Professor Levitt, an American marketing scientist, asserts that the key to future competition lies not in what products the factory produces, but in the added value provided by its products.

The added value is to deduct the value purchased from outside (such as raw materials, low-value consumables, fuel power, outsourced semi-finished products, entrusted processing fees, etc.). ) Sales revenue from enterprises. For enterprises, it is the value created by other units and regarded as external labor products.

In the production process of an enterprise, only its value is transferred to new products as it is, rather than the surplus after the enterprise produces new added value. In other words, the added value is the newly added value of the enterprise through production activities, which represents the achievements of the enterprise's production and operation. Although the sales of some enterprises are very high, if the value of external procurement is too large, it is only a value transfer and cannot indicate the actual production and operation results of the enterprise.

In this way, the product value of an enterprise (actually manifested as the sales or production of the enterprise) can be divided into two parts: the external purchase value of enterprise production and the newly created added value.

The value of external procurement includes raw materials, fuel and power, low-value consumables, entrusted processing fees, transportation and miscellaneous fees, handling fees, advertising sample fees, repair fees, utilities, travel expenses, non-operating income and other specific contents.

The added value is the result of enterprise's production and operation. Its content is finally manifested in specific forms such as wages, bonuses, allowances, retirees' wages, welfare expenses, depreciation expenses, labor protection expenses, interest, taxes, enterprise profit retention funds, and non-operating expenses.