Bell Ringer n Your credit card has a

Bell Ringer n Your credit card has a balance of $1500 and is assessed an interest fee of 15%. What is your new monthly credit card balance?

Bell Ringer Answer $1500 * 15% =

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 Contents Topic Chapter 1 Vocabulary Elements of Design Flip Book Chapter 1 Notes. Introducing Fashion Color Schemes Chapter 1 Notes. Introducing Fashion Body Shape Outfits Chapter 1 Notes. Introducing Fashion Through the Ages Sketches Chapter 1 Notes. History of Fashion Identifying Target Markets Chapter 2 Notes. Marketing Basics Functions of Marketing Chapter 2 Notes. Functions of Marketing Secondary Markets Graphic Organizer Chapter 3 Notes. Fashion Businesses Page # 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Secondary Markets Graphic Organizer Chapter 3 Notes. Fashion Businesses Notes 18 19

Agenda n Bell Ringer – (5 minutes) n Introduce Chapter 3. 1 – (5 minutes) n Lecture and Notes – (25 minutes)

Learning Targets n Explain the three main segments of the fashion industry. n Describe the primary forms of business ownership. n Identify the key risks faced by fashion businesses.

Vocabulary Words n Primary Market n Secondary Market n Tertiary Market n Retailing n Sole Proprietorship n Partnership n Corporation n Risk Management

Fashion Industry Segments n Primary Market Businesses that grow and produce the raw materials that become a fashion apparel or accessory. n Secondary Market Businesses that transform the raw materials into fashion in the merchandise phase. The link to the retail world. n Tertiary Marketing Stores that sale the fashion merchandise.

Primary Market n These businesses play a key role in the development of fashion. n Involves technical research and planning as well as complex production processes. n These businesses must be aware of current consumer needs and fashion trends.

Primary Market - Textiles n The textile industry is the largest segment n Industry produces the fiber, leather, fur, and any other substance involved in production.

Fibers n Cotton Plant n Linen Stem of a Flax plant n Wool Sheep n Silkworm (Caterpillars) cocoons or in a factory n Rayon Fake silk, produced in a factory from cellulose n Nylon Synthetic fiber, made in a factory n Polyester Made by reacting dicarboxylic acid with dihydric alcohol. n Leather Cowhide or animal skin n Fur Animals (Fox, Raccoon, Mink, etc)

Secondary Market n Produce garments by transforming textiles to the finished product, or wearing apparel. n Businesses are responsible for designing, producing, and selling the goods to the retailers. n Manufacturers, Wholesalers, Contractors, and Product Development Teams

Secondary Market - Manufacturers n Handle all operations such as buying the fabric, designing or buying designs, making garments, and selling and delivering the finished garments. n 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 n Responsible for many aspects of production – from sewing and sometimes cutting to the delivery goods. n May produce designs for merchandise that carries a store’s label. n INC for Macy’s

Secondary Market – Product Development Teams n Design, merchandise, and outsource work to contractors.

Tertiary Market n The selling of products to customers n Department stores, specialty stores, discount department stores, variety stores, off-price stores, warehouse stores, outlet stores, and non-store retailers.

Types of Fashion Business Organizations n Sole Proprietorship n Partnership n Corporation

Sole Proprietorship n Business is owned and operated by 1 (one) person. n Requires licensing from local authorities, but is not controlled by federal government regulations.

Sole Proprietorship n Risks The owner takes responsibility for all assets owned, whether used in the business or personally owned. n 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 CONS n Freedom to operate as n Financial management the owner feels and liability is the necessary responsibility of the owner n Sell the business n Remains in existence for n Huge task for one person as long as the owner is willing or able to stay in business

Partnership n A business created through a legal agreement between two or more people who are jointly responsible for the success or failure of the business. n The agreement includes arrangements for the contribution of each partner and division of profits and it states the authority of each partner. n Each partner contributes money, property, labor, or skill, and expects to share in the profits and losses of the busness.

Partnership n Taxes Fewer regulations than a corporation and each partner is taxed separately on individual tax returns. n 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 n Personal Liability Each partner is personally liable for debts of the partnership. n 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 n A business that is charted by a state and legally operates apart from the owner of owners. n State governments requires that this type of ownership be chartered. n A charter is a legal document that grants certain rights and privileges to the company by the state.

Corporations n 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 n Taxes The profit is taxed to both the corporation and to the shareholders when the profit is distributed as dividends.

Fashion Risks n Risk the possibility that a loss can occur as the result of a business decision or activity.

Risk Management n There are no methods to completely safeguard a business from risk. n Risk Management a strategy to offset business risks. n 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.

Types of Risks n Economic n Human n Natural

Economic Risks n Risks that occur from changes in overall business conditions. n When many people are without jobs, they spend less money on fashion goods. n The fashion industry has the risk of not selling merchandise.

Human Risks caused by human mistakes as well as by the unpredictability of customers, employees, or the work environment.

Sources of Inventory Shortages 5% 15% Employee Theft Shoplifting 48% Adminstrative and paper error Vendor fraud 32%

Natural Risks n Risks that occur due to natural disasters or changes in the weather.

Other Categories of Risks n Pure Risks risks when there is a possibility of a loss, but no chance to gain from the event. n Speculative risks that occur when gains or losses are possible. n Controllable risks that can be prevented or reduced in frequency.

Other Categories of Risks n Uncontrollable risks events that a fashion business from occurring such as the weather. n 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. n Uninsurable risks that occur when the chances of risk cannot be predicted or when the amount of loss cannot be estimated.

Managing Potential Risk n Businesses can handle risk by different methods: n Purchasing insurance n Implement employee training n Product warranties

Left-Hand Activity n Design a chart or graphic organizer describing the four main types of fashion producers: manufacturers, wholesalers, contractors, and product development teams.