OCCUPATIONAL CATEGORY:  Apparel and Accessories Marketing Series-Management Level

 

INSTRUCTIONAL AREA:  Economics

 

PERFORMANCE INDICATORS EVALUATED:

 

1.  Explain the nature of international trade.

 

2.  Explain the types of business risk.

 

3.  Describe the concept of price.

 

4.  Identify factors affecting a business' profit.

 

5.  Explain the concept of competition.

 

EVENT SITUATION:

 

You are to assume the role of department manager for juniors in a large department store chain.  You have just received a large shipment of 100% cotton woven shirts made in China.  The shirts have been purchased by your buyers for a special price promotion sale.  They are similar in construction to another shirt your store carries, which is produced domestically.  The shirts made in China cost $10.00 each and will retail at $20.00.  The domestically produced shirts cost $18.00 each and retail at $36.00, which is $16.00 higher than the import.  After the special price promotion sale, the shirts made in China that remain in stock will be marked up to $36.00.

 

While receiving and checking them in, a new store employee (judge) asks you why the shirts made in China are so inexpensive and how your store can afford to resell them at such a low price.  You are to explain to the new employee (judge) the factors behind trade with China that allow for such low pricing.  You are also to explain that, even though the prices are significantly lower than domestically produced products, risks are involved with that type of purchase.  Finally, you are to discuss the profit motives that your store has with regard to pricing and competition. 

 

The explanation will take place on the sales floor.  The new employee (judge) will both begin and end the role-play.

 

JUDGE'S QUESTIONS/COMMENTS:

 

1.  It looks like we just received a new shirt.  How much will it sell for?

 

 

2.  $20.00!!  Why is it so inexpensive?

 

 

3.  Won't the large difference in retail price between the shirt produced in China and the one produced domestically hurt the sales of the domestic shirt?

 

4.  That's a great idea!  Why don't we have everything produced overseas if it is so inexpensive?  Are there risks involved that make that unrealistic?

 

5.  Is the potential profit worth all of the risks involved?

 

6.  Do our competitors buy imports also?