Adding value - what it is, how firms 'add value'

Question 1

Adding value:

Answer 1

the process of increasing the worth of resources by modifying them.

Question 2

Value added=

Answer 2

Value added= sales revenue - the cost of brought-in materials, components and services

Question 3

Resources:

Answer 3

the elements that go into producing goods and services

Question 4

Land:

Answer 4

incorporates all the natural resources that can be used for production.

Question 5

Capital:

Answer 5

goods that are made in order to produce other goods and services.

Question 6

Primary sector:

Answer 6

those organisations involved in extracting raw materials (e.g.farming/fishing)

Question 7

Secondary (manufacturing) sector:

Answer 7

those organisations involved in processing/refining the raw materials from the primary sector into finishing or semi-finished products.

Question 8

Tertiary Sector:

Answer 8

those organisations involved in providing services to customers and to other businesses, in either the public or private sector.

Question 9

the factors of production:

Answer 9

the four elements; land, labour, capital and enterprise - used in the production of goods and services.

Question 10

production:

Answer 10

the process whereby resources are converted into a form that is intended to satisfy the requirements of potential customers.

Question 11

output:

Answer 11

the finished products resulting from the transformation process.

Question 12

unique selling point/ proposition:

Answer 12

a feature of a product or service that allows it to be differentiated from other products.