- Apparel manufactures and contractors need cash or credit to produce garments the season before they are sold. Some banks have been reluctant to lend money because of the high risks involved. So an alternate system of financing has developed. Called factors, these companies purchase a manufacturer’s accounts receivable or advance cash on the basis of the accounts receivable. Via research you will learn the importance of the key financial tools used in the fashion industry such as the role of the factor and Letter of Credit (L/C).
- At the end of this module, students will understand strategies companies use to determine wholesale and retail selling prices. The “Good, Better, Best” costing strategy will be explored and how it effects product mix by market segmentation.
- Students will be able to cost a similar garment style for the “good, better, best” market segments by differentiating components and country of origin. Students will learn to calculate wholesale and retail prices using the reciprocal method of markup.
- Deliverable A: Students will create a Cost Packet of one apparel item using the “Good, Better, Best” strategy, and include a write up describing the garment details and their strategy. Cost packet to include:
- Detailed academic explanation of “good, better, best” strategy and real life examples (1-2 )
- A one page write up of describing the student’s “good, better and best” garment style (3 pages).
- A FM departmental cost sheet for each style (3 pages).
- Consumer profile analysis for each market segment (3 pages).
- Conclusion / closing statement (1pg.).
- Deliverable B: Students will independently research and identify 2 factoring businesses (Factors) or financial institutions which have factoring services. Students will write a paper describing the factor’s clients or business sectors and identifying the shared advantages and disadvantages of factoring for both the factor and the client.
- Refer to the library research guide, module 2 for database resources.
- The report should be comprised of 3-5 pages of content.
- Include a well- defined explanation of factoring, its advantages and disadvantages, examples, and conclusion.
