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Bell Ringer
Your credit card has a balance of $1500 and is assessed an interest fee of 15%. What is your new monthly credit card balance?
Fashion Tip of the Day
Spend Your Budget on Accessories
"Cool shoes, interesting jewelry—those can really elevate your look," says stylist Isabel Dupré, who notes that a wardrobe of the right little extras lets
you be more relaxed about the rest of your outfits.
Table of ContentsTopic Page #Chapter 1 Vocabulary 4Chapter 1 Vocabulary 5Elements of Design Flip Book 6Chapter 1 Notes. Introducing Fashion 7Color Schemes 8Chapter 1 Notes. Introducing Fashion 9Body Shape Outfits 10Chapter 1 Notes. Introducing Fashion 11Fashion Through the Ages Sketches 12Chapter 1 Notes. History of Fashion 13Identifying Target Markets 14Chapter 2 Notes. Marketing Basics 15Functions of Marketing 16Chapter 2 Notes. Functions of Marketing 17Secondary Markets Graphic Organizer 18Chapter 3 Notes. Fashion Businesses 19
18 19
Chapter 3 Notes. Fashion Businesses
Secondary Markets Graphic Organizer
Notes
Notes
Notes
Notes
Agenda
Bell Ringer – (5 minutes) Introduce Chapter 3.1 – (5 minutes)Lecture and Notes – (25 minutes)
Learning Targets
Explain the three main segments of the fashion industry.
Describe the primary forms of business ownership.
Identify the key risks faced by fashion businesses.
Vocabulary Words Primary Market Secondary Market Tertiary Market Retailing Sole Proprietorship Partnership Corporation Risk Risk Management
Fashion Industry Segments
Primary Market Businesses that grow and produce the raw materials that become a fashion apparel or accessory.
Secondary Market Businesses that transform the raw materials into fashion in the merchandise phase. The link to the retail world.
Tertiary Marketing Stores that sale the fashion merchandise.
Primary Market
These businesses play a key role in the development of fashion. Involves technical research and planning as well as
complex production processes. These businesses must be aware of current
consumer needs and fashion trends.
Primary Market - Textiles
The textile industry is the largest segment Industry produces the fiber, leather, fur, and
any other substance involved in production.
Fibers Cotton Cotton Plant Linen Stem of a Flax plant Wool Sheep Silk Silkworm (Caterpillars) cocoons or in a factory Rayon Fake silk, produced in a factory from cellulose Nylon Synthetic fiber, made in a factory Polyester Made by reacting dicarboxylic acid with
dihydric alcohol. Leather Cowhide or animal skin Fur Animals (Fox, Raccoon, Mink, etc)
Secondary Market
Produce garments by transforming textiles to the finished product, or wearing apparel. Businesses are responsible for designing,
producing, and selling the goods to the retailers.Manufacturers, Wholesalers, Contractors, and
Product Development Teams
Secondary Market - Manufacturers
Handle all operations such as buying the fabric, designing or buying designs, making garments, and selling and delivering the finished garments.
Example: American Apparel
Secondary Market - Wholesalers
Design staffs produce the designs.Purchase the textiles or other raw materials
necessary for the designs and then plan the cutting of the materials.
Coordinate the selling and delivery processes.
*Similar to manufacturers, but no dot make the clothing.
Secondary Market - Contractors
Responsible for many aspects of production – from sewing and sometimes cutting to the delivery goods.
May produce designs for merchandise that carries a store’s label. INC for Macy’s
Secondary Market – Product Development Teams
Design, merchandise, and outsource work to contractors.
Tertiary Market
The selling of products to customers Department stores, specialty stores, discount
department stores, variety stores, off-price stores, warehouse stores, outlet stores, and non-store retailers.
Sole Proprietorship
Business is owned and operated by 1 (one) person.
Requires licensing from local authorities, but is not controlled by federal government regulations.
Sole Proprietorship
Risks The owner takes responsibility for all assets owned, whether used in the business or personally owned.
Taxes The business profit is taxed as personal income tax at a rate less than that imposed on corporations. The owner includes the income and expenses of the business on his or her personal tax return.
Sole Proprietorship
PROS Freedom to operate as
the owner feels necessary
Sell the business Remains in existence for
as long as the owner is willing or able to stay in business
CONS Financial management
and liability is the responsibility of the owner
Huge task for one person
Partnership
A business created through a legal agreement between two or more people who are jointly responsible for the success or failure of the business. The agreement includes arrangements for the
contribution of each partner and division of profits and it states the authority of each partner.
Each partner contributes money, property, labor, or skill, and expects to share in the profits and losses of the busness.
Partnership
Taxes Fewer regulations than a corporation and each partner is taxed separately on individual tax returns. Must file an annual information return to report
income, expenses, deductions, profits, and losses from its operations. However, it does not pay any income tax.
Partnership
Personal Liability Each partner is personally liable for debts of the partnership.
A partnership ends upon the death or withdrawal of one of the partners, but most partnership agreements make provisions for these types of events.
Corporations
A business that is charted by a state and legally operates apart from the owner of owners.
State governments requires that this type of ownership be chartered. A charter is a legal document that grants certain
rights and privileges to the company by the state.
Corporations
Stocks and Shareholders Has the right to issue stock. Corporations are traded on the stock exchange and their ownership is divided into shares of stock that can be owned by a large number of stockholders.
Corporations
Taxes The profit is taxed to both the corporation and to the shareholders when the profit is distributed as dividends.
Fashion Risks
Risk the possibility that a loss can occur as the result of a business decision or activity.
Risk Management
There are no methods to completely safeguard a business from risk.
Risk Management a strategy to offset business risks. Risk management is a systematic process of managing
an organization’s risk exposure to achieve objectives in a manner consistent with public interest, human safety, environmental factors, and the law.
Economic Risks
Risks that occur from changes in overall business conditions. When many people are without jobs, they spend
less money on fashion goods. The fashion industry has the risk of not selling
merchandise.
Human Risks
Risks caused by human mistakes as well as by the unpredictability of customers, employees, or the work environment.
Sources of Inventory Shortages
48%
32%
15%
5%
Employee TheftShopliftingAdminstrative and paper errorVendor fraud
Other Categories of Risks
Pure Risks risks when there is a possibility of a loss, but no chance to gain from the event.
Speculative risk risks that occur when gains or losses are possible.
Controllable risks risks that can be prevented or reduced in frequency.
Other Categories of Risks
Uncontrollable risks events that a fashion business from occurring such as the weather.
Insurable risks pure risks that could exist for a large number of businesses, includes those for which the probability and amount of loss is predictable.
Uninsurable risks risks that occur when the chances of risk cannot be predicted or when the amount of loss cannot be estimated.
Managing Potential Risk
Businesses can handle risk by different methods: Purchasing insurance Implement employee training Product warranties