Enterprise and adding value
Introduced| English | Meaning |
|---|---|
| carpenter/ˈkɑːpəntə/ | carpenter |
| value added/ˈvæljuː ˈædɪd/ | The difference between the cost of inputs and the price of the finished output. |
| enterprise/ˈentəpraɪz/ | The willingness to take a risk and combine resources to make goods or services. |
| willingness/ˈwɪlɪŋnəs/ | willingness |
| risk/rɪsk/ | The possibility of an adverse outcome, often assessed using its likelihood and consequences. |
| entrepreneur/ˌɒntrɪprəˈnjʊə/ | A person who organises a business, takes risks and seeks opportunities to create value. |
| bear/beə/ | bear |
| profit/ˈprɒfɪt/ | Total revenue minus total cost. |
| selling price/ˈselɪŋ praɪs/ | selling price |
| cost of bought-in materials/kɒst ɒv bɔːt ɪn məˈtɪərɪəlz/ | cost of bought-in materials |
| branding/ˈbrændɪŋ/ | Creating and maintaining a distinctive identity and associations for a business, product or service. |
| reputation/ˌrepjuːˈteɪʃn/ | The beliefs or opinions others hold about a person or organisation based on its conduct or performance. |
| convenience/kənˈviːnɪəns/ | convenience |
| premium/ˈpriːmɪəm/ | premium |
| efficiency/ɪˈfɪʃənsi/ | The fraction of total energy or power input converted to useful output. |
Turning 30 into 80
- A carpenter 木匠 buys 30 worth of wood and screws, and a day later sells a chair for 80.
- That extra 50 didn't appear by magic — it's value added 附加值, the whole point of being in business.
Enterprise is best described as:
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Enterprise is the risk-taking, organising factor — the entrepreneur.
An entrepreneur takes on risk in the hope of profit.
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Risk-bearing for profit is central to enterprise.
What enterprise 创业精神 is
- Enterprise is the willingness 意愿 to take a risk 风险 and combine resources to make goods or services.
- The person who does it — the entrepreneur 企业家 — spots an opportunity, organises the other factors, and bears 承担 the risk for profit 利润.
Land, labour, capital and enterprise are combined to make goods and services
Value added lab
Change the bought-in cost, the selling price and other costs to see exactly where value added — and profit — come from.
A firm buys materials for 25 and sells the finished good for 70. What is the value added?
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Value added = 70 − 25 = 45.
Value added is:
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It is the difference between output price and input cost.
The difference between the price of the output and the cost of inputs is value ______.
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Value added funds wages, rent and profit.
Adding value
- Value added = the selling price 售价 minus the cost of bought-in materials 外购材料成本.
- It is how a business covers its other costs (wages, rent) and earns a profit.
Value added is the difference between the cost of inputs and the price of the finished output.
Which can increase value added? (Select all that apply.)
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Branding, quality and lower input costs all widen value added.
How firms add more value
- Branding 品牌 and reputation 声誉 let a firm charge more.
- Quality, design and convenience 便利 make customers willing to pay a premium 溢价.
- Efficiency 效率 (lower input costs) widens the gap from the other side.
Worked example. A coffee shop buys beans, milk and a cup for 0.60 and sells a latte for 3.50. Value added per cup = 3.50 − 0.60 = 2.90 — which must cover staff, rent and profit.
Value added is the selling price minus the cost of bought-in materials
You've got it
- enterprise = taking a risk to combine resources; the entrepreneur bears it for profit
- value added = selling price − cost of bought-in materials
- firms add value through branding, quality, design and efficiency
Write from value added of 55
- Bought-in materials cost 35. The finished good sells for 90.
- Find the value added.
A firm buys materials for 35 and sells the finished good for 90. What is the value added?
90 minus 35 is 55.
What is the value added?
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Selling price minus bought-in materials is 55. Other options — 45 (the lesson value added); 90 (the selling price with no materials taken off).