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Business Studies IGCSEPDF 35
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To increase added value a business can:
1.
Increase selling price but keep cost of materials the same
2.
Decrease the cost of materials but keep the selling price same
3.
Establish a brand name by advertisement etc.
Advantages of Added Value
Maybe able to make a profit if these other
costs come to a total less than the added
value
Helps to cover other expenses like labour
costs, management expenses etc.
Disadvantages of Added Value
Increasing the products selling price
might make it expensive causing lower
sales
Decreasing cost price might lower the
product’s quality leading to bad
reputation
Chapter 2: Classification of Businesses
Businesses can be classified in three different sectors:
1. Primary sector – extracts and uses the natural resources of Earth to produce raw
materials used by other businesses e.g mining, fishing, agriculture etc.
2. Secondary sector – manufactures finished or semi-finished goods by using the
raw materials provided by the primary sector e.g construction, food-processing
companies etc.
3. Tertiary sector – provides services to consumers and other sectors of industry e.g
banking, transport, insurance etc.
● Developing Countries: where the primary sector is the most important, as more
employees and output are produced than in secondary and tertiary sectors
● Developed Countries: where the output of the tertiary sector is often higher than
the other two sectors combined.
De-industrialisation occurs when there is a decline in the importance of the secondary
sector.