1. Adding Value

2. Homework
 Create summary notes / mind map on the topic
of Adding Value using your textbook
 make sure that your notes / mind map are written
in / stuck into your revision book
 revise for a test on the topic of Adding Value
 Complete the extended writing task on added
value by answering Questions 1 – 3.
 make sure you make good use of the technique tips
provided and that your answers are fully
EXPLAINED.

3. … understand the
meaning of the
term adding value
…appreciate the
main sources of
added value
Learning objectives:
be able to understand …
… explain the importance of added
value in business survival and success

4. Adding value
Definition
Definition
Added value is the increased
Added value is the increased
worth that a business creates
worth that a business creates
for a product.
for a product.
Measurement
Measurement
Difference between the value
Difference between the value
placed on the cost of inputs
placed on the cost of inputs
and the value placed on the
and the value placed on the
product by the consumer
product by the consumer

5. Task 1: the humble potato
– how would you add value?
 If you were a business, an average sized unwashed
potato would cost you about 4p to buy in.
 What could you do to persuade a customer to pay more than
4p for it?
 Brainstorm your ideas as a group and record what you come
up with on flipchart paper.
 Be prepared to feedback to the rest of the
class.

6. Convenience
Convenience
Quality
Quality
Design and
Design and
formula
formula
How businesses add value
Speed and quality
Speed and quality
of service
of service
Branding
Branding
Unique
Unique
Selling Point
Selling Point
(USP)
(USP)

7. Task 2: work it out
 Let’s have a go at working out value added
 Remember how to measure value added?
 if not look it up in your worksheet
 When you are called to come up to the
whiteboard
 choose a business
 decide where it should be placed in terms of value added – high
or low
 drag the business to your chosen position
 justify your decision to the rest of the class

8. Highest value added
Toy manufacturer
Pays £3.75 for materials for a
train and sells it to a retailer
for £5.95
Small farm
Sells a bush to a garden centre
for £1.50 which has cost £1 to
grow
Designer
A magazine designer pays £1.75
to produce each magazine and
sells a magazine for £4.95
Restaurant
Dog grooming service
Lowest value added
A restaurant buys a bottle of
wine for £18 and sells it for
£54
A dog grooming service costs
£18 for each dog it grooms and
charges £32 for this service

9. Task 3: group discussion
 In your groups, identify why value added is
important to a business
 start by reminding yourselves what value added is
and how it is measured
 think about what benefits value added brings to a
business
 think about what would happen to a business which
didn’t add value
 Jot down the thoughts of your group and be
prepared to feedback to the class

10. allows a
allows a
business to
business to
pay its bills
pay its bills
wages, rent, tax,
wages, rent, tax,
administration
administration
allows a business
allows a business
to reward its
to reward its
shareholders
shareholders
dividend payments
dividend payments
Importance of value added
allows a business
allows a business
to compete
to compete
price and
price and
position in the market is
position in the market is
defensible
defensible
generates
generates
profit to
profit to
reinvest
reinvest
this allows the business
this allows the business
to grow
to grow

11. Task 4: exam practice
 Complete the three multiple choice questions
on the worksheet to check your
understanding of the topic we have now
completed.
 Record your mark on your worksheet.

12. Plenary
 Watch the Cadbury Smash TV advert from
the 1970s
 How did Smash create value added?