Exam 1 Study Guide Flashcards
What is globalization ?
Process of the world’s people, firms, and countries become increasingly interconnected in all facets of their lives
What are the four main factors of globalization?
Trade
Capital
Information
People
What country has the highest globalization in the world
Netherlands a European country
What are the levels of trade?
International trade
Global trade
Measuring levels of trade
Define international trade?
Any exchange of goods involving two or more countries
Define global trade
Includes the potential interactive participation of many groups,cultures, and nations in the manufacturing and distribution of products
What is measuring levels of trade
Exports-import = trade balance
Exports > imports = trade surplus
Exports < import = trade deficit
What are examples of least developed countries?
Ethiopia
Haiti
Madagascar
Uganda
What are examples of newly developing economies?
Bangladesh
Egypt
El Salvador
India
What are examples of developing economies?
Argentina
Brazil
China
What are examples of developed economies?
Australia
Canada
France
What are classifications of economic development?
Factors include GDP, GNI , human assets, health and education of population, economic vulnerability, stable government, agriculture production
What is GDP
Gross domestic product: total of all value created in an economy
What does GNI mean ?
Gross national income: total amount of money earned by a nation’s people and businesses
Least developed countries
Countries confronting severe structural impediments to
sustainable development
• United Nations (UN) classification
• Includes all least developed economy countries and some
newly developing economy countries
What are indicators of economic development?
Population wellbeing
Literacy rates
Infinity mortality
Life expectancy
Labor intensive apparel production
Despite technological advancements, remains labor
intensive
• Hard to automate aspects of textiles and various shapes and sizes of clothing
Low barriers to entry
Developed Countries
• All have used textile and apparel production as means of achieving economic growth
• Now import more than export and any production is likely for domestic consumption
Developing Countries
• Significantly improved overall economic conditions and
compete in global marketplace
• No longer low-cost labor source – must outsource
production
• Focus on textile manufacturing rather than appar
Newly developing countries
• Tend to be economies that primarily rely on agriculture
• Highly favorable to textile and apparel production because
of low-cost labor, usually for women
• Have trade surplus (export more than import)
• Production for trade, not domestic consumption
Least Developed Countries
• Attractive economy for low-cost labor
• However may suffer from other social issues such as political
unrest, unstable and/or corrupt governments
Structure of the textile complex
Level 1: textile fiber manufacturing and agriculture -> fiber commodity marketing
Level 2 : textiles, findings, trims manufacturing-> wholesale materials marketing
Level 3: apparel , home furnishings, and industrial textile products manufacturing-> wholesale finished good marketing
Level 4 : retailing
Level 4: consumption, disposal
Which fashion brand has the highest market capitalization
- LVHM( 17 brands)
- Nike
ESTABLISHING A SUSTAINABLE SUPPLY CHAIN
• The supply chain begins and ends with the consumer
• Consumer demand drives the industry
• The global environmental footprint and social issues in
the industry raise issues of sustainability
• Government regulations, trade agreements, trade
regulations, intellectual property laws - all sources of controversy
• Identifying countries and vendors to build supply chains
What are the four stages of clothing consumption process
- Acquisition
- Use
- Care
- discarding
Define Active wardrobe
garments being worn
Define Inactive wardrobe
garments not being worn or rarely used
Unique Nature of Apparel Products
◦ Difference between need and want ◦ Nonverbal communication
◦ High degree of change in style and
design
What is the difference between style and design
Distinctive characteristics - s
Variation of style - d
What are the classification of apparel products ?
Basic
Fashion apparel
Classic apparel
Fads or fast fashion apparel
Wellbeing
good or satisfactory condition of existence; a state of
being comfortable, healthy, and happy
◦ The types of products we consume are use to indicate it
Level of consumption
◦ Overall amount of food, fuel, and other durable goods consumed ◦ The use of houses, cars, clothing, and other durable goods and services
A rise in consumption means an increase in volume or improvement in quality
Standard of living
◦ Level of consumption urgently desired or strived for, plus the overall
well-being of an individual or group
◦ Often associated with monetary income as indicators of wellbeing
May differ for each person based on motivations
Income elasticity
Describes the relationship between consumers’ change in income and resulting change in consumers’ expenditures
Superior goods (luxury
income elasticity greater than 1
◦ As income increases, expenditures increase but at a faster rate than income
Normal goods (necessity):
income elasticity 0 – 1
◦ As income increases, expenditures increase but at a slower rate than income
Inferior goods (inadequate income)
income elasticity < 0 ◦ Expenditures decrease as income increases
◦ Clothing is moderate luxury (approx. income elasticity of 1.2)
◦ As income increases, people tend to spend more money on fashion goods, buying higher-end, more expensive products
◦ Price elasticity
elasticity: Describes the relationship between the change in price of a product and the related change in demand for that product, or the quantity of that product sold
◦ To a merchant, the question is how much increase in sales will result from price decreases
In the U.S., price elasticity for clothing is
Around 0.7
The price reduction increased clothing expenditures but at a slower rate than
the reduction in price
Total Income:
gross income; income before taxes
Disposable Income:
take-home pay; income after taxes and contributions
Discretionary Income:
what remains after all current obligations
(e.g., rent, mortgage, bills, insurance, food, transportation, cell phone, other necessities)
Poverty:
the lack of resources or income to satisfy minimum basic needs
◦ Approximately 12.4% of Americans live below the poverty line as of 2022
What are the three factors affecting consumption expenditure patterns?
- cpi : Consumer Price Index is used to measure impact of inflation on consumer purchasing power
Inflation : increase in prices that leads to decreased purchasing power
Demographics and psychographic shift
Purchasing power
how much a dollar will get you
What is the difference between regression and progressive tax ?
Lower-income people pay higher rate than higher-income people r
Increased tax rate as income rises
Measuring Textile and Apparel Trade
◦ In number of units
◦ In monetary value( US dollars cost at ownership -buyer)
