How much added value do they
make?

6. Added value formula
• Added value = Price of finished
product –cost of resources

7. Objectives
• To understand the
terms “Adding value”
and “added value”
• Explain how a business
can add value to
resources
• Be able to apply the
classification of
business activity by
sector

8. How can you add value to your resources?
Product
Quality
Design
Formula
Customer
Service
Convenience
Branding
USP

9. The benefits of adding value
• Differentiation from the competition
• Charging a higher price
• Higher profit margins
• Targeting product or service at a
different market segment

10. So back to your ideas
• How will it cost to buy the
resources?
• What will the selling price for
your finished product be?
• How much value have you
added?

11. Objectives
• To understand the
terms “Adding value”
and “added value”
• Explain how a business
can add value to
resources
• Be able to apply the
classification of
business activity by
sector

12. Key Terms
At its simplest, a business is a process
whereby inputs are processed to
produce outputs.
• Input –something that contributes to
the production of a product or
service
• Output –something that occurs as a
result of the transformation of
business inputs

13. Different Business Sectors

14. Primary Sector
• Primary Sector – extract raw
materials from land or sea, e.g.
Mining, Farming, Fishing, Oil, Gas,
Forestry.

15. Secondary Sector
• Secondary Sector – use raw materials
to make finished goods, e.g. Cars,
Ships, Furniture, Roads, Buildings,
Bridges

16. Tertiary Sector
• Tertiary Sector – provides a service to
industry/consumers, e.g. Retail /
plumbers/ electricians / education /
health..

17. Quaternary Sector
• Quaternary Sector – businesses that
transform information e.g Google /
facebook / ICT

18. P, S or T?
• Cadburys chocolate
• Sainsbury’s
• Pick your own strawberry farm
• Ryanair
• Twitter
• Innocent
• Big Kenny’s Kebab Kave

19. Objectives
• To understand the
terms “Adding value”
and “added value”
• Explain how a business
can add value to
resources
• Be able to apply the
classification of
business activity by
sector

20. Questions
• List up to three ways in which a hotel
could improve its added value
• Identify three benefits of a business that
successfully manages to add value in the
production process
• Explain why added value is not the same
as the profit earned by a business

21. Risk
• Identify the main risk from each of the
following:
• Doubling the advertising budget when a
firms sales haven’t increased compared
with last year
• A bakery switching to a new supplier of
flour
• A entrepreneur borrowing £80,000
secured against his house.

22. Quick Quiz!
• http://www.tutor2u.net/business/qui
z/buss1/addedvalue/quiz.html