1.12.1 Operations - Added Value

Question 1

What is added value?

Answer 1

The difference between the price and the production cost of a product

Question 2

What is the formula for added value?

Answer 2

Selling Price - Cost of Production

Question 3

How can you increase added value?

Answer 3

-Develop the brand (reputation)
-Differentiate product
-Improve customer service
-Improve quality/durability/lifespan

Question 4

What are some advantages of added value?

Answer 4

-Allows business to charge higher prices
-Acts as a USP which helps differentiate product from competitors
-Creates a barrier to entry

Question 5

What are some disadvantages of added value?

Answer 5

-Customers will have high expectations which the business may not be able to achieve resulting in customer dissatisfaction