CTE 4829 Exam 1 Chapters 1 4 Chapter 1 Levels of trade textile complex incorporates textile manufacturing apparel manufacturing retailing and consumption around the world Trade occurs from production to consumption Levels 1 Domestic trade exchange of goods services within a nation 2 International trade exchange of goods services between two countries 3 Global trade many groups cultures and nations involved in production and distribution of products services Imports exports trade balance Trade balance exports imports Trade Agreements established by governments to encourage regulate or restrict trade between countries Trade barriers regulate or restrict trade import limits tariffs quotas Trade is based on imports and exports Trade Balance exports imports Trade surplus value of exports exceeds value of imports also known as positive trade balance Trade deficit value of imports exceed value of exports also known as negative trade balance Measuring levels of development based on country s economic development Described by World Trade Organization WTO commonly describes differences between rich countries and poor countries but it does not define the terms rich and poor Another set of terminology that has been used to indicate differences in levels of development is First world Second world and Third world Least developed greatest level of poverty Levels of Development Newly Developing poor Developing Transitioning from developing to developed status less poor Developed richest Development is described by 5 important factors 1 2 3 4 5 Unemployment rate Population below poverty live Literacy male female Infant mortality Life expectancy As well as GNP and GDP of course Relationship of level of development to industry measured by GDP and GNP Gross National Product GNP average output per domestic worker in a nation within that nation country in a year Gross Domestic Product GDP market value of outputs of products services for a What s the difference Well both measure the size and strength of the economy but their definition calculation and applications are different from each other GDP is the estimated value of worth WITHIN its boundaries but GNP is the value of its citizens in its country or foreign countries for the year So you if you spend by a product of service in the US it counts for both but if you buy a product service in Spain it will only count for GNP Gross Domestic Product per capita GDP divided by the number of people in the population Purchasing Power Parity PPP Adjusted GDP in each country from Consumer Price Index CPI determines relative buying power of each currency Newly developing and developing countries are involved with production Developed countries are involved with consumption design and technology Structure of Textile Complex Firms in Textile Complex have different levels 1 Level One Textile Findings Manufacturers the production of fabrics yarns fiber finishings and production of findings Many of these firms are vertically integrated in yarns weaves and finishes Many fabric mills are horizontally integrated Level Two Apparel Manufacturer Contractors and Retail Product Developer Apparel manufacturers merchandising apparel production and 2 wholesale marketing Includes less local production sourcing development is done by contractors Retail Product Developers Private brands sourced from contractors Both in house and outside product development Apparel contractors produce or arrange production of specific garment Either cut make trim CMT or full package contractors Factors facilitating Level 2 Just in time JIT manufacturing Quick Response o Inventory control system of components and finished goods o Products produced as needed less inventory o Less markdowns o Electric transmission of data between retailer and producer o Shortens production cycle time o Shortened delivery times and offer other incentives Wholesale Marketing o Apparel manufacturers sell their product lines either at 1 Wholesale markets or 2 a buyer s office Retails place orders and may request changes 3 Level three Retailing Includes sale of merchandise services to customers overstoring growth of brick and mortars multiple channels direct marketing catalog television and e tailing specialty stores increased private labels Department stores mass merchandisers and off price retailers Overlap of Levels of Firms 1 3 Global export trading and sourcing companies o Same activities as the first three levels on a global scale o Sourcing shifts to outsourcing overseas o Outward processing lower wage rate regions o Country of origin becomes complex o Demand might exceed supply 4 Level four Customers Ultimate goal of apparel business Shifts in consumer demographics growth of Hispanic Asian and Muslim populations Satellite TV and Internet globalization of fashion Both utilitarian and hedonic shopping experimental retailing There are many perspectives central to global textile and apparel trade Economic Political Technological Environmental Social Chapter 2 Power Point slide fun fact The average US consumer spends on clothing alone more than twice the annual income of half the people in the developing world Progressive Policy Institute Fashion and Basic Goods Basic goods tend to be standardized and utilitarian and have infrequent demand for changed in styling The same styles sizes and colors can be sold for a year or longer with consistent levels of demand Inventories in basic goods are steady predictable and refillable Automated replenishment based on point of sale POS data can be used to keep products in stock The appeal of basic goods tends to be meeting a need or in replacing a product already owned Price is often a major selection factor Basic goods can be manufactured using mass production techniques for large quantities of goods Mass retailers and department stores can also retail basic goods by replenishing similar merchandise on a daily or weekly basis over long periods of time Fashion Goods individualized differentiated by style and color Styles of one brand are distinct form styles of another brand Fashion goods have demand peaks followed by obsolescence Merchandisers plan for zero to zero inventories in fashion categories Merchandise is bought stocked sold and cleared from the retail sales floor all during a single selling period The appeal of fashion goods is more emotional as the customer acquires not only the garment but also its associated fashion image Appearance is the major selection factor with