TXC Midterm 1

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hye2805
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195150
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TXC Midterm 1
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2013-01-25 00:59:42
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TXC Midterm Chapter1 Chapter
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Midterm materials for TXC Midterm
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  1. Global Market-Entry Strategies
    • Exporting
    • Licensing
    • Joint Venture
    • Foreign Direct Investment
  2. Difference between disposable and discretionary income.
    • Disposable = post-tax money
    • Discretionary = post-necessity money
  3. Sourcing
    Activities involved in acquiring materials and finished G&S
  4. Outsourcing
    Acquiring materials, G&S outside one's own country
  5. Outward Processing Trade (OPT)
    Having garments assembled in lower wage countries
  6. Four sourcing criteria
    • Cost
    • Production Capacity
    • Quality
    • Timing
  7. What can ETC's provide?
    • Can source for you
    • Link buyers with producers
    • Product & design development
    • Raw material and factory sourcing
    • Quality assurance
    • Export documentation
    • Shipping consolidation
  8. What do Export Management Companies do? 
    Can promote products overseas and help w/ cash flow by arranging credit for buyers (or buying products for resale.
  9. What are the advantages & disadvantages of export management companies?
    Adv: provide immediate access to foreign markets

    Disadv: loss of control over foreign sales/ maintenance of company and product image overseas
  10. Levels of trade & what they entail.
    • Domestic: w/in boundaries of a country
    • International: among a few countries
    • Global: commercial interaction among many groups and cultures
  11. Difference between international & global trade.
    International: trading w/ a few countries and operating from a single HQ

    Global: HQ across the world where products and labor come from several places
  12. Types of integration in business environment.
    • Financial: globally integrated
    • Trade & Investment: regionally integrated
    • Labor: nationally regulated (most controversial)
  13. Exports
    G&S shipped to another country in exchange for $ or goods
  14. Imports
    G&S acquired from another country for resale
  15. Trade Balance
    Exports - imports
  16. Trade Surplus
    • Export values > Import values
    • *quantity does not equal value
  17. Trade Deficit
    • Export values < Import values
    • *quantity does not equal value
  18. Factors affecting surplus/ deficit
    • Low wages
    • Textile deficit (must import more to meet demands)
    • Textile surplus (producing high tech industrial fabrics wanted by other countries)
  19. Levels of Development
    • Developed
    • Developing
    • Newly Developed
    • Least Developed
  20. Measuring levels of development & well-being
    • Unemployment
    • Life Expectancy
    • Infant Mortality
    • Literacy
    • Infrastructure
  21. Developed Countries
    Consume goods instead of producing them
  22. Developing Countries
    • Improved economic condition
    • Competitive in production of textile & apparel products
  23. Newly Developing Countries
    • GDP below world average
    • Apparel production provides employment
    • Unemployment & poverty are high
    • Low wages
  24. Least Developed Countries
    • Lowest in economic well-being
    • Begin development through apparel production services for export
    • Low literacy
    • Often suffering from political turmoil
  25. Textile Complex (Supply Chain)
    • Fiber production & manufacturing
    • Textile manufacturing
    • Apparel manufacturing
    • Retailing
  26. Horizontal Integration
    Combination of firms operating at the same level of textile complex
  27. Vertical Integration
    Combination of firms operating at different levels of the textile complex
  28. Textile Complex: Level 1
    Harvesting fibers to be sold to commodity markets
  29. Textile Complex: Level 2
    Manufacturing fabric from collected fibers
  30. Textile Complex: Level 3
    Manufacturing apparel from textiles and fabrics
  31. Textile Complex: Level 4
    Retailing; sale of G&S
  32. Types of Contractors: CMT
    Cut, make, trim; sourcing company provides the specifications and fabric
  33. Types of Contractors: Full Package
    Add product development to materials sourcing services
  34. Technology Development: Transportation & Logistics
    Science of moving products through the supply chain to their final destination
  35. Technology Development: Universal Product Code (UPC)
    system developed enabling tracking from factor to consumer
  36. New Apparel Production Methods: Mass Customization
    Production of goods to meet individual consumer needs at near-mass production prices
  37. New Apparel Production Methods: Masstige
    • Mass + prestige
    • Goods that have high prestige/ style but are affordable to a wider range of customers
    • Aim to broaden market while having reasonable level of prestige
  38. Reason for low-cost labor
    • Production of textiles & apparel labor intensive
    • Cut garments must still be hand-fed into sewing machines
    • Keep overall costs down
  39. Why do firms seek profit?
    • The world operates on capitalism
    • Helps fund growth of firm
    • Growth is necessary for revenue to compete with inflation
  40. Conflict b/t profits and people
    Pressure to reduce costs and delivery times motivates contractors to have employees work long hours for low wages in unsafe conditions. When a demand for better conditions, employers can easily move apparel and equipment elsewhere.
  41. How do imports impact developed countries?
    Trade deficit >> Reduced domestic production >> Increased unemployment >> country becomes economically vulnerable
  42. Methods of Measuring Production & Trade: Woven Fabric
    • Measured in square yards/ meters
    • *Width of fabric bolt varies
  43. Methods of Measuring Production & Trade: Narrow Fabric
    • Measured in linear yards/ meters
    • Width cannot exceed 12 inches
    • Includes ribbons & lace
  44. Methods of Measuring Production & Trade: Yarns & Knits
    Measured in pounds/ kilograms
  45. Methods of Measuring Production & Trade: Findings (ex: buttons)
    Measured by the dozen/ gross (ex: 12/ <weight>)
  46. Methods for measuring production and trade for apparel
    • Number of garments
    • Monetary value
    • Square meter equivalents (SME)
    • Weight
  47. Calculating Monetary Value: Free on Board (FOB)
    • Cost before shipping from exporter's port to the importer's port
    • Risk passes from seller to buyer when ship is enroute to importer's port
  48. Calculating Monetary Value: CIF
    Cost, Insurance, Freight--"Cost in Full"
  49. Calculating Monetary Value: Point of Entry (POE)
    • Freight from exporter's port to importer's port and duty
    • Does not include insurance
  50. Reason why developing countries are apt to provide fewer units/ hrs of labor
    • Lower literacy levels
    • Less advanced technology
    • Primitive infrastructure
    • Basic facilities & services needed for functional community (water & electricity)
  51. Measuring Import Penetration: Domestic production
    Quantity/ value of items produced w/in a particular country
  52. Measuring Import Penetration: Apparent Domestic Consumption
    Production + Imports - Exports
  53. Why is "apparent domestic consumption" "apparent"?
    • Not all garments put into the market are sold by original retailer
    • *Some items won't sell at clearance prices (distressed goods)
  54. How to show imports being a big problem?
    Compare number of units moved
  55. How to show imports as not a big problem?
    Compare dollar values
  56. Apparel sourcing options
    • Develop & produce materials & garments in-house (cost v quality control)
    • Purchase finished garments
    • Contract a vendor to develop & produce garments
  57. Factory Direct models: CMT Sourcing
    Original sourcing company...

    • Bears all costs
    • Does development
    • Sources fabric
    • Delivers fabric to vendor
    • pays duties & transportation costs
  58. Factory Direct models: Full Package Sourcing
    Vendor contributes to finance and most of manufacturing process including development and sourcing
  59. Requirements for efficient full-package production.
    • High levels of management experties
    • Latest technology
    • Fully developed infrastructures
    • Financial resources to assume the majority of manufacturing expenses
  60. Sourcing Methods
    • Trade shows
    • Trade fairs
    • Sourcing Agents
  61. Branded Importer
    Outsourced production is owned by manufacturer wholly or as a joint venture
  62. Private Brand Importer
    Exclusive brand whose firm contracts production of goods offshores

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