International Sourcing 6

  1. Politics
    methods or tactics involved in managing an organization, business, state or government
  2. Capitalism
    • Private ownership of property
    • -income from operations accrue to the owners
    • -free competition for economic gain
    • -profit motive is basic to economic life
  3. Communism or Socialism
    • -Resources are cooperatively or state owned
    • -Trade is often done between states or governments
  4. Subsidies
    • payments made from a government to a company to permit the company:
    • -sell its products at a lower price domestically
    • -sold internationally below the market price
  5. Price Support Programs
    government purchasing products to reduce the supply and thereby drive the price higher
  6. Dumping
    selling the product in another country at a price less than it is sold domestically or less than the cost to produce
  7. Why would a country dump products?
    • -establish or maintain market share
    • -dispose of excess inventory
    • -selling government production from socialistic or communistic countries
  8. Office of Textiles and Apparel (OTEXA)
    • -documents trade data
    • -assist firms with exports
    • -updates the status of trade agreements
  9. Labor Unions
    • -represent their membership with employers
    • -employ lobbyist to convey their interests to policy makers and the administration
  10. Trade Associations
    • -non-profit organizations formed to serve their membership
    • -similar business interests
    • -provide services (industry research, publications, seminars, trade shows)
    • -larger ones employ lobbyists
  11. Five classifications of political perspectives
    • -Domestic interests
    • -International interests
    • -Global Interests
    • -Multinational Interests
    • -Transitional Interests
  12. Domestic Interests
    protect domestic manufacturing, focus on domestic suppliers
  13. International Interests
    source abroad but see their overseas activities as supporting their domestic company
  14. Global Interests
    source products worldwide but sell market their products worldwide as a "national brand"
  15. Multinational Interests
    source and sell their products to meet in each worldwide market including their domestic market
  16. Transitional interests
    see their goal as responsive to local needs worldwide and respond to needs
  17. 1930's
    • -high tariffs
    • -protectionism
  18. 1940's
    multilateral agreements were seen as a way to resolve trade & financial problems (GATT in 1946)
  19. 1960's
    average tariffs reduced by 36% and the use of other non tariff barriers began
  20. 1970's
    • -protectionism began to rise again
    • -free trade and high employment clashes
    • -US had largest apparel employment
    • -retailers began to bypass manufactures & therefore supported free trade
  21. 1980's
    • -MFA, quota system, effectively rising the value of imports
    • -opening plants in foreign countries
    • -quota rents became a reality
    • -guaranteed access levels (GALS)
  22. 1990's
    • -GATT became WTO
    • -NAFTA
    • -apparel and textile manufacturers abandons protectionism, joined retailers for lower costs
    • -brand licensing is important
    • -price became dominate in retailing
  23. 2000's
    • -global marketing and sourcing increased, small firms failed
    • -MFA phased out
    • -demand for domestic textiles decreased
    • -only 10% of apparel sales are domestically made
  24. Four regions that form trade blocks
    • -Europe and European Union
    • -The Americas and Caribbean
    • -Asia and Oceania
    • -Middle East and Africa
  25. Europe and European Union
    • -western Europe are the most developed countries
    • -eastern Europe constitutes more
    • -EU includes 25 countries
  26. The Americas and Caribbean Basin
    • -Central America (7), North America (3), South America (13) and West Indies (13)
    • -NAFTA 1994
    • -CAFTA Central American Free Trade Agreement
    • -FTAA Free Trade Area of the Americas
  27. Asia and Oceania
    • -China, India, island countries
    • -Pakistan is the largest exporter of cotton & cotton goods
    • -India 2nd largest population
  28. Middle East and Africa
    • -Politically volatile
    • -Middle east is a low cost supplier
    • -Africa has become a significant producer to global trade in the northern most regions
Card Set
International Sourcing 6
Chapter 6