As business transforming resources
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This document discusses how businesses can add value through transforming resources into goods and services. It defines key terms like inputs, outputs, and added value. Businesses can add value through improving quality, design, branding, customer service and more. Adding value allows businesses to differentiate themselves, charge higher prices and earn higher profits. The document also categorizes business sectors as primary (extracting raw materials), secondary (manufacturing), tertiary (providing services), and quaternary (transforming information). It provides examples of businesses in each sector and risks businesses may face.
As business transforming resources
- 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
- 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.