Global Manufacturing exam 2

What is trade?

The buying selling or bartering of goods and services across political boundaries.

What are the three phases of globalization?

1. Countries (1400–1914); 2. Companies (1914–2000); 3. Individuals (2001–present).

What is protectionism?

Using trade barriers to minimize imports and protect domestic industries.

What is free trade?

A policy of unrestricted exchange of goods among nations.

What are customs services responsible for?

Monitoring imports/exports collecting duties reporting quota imports/exports and protecting borders.

What is a tariff?

A tax imposed on imported or exported goods; import duties are charged when goods enter a country.

Specific tariff: 200 bags at $3 per bag. Duty?

200 × $3 = $600.

How do you calculate an ad valorem duty?

Product value × ad valorem rate. Example: $10

What is the difference between specific and ad valorem duties?

Specific duties are fixed amounts per unit; ad valorem duties are percentages of product value.

What is an import quota?

A restriction on the quantity of a good that may be imported.

What is a subsidy?

Government assistance such as grants loans or tax breaks that helps an industry remain competitive.

What is a voluntary export restraint (VER)?

A government-set limit on the quantity of goods exported during a specified period.

What are technical barriers to trade (TBT)?

Regulations standards testing and certification procedures that can obstruct trade.

What is dumping and what do antidumping policies do?

Dumping means selling abroad below the domestic price or production cost. Antidumping measures protect domestic producers from unfair competition.

What is a free trade zone?

A designated site where selected goods can enter duty-free for storage display or manufacturing before export.

What is the difference between a free trade zone and a free trade area?

A zone is a designated site within a nation; an area is a region consisting of two or more countries.

What did GATT (1947–1994) aim to do?

Create international trade rules and reduce barriers especially tariffs and quotas.

What was the Multifiber Arrangement (MFA)?

A 1974–1994 framework for controlling textile and apparel trade through restraints and bilateral export agreements.

What was the purpose of the WTO Agreement on Textiles and Clothing (ATC)?

Phase out the MFA quota system over 10 years by December 31 2004 and reintegrate textiles into the WTO system.

What is the WTO's general approach to trade protection?

The WTO framework assumes trade protection weakens the global economy and freer trade strengthens it.

What is a trade association?

A nonprofit organization representing member companies' common interests and management perspectives.

What services do trade associations provide?

Trade shows communication research publications seminars government relations lobbying and responses to social activists.

What is intellectual property (IP)?

Registered inventions or creations intended for sale or use by their owner.

What are the five intellectual property categories in the slides?

Copyright trademark patent design patent and trade secret.

What does copyright protect?

An author's or creator's exclusive rights to publish produce sell or distribute their work.

What is the difference between moral and economic copyright rights?

Moral rights are nontransferable; economic rights are transferable.

What is a trademark?

A word phrase logo or graphic symbol distinguishing one firm's products or services from others.

What is trademark infringement?

Using a brand's trademark on products without the owner's permission.

What is a patent and how long is it typically granted for?

A right allowing its holder to prevent others from using the protected invention; typically 20 years.

What is a design patent?

Protection for distinct nonfunctional two-dimensional or three-dimensional product features.

What is a trade secret?

A formula pattern device idea or process that provides a competitive advantage.

How can intellectual property rights be legally transferred?

Through a licensing contract: the owner (licenser) grants rights to a licensee for a royalty or fee.

What is counterfeiting?

Making or selling look-alike goods or services bearing fake trademarks.

What are gray market goods?

Original goods or overruns sold by unauthorized vendors; they are not knockoffs.

What anti-counterfeiting measures do the slides list?

Identification numbers holograms and special package markings.

What is a knockoff?

An imitation usually made with lower-cost fabrics and production methods and sold at a lower price.

How is country of origin (COO) determined?

By rules of origin: where goods are wholly obtained or where the last substantial transformation occurs.

What is misclassification of goods?

Filing merchandise under an incorrect Harmonized System (HS) classification sometimes to evade duties or quotas.

What is legal transshipment versus illegal transshipment?

Legal transshipment transfers goods between conveyances during shipment. Illegal transshipment routes goods through a third country to falsify country-of-origin documents.

What is border protection?

Customs efforts to prevent illegal entry of drugs weapons counterfeits contraband and illegal immigrants.

Who are the three types of apparel importers?

Private brand retailers brand managers and apparel sourcing intermediaries.

What is a private brand retailer?

A retailer that owns and markets an exclusive label often sourcing directly from factories to reduce costs.

What is a brand manager in global sourcing?

A company that outsources production to offshore vendors it wholly owns or operates through a joint venture.

What is an apparel sourcing intermediary?

A company with expertise in design product development materials logistics importing and a network of contracted factories.

What does CMT stand for?

Cutting fabric making (sewing) garments and trimming/packaging finished products.

In CMT sourcing who handles materials and most costs?

The customer sources and pays for materials handles development and pays duties and transportation; the vendor provides production expertise and equipment.

What is full-package sourcing?

The vendor handles cutting sewing trimming packaging and a broad range of preproduction and postproduction services.

What additional tasks do full-package factories perform?

Materials sourcing design patternmaking grading specifications and sample development plus production and export-related services.

What is one key advantage of CMT sourcing?

The customer controls most product development decisions.

What is one key advantage of full-package sourcing?

The vendor provides full-service support allowing comparison with alternative vendors.

What is factory-direct sourcing?

Customers contract directly with factories or mills eliminating a middleman and potentially saving money.

What is a joint venture and what are its advantages?

Shared ownership between two or more firms; advantages include shared financial responsibility local cultural knowledge and lower initial investment.

What does a sourcing agent or intermediary do?

Provides procurement and delivery services and may manage the entire supply chain for brands and retailers.

What is licensing in apparel sourcing?

Permission to use a brand team character or celebrity name on another firm's product for a royalty or fee.

What are trade shows or trade fairs?

Industry exhibitions where companies showcase products and services and connect with designers manufacturers and suppliers.

What country factors affect sourcing decisions?

Geographic location shipping time and cost import tariffs natural-disaster risks and cultural values and norms.

What affects shipping time?

Distance transport mode and additional time for handling paperwork consolidation and customs clearance.

What is the difference between FCL and LCL?

Full container load (FCL) generally has lower prices and is more cost-effective overall than less than container load (LCL).

What is a consolidator?

A person or firm combining cargo from multiple shippers into one container to reduce shipping rates.

What is agile manufacturing?

Flexible fast production with small runs and quick changeovers; best suited for fashion products.

What is lean manufacturing?

Emphasizes efficiency economies of scale lower costs and improved quality; best suited for basic core and staple products.

What is a sourcing calendar?

A timeline based on the merchandising calendar that organizes merchandise classifications retail selling periods and product development.

Why do fashion products need shorter sourcing timelines?

Fashion selling periods can last only weeks so products must reach the sales floor before demand peaks.

What is culture?

A system of shared values and norms that together constitute a design for living.

What is the difference between values and norms?

Values are abstract ideas about what is good right and desirable; norms are social rules for appropriate behavior.

What factors determine culture according to the slides?

Nationality ethnicity religion gender profession age political party and income level.

How do cultures form and change?

Basic values are often acquired in childhood. Cultures also evolve; change can occur by choice or by imposition.

What is change by choice?

Cultural change in response to social and economic situations that present new alternatives.

What is change by imposition?

Imposing elements of an outside culture; also called cultural imperialism.

What is multiculturalism?

Many cultures within one country's borders or similar cultural groups spread across multiple countries.

How does language affect international business?

Language includes spoken and nonverbal communication; understanding local language and cues can be critical to business success.

What is a high-context message?

Meaning depends heavily on the situation and nonverbal cues.

What is a low-context message?

Meaning depends primarily on the words used.

What factors influence context?

Family school religion language and work.

What are cultural universals listed in the slides?

Material elements social institutions belief systems aesthetics and language.

What is high power distance?

Subordinates have little consultation with management; authority is more autocratic.

What is low power distance?

Management consults with subordinates often to improve productivity.