Adding value to products and

services
A rare diamond has been put on display at the Natural History Museum in London. The
stone, called the Sun Drop, is a bright yellow diamond and is the largest of its type in the
world. It is on loan from the diamond manufacturer Cora International. One can only
speculate about the price of the diamond as the Chief Executive of Cora International,
Suzanne Gomes, has said that the value of the stone is currently undetermined. However,
the value will be affected by a number of factors. The size of the diamond will certainly play
a part – most of those used in jewellery weigh less than five carats whereas the Sun Drop is
a massive 110 carats. Also, the unusual yellow colour, caused by traces of nitrogen within
the carbon structure, sets it apart from the more common white diamonds. For the Cora
diamond, the process of transforming a rough diamond into a cut and polished stone is
perhaps the factor that has added the most value. Mr Hart of the Natural History Museum
commented that 'the real value of these gems is that they're exceptional, they're one-offs'.
(BBC, 24th February 2011)
For Warburtons, every step of its supply chain aims to meet the needs of customers and, in
turn, add value to its products. Added value is the difference between the cost of inputs and
the price customers are willing to pay. A business can add value in a number of ways, such
as through the use of a unique selling proposition (USP), through promotional campaigns or
through its supply chain. For Warburtons, value is continually added through the chain of
production. It involves working with farmers to ensure a sustainable supply of high quality
wheat, turning wheat into finished baked goods and ensuring products are delivered fresh
and on time to the retailers.
Questions
1.Define added value.
2.List the ways that firms can add value to products.
3.Explain why it is important for firms to add value.
4.Using the article and case study, analyse the different ways that Warburtons adds value to
its products. Try to link these to the factors you identified for question 2.