3763 Final Exam Study GuideOverview of the Apparel IndustryTextile Industry:Fiber manufacturerYarn spinnersConverters- Dyers, Printers, FinishersWholesale representatives who sell fabrics and findings to apparel producersApparel Industry:- Apparel manufacturers and contractors- Apparel wholesale reps and direct importers who sell garments to retailers- Apparel retailers, including department and specialty stores, boutiques, chain stores, mass merchandisers, discount stores, warehouse retailers, etc. Manufacturer-- Traditional manufacturing is when there is complete responsibility of production of garment, starting with design- Refer to sources of raw materials as their vendors or suppliersContractor-- Provide labor and equipment to produce merchandise for manufacturers and manufacturing retailers; they profit from their labor- Must complete their work satisfactorily and in the time frame agreed upon, butthey assume no risk for the success or failure of particular styles- Range from freelancers who perform design or pattern making work to large companies that provide a wide variety of tasks- A contractor that performs all the production operations to produce a style is called a cut, make, and trim contractorVertical Integration- Significantly impacts a firm’s competition advantage in getting the right product to market at the right time and the right priceWhen the SAME firm is responsible for multiple steps in the production or marketing of an apparel PRODUCTFully vertical company controls all the steps in the processHorizontal Integration- Prioritizes the acquisition or licensing of companies or brands that make or sell similar products to expand market penetration and reduce competition.Acquiring another firm and/or competitor at the same stage of the supply chainInside shops- vertical integration, consolidate supply chain of manufacturing by acquiring companies at other stages in the supply chainWhen manufacturers operate their own factoriesFewer communication problemsTighter control over quality processes and proceduresMove control over timing, making it easier to meet delivery datesSaving time and transportation costs if garments are made domesticallyEasier to ensure work is done in compliance with human rights and environmental regulationsOutside shops- companies that exclusively use independent contractors No investment in plants and equipment’sFewer employee training needs and fewer personnel problems and demandsNo need to buy and maintain factories and equipment as business growsNo need to employ workers between seasons if the business slowsThe ability to perform specialty work as neededWholesale-- Wholesale reps- agents of apparel-manufacturing companies; they sell finishedgarments to retail buyers- The reps sell to retail buyers at trade shows and in showrooms at market centers, and make on-site visits to buyers to show them new linesRetailers-- Sell to the ultimate consumers- Traditional retailers buy finished apparel products from domestic manufacturers and/or direct importers and sell these goods to consumers- Manufacturing retailer serves a dual role: that of the manufacturer responsiblefor producing private-label brands and that of the traditional retailer selling finished goods to the consumerBranded apparel- developed by a manufacturer and sold to many retailers under thetrademarked brand nameCreated under a label and sold at wholesale for distribution to retailers who also carry other brandsPrivate label apparel- merchandise developed by or for a specific retailer, it is exclusive to a specific retailer and gives retailers more control over the production and assortment of products they offer to consumers provide exclusivity and customizationImport - to buy goods from another countryExport - to sell goods to another countryTrade deficit- when a country imports more goods than it exportsTariff - a tax on imported goodsQuota - an annual limit on the volume of a product that may be importedEmbargo – prohibition of importing a productTrade Dress- refers to the shape and features of the product itself that are not only distinctive but also identify the manufacturer of the productPatent- exclusive right to produce an itemCMT- (cut, make, and trim) a contractor that performs all the production operations to produce a styleSubcontractor- perform specialty work for other contractors and manufacturers., quickly and economically, pleating, quilting, embroidery, and screen printingLicensing- the process by which a manufacturer (licensee) pays a fee to an individual or company (licensor) for the privilege of affixing the licensor’s name, trademark, or logo to the licensee’s productsLanded Cost- the end cost of an internationally shipped item. This includes purchase price, freight, insurance, and other costs and may sometimes include duties and taxes.FOB- "free on board", meaning that the buyer pays for transportation of the goodsNAFTA- policy creating a single North American market for goods originating in the UnitedStates, Canada, and MexicoEU- European Union, trading bloc of European countriesTFPIA- Textile Fiber products Identification Act; Federal law requiring that all apparel soldin the United States have a label that identifies fiber content, manufacturer, and country of originWorld Trade Organization = (WTO)Replaced General Agreement on Tariffs ad Trade (GATT) and Agreement on Textiles and Clothing (ATC)Fundamental of WTO - Promotion of free trade through reduction of tariff trade barriersEqualization of trade among countriesQuality-to-cost ratio: How much you are willing to pay to have quality - measured against what they will give up in order to have a lower priceDetection- after the eventTolerates waste, raises cost, loses orders, destroys jobsPrevention- before the eventAvoids waste, lowers cost, gains orders, protects jobsLabeling- RNRN stands for Registered Identification NumberBusinesses can use this number on product labels in lieu of the company nameKnockoff- copy or near copy of a design under a different brand nameCounterfeit- fakes or copies of currently popular brands accompanied by the illegal trademarkCopyright- the exclusive right to reproduce a work of art, the design must contain “originalworks of authorship,” that is, “pictorial, graphic, or sculptural features” that are identified separately from the article on which the design appearsFiber, Yarn & FabricFiber- the raw materials from which fabrics are made; they are the basic
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