Enterprise and adding value
| English | Chinese | Pinyin |
|---|---|---|
| carpenter | 木匠 | mù jiàng |
| value added | 附加值 | fù jiā zhí |
| enterprise | 创业精神 | chuàng yè jīng shén |
| willingness | 意愿 | yì yuàn |
| risk | 风险 | fēng xiǎn |
| entrepreneur | 企业家 | qǐ yè jiā |
| bear | 承担 | chéng dān |
| profit | 利润 | lì rùn |
| selling price | 售价 | shòu jià |
| cost of bought-in materials | 外购材料成本 | wài gòu cái liào chéng běn |
| branding | 品牌 | pǐn pái |
| reputation | 声誉 | shēng yù |
| convenience | 便利 | biàn lì |
| premium | 溢价 | yì jià |
| efficiency | 效率 | xiào lǜ |
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:
Enterprise is the risk-taking, organising factor — the entrepreneur.
An entrepreneur takes on risk in the hope of profit.
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?
Value added = 70 − 25 = 45.
Value added is:
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 ______.
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.)
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