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How can these companies sustainably increase the level of value creation while minimising necessary planning activities, which by definition are not value adding? And how can they solve the dichotomy between individualisation and mass production?

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Delivering answers to these questions is crucial to strengthen domestic industrial production and has the potential to sustainably lower unemployment. Manufacturing companies in high-wage countries are increasingly set under pressure in international competition due the lower production costs in low-wage countries. In order to counteract this development, many manufacturing companies respond to this issue by relocating their production facilities.

The concept of mass customisation connects the opposed production concepts of mass production and customisation to enable an economical production of customer-specific products Piller, Mass Customization, Ein wettbewerbsstrategisches Konzept im Informationszeitalter, ; Pine, Mass customization, the new frontier in business competition, The individualised production enables companies to do this and contributes to the solution of the dilemma between the economies of scale and economies of scope by delivering suitable approaches and solution concepts.

The use of simulation systems is of significant importance for companies in high-wage countries as the requirements of product- and process quality are generally higher than in low-wage countries due to conditions of the market. Since the implementation of simulation tools is not value-adding in the first place, the performance of virtual product development chain must therefore be continuously increased in terms of greater planning efficiency.

Research in the field of virtual production systems therefore addresses the following issue. While virtual product development allows great freedom in terms of design, actual development processes are rather restricted. Those boundary conditions are at best hardly possible to exert influence on.

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Therefore, future research has to focus both on the realisation of the concept of one-piece-flow while simultaneously increasing flexibility and productivity and on the technological advancement. Hence, hybridisation of manufacturing processes is a promising approach, which often allows tapping potentials in all the aforementioned dimensions.

Planning efficiency describes the relationship between the expenditure of planning and the profit generated by these expenditures.

From the viewpoint of a successful business management, the challenge is to dynamically find the optimum between detailed planning and the immediate arrangement of the value stream. Planning-oriented approaches try to model the production system with as many of its characteristics and parameters as possible in order to avoid uncertainties and to allow rational decisions based on these models. The success of a planning-oriented approach depends on the transparency of business and production processes and on the quality of the applied models.

Even though planning-oriented approaches are supported by a multitude of systems in industrial practice, an effective realisation is very intricate, so these models with their inherent structures tend to be matched to a current stationary condition of an enterprise. Chancellor of the Exchequer Mr. Alistair Darling mentioned his support to innovative businesses in the UK. Many people believe that the coming century will be an Asian century with Asia contributing one third of the global GDP.

This is also a good reason to make the UK and Europe most welcoming place for businesses and especially innovative businesses. This shows that the British government is determined to help the government and to support them in every step. So, in this paper we will analyze some fundamentals of Value Added, its importance, patterns of it and how it is divided sectorially. We will mainly focus the firms of the European Union.

In the second part of the paper, we will see the basics of calculation of Value Added. In this section, how a firm calculates the Value Added and its uses will be discussed. The final part is the performance evaluation of BMW.

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Taking as a basis year, we will see some current developments, some impacts on BMW due to Financial crisis started in and its market position in Europe and worldwide. Value added measures the amount of wealth created by a company. This is how we can judge a company how efficiently it worked in the previous year and how well it could satisfy its customers. We calculate the value added by subtracting what a company bought in goods by the total sales it made. The result is the value added. The bigger the ratio, the more profit generation.

The company can increase its value added by [1] :.

Moreover we have also seen in the past and the present that many large firms as well as small firms tend to merge with other firm in order to raise profit or increase value added. In most cases there are cultural issues, in some cases there are government rules and regulations. There are also some good stories of mergers and acquisitions where the value added sky-rocketed after the acquisition. The world is being more and more globalized; hundreds of thousands of firms from emerging economies are being launched.

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They are growing in size and competing with the Firms from developed countries. Developing countries have an advantage of low labor cost, low transportation cost and low labor standards and this makes their game easier than the firms from developed countries. Thatswhy it is the real challenge to the firms of today to remain in an appropriate price and quality and satisfy the customer needs.

The European, Japanese and North American firms are using the latest technology goods to secure their market portions. This is vulnerable in present day situation.

List of figures

From the lessons that some firms which were not willing to adjust with modern technology and lifestyles had to get out of the market, the companies today also focus more on non value adding activities. These processes do not add value in the goods but is very essential to win the heart and mind of people. Some of the actions include that service sectors like Sauna allowing a free entry to a customer who has a birthday. Apart from these things, innovation is most important in value creation. From these arguments we can conclude that the main aim of a firm is to generate profit or increase the value added.

This is the most important thing.


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To achieve this goal, a firm has to move with time, time has changed and it has to change with it. A firm should adjust with the global environment, it should also involve in non value adding activities which could help to increase value addition in the long term.