Roles of business in society

What does ‘adding value’ mean?

Adding value is the difference between the cost of inputs (materials, labour, etc.) and the price the finished product is sold for.

How do businesses add value?

By transforming raw materials into finished goods (e.g. wood → furniture), branding and marketing products, and providing a service that adds convenience for customers.

Why is adding value important?

It allows businesses to sell products at a higher price than production cost, leading to profit generation; higher value-added products improve competitiveness, helping businesses stand out in the market.

What is the primary sector?

The extraction of natural resources from the Earth, including examples like farming, fishing, mining, and oil extraction.

What is the secondary sector?

The processing and manufacturing of raw materials into finished or semi-finished goods, including examples like factories, construction, and manufacturing.

What is the tertiary sector?

The provision of services to consumers and businesses, including examples like retail, transport, banking, and healthcare.

What is the quaternary sector?

The provision of knowledge-based services and information, including examples like IT, research & development, and education.

What is the private sector?

Businesses owned by individuals or shareholders that aim to make profit; the profit motive encourages efficiency and innovation.

What is the public sector?

Organisations owned and run by the government that aim to provide a service, focusing on meeting public needs rather than profit.

What is the third sector?

Non-profit organisations that aim to help people or causes, reinvesting any surplus back into the organisation to support communities.