1.1 Adding Value

• Business
• Secondary Education

Added Value

IGCSE - Topic 1.1 Business activity

While you are waiting for you classmates to arrive, think about:
1. What is specialisation?

2. What is the benefit of businesses focusing on producing one specific product / service?

In today's lesson

You will be able to:

• Understand what is meant by 'added value'  
  
  
• Understand why 'added value' is important for businesses
  
  
• Identify ways businesses can increase it

First, let's review

What can you remember about what we studied last lesson?

What is specialisation?

1. Focusing on a specific area of expertise
2. Working in multiple areas simultaneously
3. Having no expertise in any area
4. Avoiding any kind of work

Why is specialisation important for businesses?

1. Wastes resources and time
2. Increases efficiency and productivity
3. Reduces profits and revenue
4. Causes confusion and chaos

What are the advantages of specialisation?

1. Lower customer satisfaction and increased costs
2. Higher quality output and economies of scale
3. Decreased production speed and decreased specialization
4. Reduced market share and increased competition

What is division of labour?

1. Breaking down tasks into smaller specialized activities
2. Avoiding any kind of work
3. Combining all tasks into one activity
4. Working on different tasks simultaneously

What are the benefits of the division of labour?

1. Saves time and reduces errors
2. Decreased productivity and lack of expertise
3. Wastes resources and increases errors
4. Increased efficiency and expertise

What is opportunity cost?

1. The benefit gained from choosing one option over another
2. The total cost of all available options
3. The profit gained from choosing one option over another
4. The loss of potential gain from choosing one option over another

Can you provide an example of the division of labour in a company?

1. A company focusing on multiple unrelated activities
2. Assembly line production in a car manufacturing company
3. A company outsourcing all tasks to different firms
4. One person performing all tasks in a company

Can you provide an example of the opportunity cost of a company?

1. Investing in new machinery instead of hiring more employees
2. Hiring more employees instead of investing in machinery
3. Expanding into new markets instead of improving existing products
4. Not making any investments at all

How much would you pay for this Plain White T-shirt?

Consider this basic t-shirt. The quality is OK, it will do what you expect it to do. How much would you pay for it?

How much would you pay for this Plain White T-shirt?

Consider we change the materials we use. We use the finest quality Pima cotton. It's durable and comfortable. How much would you pay for it?

How much would you pay for this Plain White T-shirt?

Consider we hire a designer to design a cool fashionable design that is trendy. How much would you pay for it? 

How much would you pay for this Plain White T-shirt?

Now consider we brand it with careful marketing, such as like Dior, Chanel or Balenciaga. How much would you pay for it?

This is Added Value

'Added value' is the increase in worth or desirability of a product or service as a result of a company's production activities.

Why is added value important?

Added value is important for businesses as it allows them to: 

• create unique products or services from competitors
• ask for higher higher prices
• increase customer loyalty

How can businesses increase their added value?

1. Improving product quality 

2. Enhancing customer service
3. Customise and personalise

4. Innovation and product development 

5. Effective marketing and branding

How can NAISM Bakery add value to their bread?

Strategy 1 - Improving product quality

By: 

• using higher quality materials, 
• implementing rigorous quality control measures, and 
• continuous improvement efforts
  
  ...businesses can enhance the perceived value of their products!

Strategy 2 - Enhancing customer service

• Providing exceptional customer service, 
• Quickly fixing customer problems, and 
• Exceeding customer expectations
  
  ...can significantly enhance added value.
  

Strategy 3 - Customisation and personalisation

Offering customised products or services that suit individual preferences and needs can increase added value, as customers feel a higher level of personalisation.

Strategy 4 - Innovation and product development

• Investing in research and development 
• Introducing new and innovative products, and
• Staying ahead of market trends can significantly boost added value.

Strategy 5 - Effective marketing and branding

Strong branding, impactful marketing campaigns, and creating a positive brand image can increase how valuable a customer sees a product or service, leading to increased added value.

Answer questions (a) and (d). Write your answer and send to me on Teams.

Write down 3 things you learned in this lesson.

Have students enter three things they learned in this lesson. With this they can indicate their own learning efficiency of this lesson.

Write down 2 things you want to know more about.

Here, students enter two things they would like to know more about. This not only increases involvement, but also gives them more ownership.

Ask 1 question about something you haven't quite understood yet.

The students indicate here (in question form) with which part of the material they still have difficulty. For the teacher, this not only provides insight into the extent to which the students understand/master the material, but also a good starting point for the next lesson.