1. Recap last lesson…!
Use your whiteboard and write on one side…True and on the other… False….. & be prepared to make a ‘quick’ decision!

2. Trademarks protects signs and symbols!
True or False?
A trademark protects a new invention?
False
Trademarks protects signs and symbols!

3. False A new product is automatically patented? True or False?
You have to apply for the legal protection through the UK Patent Office

4. Copyright protects creative work – written, music, art & broadcasts
True or False?
A copyright applies to written work and music?
True
Copyright protects creative work – written, music, art & broadcasts

5. Added Value: Sectors of Industry
Other recap Q’s
State two possible sources of new business ideas.
State two factors that can determine the success of a new business idea.
What’s the difference between a product niche and a market niche?
Product niche – brand new product/invention that solves a problem…never been created before
Market Niche – something that already exists but the entrepreneur brings it to a ‘new’ market/set of customers…. Eg bringing something from US to UK!
Mr Mercer's notes

6. Added Value: Sectors of Industry
Adding Value
Mr Mercer's notes

7. By the end of this lesson you should be able to…
Explain the concept of added value
Identify the different sectors of production
Explain the role of the different factors of production

8. How does Bob add value????

9. Inputs Outputs Inputs and Outputs
Transformation
Process
The transformation process describes what happens inside the business.
This is where value is added to inputs to create outputs

10. What’s involved with adding value?
INPUT
PROCESS
OUTPUT
Land
£18,000
Wood
£2,500
Digging
Brick laying
Bricks
£3,000
Frames
£1,000
Finished new house
Painting
Roofing
Tiles
£1,500
Glass
£1,000
Plumbing
Joining
Other materials
£4,000
£31,000
£89,000
Added Value = £58,000

11. Some theory..

12. By the end of this lesson you should be able to…
Explain the concept of added value
Identify the different sectors of production
Explain the role of the different factors of production

13. What are the different sectors of production?

14. Sectors of Production Primary Secondary Tertiary Quaternary
You should have
covered this
in humanities!

15. Sectors of Production in the Economy
Added Value: Sectors of Industry
Sectors of Production in the Economy
Primary sector:
This involves extraction of natural resources e.g. agriculture, forestry, fishing, quarrying, and mining
Bauxite miners (for copper)
Diamond mining
Mr Mercer's notes

16. Sectors of Production in the Economy
Added Value: Sectors of Industry
Sectors of Production in the Economy
Secondary sector:
This involves the production of goods in the economy, i.e. transforming materials produced by the primary sector e.g. manufacturing and the construction industry
Mr Mercer's notes

17. Sectors of Production in the Economy
Added Value: Sectors of Industry
Sectors of Production in the Economy
Tertiary sector:
The tertiary sector provided services such as banking, finance, insurance, retail, education and travel and tourism
Mr Mercer's notes

18. Sectors of Production in the Economy
Added Value: Sectors of Industry
Sectors of Production in the Economy
Quaternary sector:
The quaternary sector consists of those industries providing information services, such as
computing and ICT (information and communication technologies)
consultancy (offering advice to businesses)
R&D (research, particular in scientific fields).
Sometimes called the “Knowledge Economy”
Mr Mercer's notes

19. Guess the sector of production

20. Which sector of production does the following belong to?
20 in all…

21. Primary
Secondary
Tertiary
Quaternary

22. By the end of this lesson you should be able to…
Explain the concept of added value
Identify the different sectors of production
Explain the role of the different factors of production

23. So what’s Adding Value in each sector?
Added Value: Sectors of Industry
So what’s Adding Value in each sector?
Mr Mercer's notes

24. Inputs Outputs Inputs and Outputs
Transformation
Process
The transformation process describes what happens inside the business.
This is where value is added to inputs to create outputs

25. Inputs ….. Aka Factors of Production
Adding value takes ‘raw’ materials & skills to create a product… while any business wanting to ‘add value’ creates a little something extra that allows them to increase the price!
The ‘factors’ of production that businesses use are ‘categorised’ by the abbreviations…
C E L L!

26. C E L L! So what’s the ‘E’? Factor of Production… Land Labour Input
Capital
So what’s the ‘E’?

27. Enterprise: the organisation of factors of production in such a way as to make profit

28. How to add value in processed foods
E.g. Grain/corn to breakfast cereal
Identify at least 4 ways in which value is added to the raw materials in this video in order to produce the end products
To help you classify them, the key ways of adding value are
Processing, Packaging, Marketing & advertising
How does a kilo of corn cost compared to a kilo of cornflakes?
What is the difference in percentage terms?
How does Justin King, the Chief Executive of Sainsbury’s, describe/justify added value?

29. How to add value in processed foods
E.g. Grain to breakfast cereal
Identify at least 4 ways in which value is added to the raw materials in this video in order to produce the end products
To help you classify them, the key ways of adding value are
Processing, Packaging, Marketing & advertising
Processing: Take out the germ and the skin, cook it, dry it down, roll it out, toast it, add sugar, vitamins
Packaging: design, wrapping, boxing
Marketing: emotional advertising to make it part of your routine, free gifts, competitions, convenience, packaging, health claims
A kilo of corn costs 15p, a kilo of cornflakes costs around £3,
a 2000% difference
Something that the consumer couldn’t do for themselves and are therefore prepared to pay for it

30. Another Example of value added
Added Value: Sectors of Industry
Another Example of value added
Tyrrells Potato Chips
Will Chase had been farming potatoes for 20 years (loss-making)
Wanted to produce something with more added value
Came up with idea to make hand-fried chips with distinctive flavours and packaging
Successfully created a premium product and turned Tyrrells into a profitable business
Last week, David Milner, chief executive of Tyrrells Crisps discussed his recent trip to Russia to promote UK business, where his brand's crisps cost £5 a packet.
Mr Mercer's notes 30

31. World’s most expensive…
Added Value: Sectors of Industry
In other words, how enterprising people can be!
World’s most expensive…
Some extreme examples..
Mr Mercer's notes

32. Coffee from civet poo? Only £30 a cup!
It looks different, it smells different, and most importantly it tastes different.
Coffee connoisseurs usually give two reasons for civet coffee’s unique taste - the fact that the civets self-select the juiciest coffee cherries, which in turn give the best beans, and the fact that - once inside the civet - these beans are fermented by enzymes in the stomach.
After being thoroughly washed and roasted, the end product lacks the bitterness of some ordinary coffees and has a soft, chocolaty flavour.

33. Added Value: Sectors of Industry
An £85 sandwich?
The McDonald sandwich
named after its creator Scott McDonald, the chef at London department store Selfridges - is said to be the world's most expensive.
The ingredients of the sandwich are: Wagyu beef, fresh lobe foie gras, black truffle mayonnaise, brie de meaux, rocket, red pepper and mustard confit and English plum tomatoes.
It’s cost is down to the Wagyu beef that makes up most of the filling, packed in a 24-hour fermented sour dough bread.
Wagyu cattle are one of the most expensive breeds in the world. The Japanese cows are raised on a special diet, including beer and grain.
Mr Mercer's notes

34. $1000 sundae?
One of the most expensive deserts in the world, served at Serendipity 3, a popular restaurant in the Upper East Side of Manhattan.
The $1000 sundae was introduced in 2004 and was listed in the Guinness Book of World Records as the most expensive dessert.
It’s made up of 5 scoops of the richest Tahitian vanilla bean ice cream, Madagascar vanilla, 23K edible gold leaf and one of the most expensive chocolates in the world, Amedei Porceleana.

35. Tea bag for £7,500?
The world’s most expensive tea bag for the PG company, to celebrate their 75th anniversary.
Manually decorated with 280 diamonds, the bag made to remind people just how much they love the great British cup of tea is worth £7,500.

36. By the end of this lesson you should be able to…
Explain the concept of added value
Identify the different sectors of production
Explain the role of the different factors of production

37. So why bother with Adding Value?

38. Added Value: Sectors of Industry
Ways to add value
Build a brand
Deliver excellent customer service
Add product features and benefits that customers want
Operate efficiently
Exam key theory
Mr Mercer's notes 38

39. Benefits of adding value
Added Value: Sectors of Industry
Benefits of adding value
Charge a higher price – increase profit margins?
Create a difference with competitors - Unique selling point
Protection against competitors offering lower prices
Focuses business on its target market segment
Customer loyalty
Exam key theory
Mr Mercer's notes 39

40. Signs that a start-up business is adding value
Added Value: Sectors of Industry
Signs that a start-up business is adding value
Strong gross profit margins
Gross profit / Total Sales
A strong signal
Repeat custom
Sign of satisfied customers
Suggests customers feel they are getting value for money
Brand or name recognition
Important for word-of-mouth recommendation
Mr Mercer's notes 40

41. “The Price is Right” worksheet
Read Ch7 p42-46 and answer
“The Price is Right” worksheet
Due Sept 21/22
Homework

42. Plenary
What is the difference between Primary, Secondary, Tertiary and Quaternary sectors?
What are the 4 factors of production?
How would you define ‘adding value’?
Why do businesses bother with value added?