Exam 1 Study Guide

Question 1

What is globalization ?

Answer 1

Process of the world’s people, firms, and countries become increasingly interconnected in all facets of their lives

Question 2

What are the four main factors of globalization?

Answer 2

Trade
Capital
Information
People

Question 3

What country has the highest globalization in the world

Answer 3

Netherlands a European country

Question 4

What are the levels of trade?

Answer 4

International trade
Global trade
Measuring levels of trade

Question 5

Define international trade?

Answer 5

Any exchange of goods involving two or more countries

Question 6

Define global trade

Answer 6

Includes the potential interactive participation of many groups,cultures, and nations in the manufacturing and distribution of products

Question 7

What is measuring levels of trade

Answer 7

Exports-import = trade balance
Exports > imports = trade surplus
Exports < import = trade deficit

Question 8

What are examples of least developed countries?

Answer 8

Ethiopia
Haiti
Madagascar
Uganda

Question 9

What are examples of newly developing economies?

Answer 9

Bangladesh
Egypt
El Salvador
India

Question 10

What are examples of developing economies?

Answer 10

Argentina
Brazil
China

Question 11

What are examples of developed economies?

Answer 11

Australia
Canada
France

Question 12

What are classifications of economic development?

Answer 12

Factors include GDP, GNI , human assets, health and education of population, economic vulnerability, stable government, agriculture production

Question 13

What is GDP

Answer 13

Gross domestic product: total of all value created in an economy

Question 14

What does GNI mean ?

Answer 14

Gross national income: total amount of money earned by a nation’s people and businesses

Question 15

Least developed countries

Answer 15

Countries confronting severe structural impediments to
sustainable development
• United Nations (UN) classification
• Includes all least developed economy countries and some
newly developing economy countries

Question 16

What are indicators of economic development?

Answer 16

Population wellbeing
Literacy rates
Infinity mortality
Life expectancy

Question 17

Labor intensive apparel production

Answer 17

Despite technological advancements, remains labor
intensive
• Hard to automate aspects of textiles and various shapes and sizes of clothing
Low barriers to entry

Question 18

Developed Countries

Answer 18

• 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

Question 19

Developing Countries

Answer 19

• 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

Question 20

Newly developing countries

Answer 20

• 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

Question 21

Least Developed Countries

Answer 21

• Attractive economy for low-cost labor
• However may suffer from other social issues such as political
unrest, unstable and/or corrupt governments

Question 22

Structure of the textile complex

Answer 22

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

Question 23

Which fashion brand has the highest market capitalization

Answer 23

1. LVHM( 17 brands)
2. Nike

Question 24

ESTABLISHING A SUSTAINABLE SUPPLY CHAIN

Answer 24

• 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

Question 25

What are the four stages of clothing consumption process

Answer 25

1. Acquisition 2. Use 3. Care 4. discarding

Question 26

Define Active wardrobe

Answer 26

garments being worn

Question 27

Define Inactive wardrobe

Answer 27

garments not being worn or rarely used

Question 28

Unique Nature of Apparel Products

Answer 28

◦ Difference between need and want ◦ Nonverbal communication ◦ High degree of change in style and design

Question 29

What is the difference between style and design

Answer 29

Distinctive characteristics - s Variation of style - d

Question 30

What are the classification of apparel products ?

Answer 30

Basic Fashion apparel Classic apparel Fads or fast fashion apparel

Question 31

Wellbeing

Answer 31

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

Question 32

Level of consumption

Answer 32

◦ 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

Question 33

Standard of living

Answer 33

◦ 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

Question 34

Income elasticity

Answer 34

Describes the relationship between consumers’ change in income and resulting change in consumers’ expenditures

Question 35

Superior goods (luxury

Answer 35

income elasticity greater than 1 ◦ As income increases, expenditures increase but at a faster rate than income

Question 36

Normal goods (necessity):

Answer 36

income elasticity 0 – 1 ◦ As income increases, expenditures increase but at a slower rate than income

Question 37

Inferior goods (inadequate income)

Answer 37

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

Question 38

◦ Price elasticity

Answer 38

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

Question 39

In the U.S., price elasticity for clothing is

Answer 39

Around 0.7 The price reduction increased clothing expenditures but at a slower rate than the reduction in price

Question 40

Total Income:

Answer 40

gross income; income before taxes

Question 41

Disposable Income:

Answer 41

take-home pay; income after taxes and contributions

Question 42

Discretionary Income:

Answer 42

what remains after all current obligations (e.g., rent, mortgage, bills, insurance, food, transportation, cell phone, other necessities)

Question 43

Poverty:

Answer 43

the lack of resources or income to satisfy minimum basic needs ◦ Approximately 12.4% of Americans live below the poverty line as of 2022

Question 44

What are the three factors affecting consumption expenditure patterns?

Answer 44

- 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

Question 45

Purchasing power

Answer 45

how much a dollar will get you

Question 46

What is the difference between regression and progressive tax ?

Answer 46

Lower-income people pay higher rate than higher-income people r Increased tax rate as income rises

Question 47

Measuring Textile and Apparel Trade

Answer 47

◦ In number of units ◦ In monetary value( US dollars cost at ownership -buyer)