Kate Spade Presentation

COUNTRY PROFILE PRESENTATION FASM 420-Global Sourcing Ashley Chan & Nikia Hunt

Company Profile: Kate Spade

About Kate Spade New York

Easily recognized by the brand name & spade logo on all of their products Over 140 retail shops & outlet stores across the United States & more than 175 shops internationally Product Mix: Women’s clothing, jewelry, bedding, homewear, legwear, fragrance, footwear, stationery, eyewear, baby & gifts Menswear: Jack Spade, a fictional name, is the male complement to the Kate Spade brand with a more rugged style created with darker tones.

Signature Style: Crisp color, graphic prints and playful sophistication is their exuberant approach to promoting personal style with an added irresistible charm

Brand Motto

Company History 1993-Present

1993 Brand was created | first collection had only six silhouettes featuring a colorful palette in utilitarian shapes 1996 First brick-and-mortar store was opened in New York City 1999 Sold the brand to the Neiman Marcus Group 2007 Company handed control operations over to Liz Claiborne, which has since been renamed Kate Spade & Company | Deborah Lloyd became the president and chief creative officer | Kate Spade at Home is launched as the home collection 2013 Live Colorfully fragrance was crafted in-house to celebrate their 20th anniversary 2015 Launched kids’ clothing collection Today Recognized as a lifestyle brand throughout the world for colorful designs

The Imported Products

Handbags & Small Goods Classic Nylon: a lightweight, classic style made of tightly woven fibers for a waterresistant bag Fabric: each fabric used is carefully selected for its color, texture, durability & beauty Straw: a seasonal style made of delicate straws extracted from Thailand & Indonesia Leather: leathers used are specially chosen from the finest tanneries in Italy & Asia All of the handbags and small goods including wallets and keychains are imported from countries such as China, Vietnam, Hong Kong, Singapore, Sri Lanka, Taiwan, Indonesia, Italy and India.

Made in the USA vs. Imported Every single Kate Spade handbag is imported. Their nylon bags were produced in the United States until 2002 when they moved production overseas to countries like China and Indonesia to increase profit margins.

Top 5 Countries that Supply Leather Goods to Kate Spade are: 1. Hong Kong 2. China 3. Vietnam 4. Singapore 5. Sri Lanka

Though India is not one of the major suppliers for Kate Spade’s leather goods, it is still a place that the company sources from, because India is known for their production of leather goods. Since Kate Spade no longer makes their goods within their own national borders, India supplies manufacturers for the company.

Made in the USA vs. Imported • S napshot summary of all of the shipments imported into the USA for Kate Spade New York since March 2014 • D ata prior to that date may have been blocked by the company for privacy purposes • T op commodity items are leather goods, polyester goods, leather & cowhide leather handbags •

T op 3 Suppliers in India that Supply Goods to Kate Spade are: 1. Damco India Pvt., Ltd 2. PS Apparels 3. Sahu Exp.

Country Profile: India

About India • 2nd most populous country in the world • 1.2 billion people • Occupies an area of 1.27 million square miles • T remendous diversity in geography, climate, culture, language & ethnicity • W on independence from Great Britain in 1947 following protest led by Mohandas K. Gandhi • Surrounded by 3 different bodies of water:

-Arabian Sea in the west

-Bay of Bengal in the east

-Indian Ocean in the south

• S hares international borders with Pakistan on the west, Nepal, China, and Bhutan on the northeast

• More than 1/3 of Indians live in cities • More than 30% of all Indian women live in cities • Indian youth population is the largest in the world • Median age in India is 27.3 years old

Social & Cultural Norms • C aste system is divided into 4 sectors: Brahmans, Kshatriyas, Vaisyas & Sudras

-With growing urbanization, caste system is diminishing

• Family is valued heavily; divorce is often unappreciated or uncommon

- Believes strongly in the nurture & well-being of children so divorces are scarce

• I n many regions, women remain very submissive, but improved education levels are making women more assertive • P atriarchal setup: eldest male member controls the matters within the household • Marriage is an important social obligation • Birth of a child calls for a celebration, especially if it is a boy • D eath is also an important occasion in the Indian family system that call for a ceremony

-Annual rituals continue in remembrance of the deceased

Political • Operates under a federal parliamentary democratic republic • D ual polity system: double government that consists of President of India (elected for 5-year terms) as head of state & Prime Minister as head of government • C onstitution defines organization, powers & limitations of both central & state governments • I ndependent Judiciary brand headed by Supreme Court to settle disputes between central government & the states while protecting the laws outlined in Constitution Current Problems: • T errorism, Naxalism, religious violence & caste-related violence affect political environment

- Terrorism supporters from Pakistan or internal guerrilla groups such as Naxalites

• Many elected legislators have criminal cases against them

- In July 2008, Washington Post reported ¼ of 540 Parliament members faced criminal charges including human trafficking, immigration rackets, embezzlement, rape & murder

Economic Situation The government under Narendra Modi has undertaken some necessary structural adjustments with a focus on improving the inefficient government sector, better managing public finance, and improving the business and investment environments. These reforms have shown some progress but more efforts need to be made, because the overall progress on implementing these changes has been limited and irregular.

• GDP: $7.4 trillion with a steady 7.2% growth • $5,855 per capita • 3.6% unemployment rate Top Concerns: • Corruption, regulatory efficiency, investment freedom • U ncertainty about land ownership, civil servants at all levels are known to accept bribes or other corruption activity

Labor • Labor force is growing quickly

- Within the next 10 years, expected to add 110 million people to work force

- Over the next 40 years, expected to add 424 million working age adults

• I f India can increase women’s labor force participation by 10%, equivalent to 68 million women, India’s GDP could increase 16% • More women work in rural India than in cities • o nly 13.4% of working women have a regular salaried job compared to 21.2% of men • H ome to the largest number of child laborers in the world, caused by poverty and lack of social security & the increasing gap between rich and the poor

Natural Inputs Though amount of natural resources does not correlate with the economic development of a country, India has a considerable amount of resource wealth including coal, iron, and petroleum reserves.

Mineral Resources • Coal- 4th largest reserve in the world • Iron Ore • Manganese Ore • Mica • Bauxite • Natural Gas • Limestone Around 21% of India’s total geographical area consists of forests with a large variety of forest vegetation due to variations in climatic conditions.

Products The major export products of India include leather, medical appliances, equipments and textiles.

Leather Goods Handbags, wallets, belts, keyholders, pouches and gift items such as leather notebooks and key rings Medical Supplies Absorbent gauze, sterile gloves, crepe bandages, gauze sponge, surgical face masks, surgical caps, surgical disposables Textile Goods Knitted tops, embroidered salwar, sequin work blouses, sarongs, floral t-shirts, beaded garments, poplin embroidered kurta, viscose crape printed skirt In 2015, India’s total exports to the US amounted to $40.4 billion.

Transportation Public transportation is the primary mode of transport for most of the Indian population & it’s among the most heavily used in the world.

• I ndian Railways is one of the largest railways under single management

-4th longest & most heavily used system in the world

-8,224 million passengers

-969 million tons of freight

• O nly 10.3 million cars on the roads despite one of the highest number of deaths caused by traffic • 12 major & 187 minor and intermediate ports along the coastline • Inland

water transportation remains undeveloped despite navigable rivers & canals • 125 airports including 11 international airports

-96 million passengers

-1.5 million tons of cargo

Business Climate India is a very large country with plenty of economic potential. As one of the world’s fastest growing countries, it is going through unprecedented economic freedom that allows foreign investors to access their vast market for the first time.

• Foreign direct investment reforms • L arge youth population & a strong export sector anticipating expansion for their businesses • Can be a difficult place to do business • Hire the help of a local • Be patient to learn the culture • Be respectful of differences in terms of way of life & attitudes

Effects of Quota Removal • I n 2005, under the Agreement on Textiles and Clothing (ATC), quotas were removed on textiles & clothing • Positive & beneficial for India • P rior to the removal, India’s exports were limited & hindered by restrictions Challenge • I ncreased competition as other countries also gain liberalization • No guaranteed markets Advantages • L arge, readily available and relatively low-cost labor force • B ountiful domestic supply of fabrics & ability to manufacture a wide array of products • R ich with raw materials that are essential for manufacturing fibers

SWOT Analysis Strengths • High self sufficiency for raw material, specifically natural fibers • Cheap labor & strong entrepreneurial skills • Greater flexibility to service smaller and specialized orders due to the small size of manufacturing • Domestic demand is on the rise Weaknesses • High power costs and long export lead times • Productivity levels for manufacturing various apparel items are low Opportunities • B ilateral agreements between countries are causing trade to increase between regional trade blocs • Could produce more technologically advanced products Threats • Shortened the fashion cycle • NAFTA & SAFTA are trading blocs that exclude India

Business Etiquette

Type of Culture • H indi is the official language of the country but English is popular in business meetings • N amaste (pressing the palms together in a bowing gesture) is typically used as a greeting • Handshake is acceptable for meetings

-Can only be done between men

-Men are not allowed to shake hands with women

Masculine The influences of Hinduism and the tradition of the caste system have instilled hierarchal beliefs in the Indian culture.

Negotiation Styles & Etiquettes Five tips for doing business in India: 1. Be punctual Greet the senior people first and expect to start with some small talk.

2. Be patient It can take a long time to complete negotiations as final business decisions are made at the highest level, so and pressure tactics and hard sales techniques are not appreciated.

3. Take tea The Indian alternative to black coffee is a sugary, milky tea or coffee beverage that you shouldn’t refuse.

4. Don’t be too direct “No” is considered impolite and is replaced with “I will try”, or “let me consider and come back to you”.

5. Check the local calendar India enjoys countless holidays which change depending on the year.

Negotiation Styles & Etiquettes Business Attire • Men should wear dark colored business suits • Women should dress conservatively in pantsuits or dresses • In the hotter parts of the country, dress is less formal

- Dressing conservatively indicates a sign of respect and is highly recommended Greetings • Handshake upon meeting • Namaste is the name of the bowing gesture that Indians typically use • Use the appropriate formal title of Professor, Mr., Mrs., etc.

-”Sir” or “Madam” Business Cards • Should be exchanged at the first meeting • G ood idea to translate into Hindi on 1 side as a sign of awareness & respect • Do not just shove the business card into trouser pocket

Negotiation Styles & Etiquettes First Name or Title • S tatus is determined by age, university degree, caste and profession so the appropriate title should be used • Must wait to be invited to call anyone by their first name Gestures • Kissing & embracing are not to be tolerated in public • Couples rarely hold hands in front of people • Shoes should be taken off upon entering someone’s home • Considered rude to point soles of feet at anyone while sitting Colors, Numbers & Their Meanings • Green, red and yellow are seen as lucky colors Gift Giving • Believe that giving gifts eases the transition into the next life • Cash is given to friends & members of the extended family • V alue of the gift is not quite as important as the sincerity with which it is given • Hindus do not get gifts made of leather • Muslims do not get gifts made of pigskin or alcoholic products • Gifts should not be opened right away

Negotiation Styles & Etiquettes Time • Clocks are not watched • I ndians value the outcome of a task rather than the time it took to do the task

- A meeting can start at 3pm and people will show up at a variation of that time Joke Telling • Joke telling at an Indian dinner party is appropriate

-Not acceptable at a business meeting or arrangement dinner • Meetings are 100% focused on business

Business Entertaining Proper Use of Utensils • Main rule for eating: eat with your right hand only

- Left hand is used for wiping the bottom, cleaning the feet and other functions such as putting on & taking off shoes • Spoon is more important than the fork

- Right handed people keep their spoon in their right hand and put it down to switch to the fork it is needed Table Manners • C an hold a cup or eating utensil in your left hand but you cannot eat, wipe your mouth, or pass food with your left • Do not pass anything to anyone or point at anyone with your left hand • S hould always accept things with your right hand but using both hands is a sign of respect Alcoholic Beverages • A lcohol is not had with a traditional meal but if served, it is served in a mug or glass • Too much alcohol consumption is looked down upon Appropriate Conversation Subjects • Topic that you can speak on with clarity, sincerity, and intelligence • When other people at the table are speaking, pay attention Topics to Avoid • Religion because there is so much diversity on this subject • Don’t complain about work

Classifying the Import

Women’s Handbags Chapter 42 Heading 4202 Subheading 4202.11.00 Tariff Item 4201.11.0000

Cost Sheets

Emerson Place Olivera Style #: PXRU6525 Color: Black/Cement

COMPONENT COSTS: Fabrics: Quilted cow leather Cow leather Lining: Jacquard lining (TOTAL FABRICS) Trims: Kate Spade New York Logo Crossbody strap Gold zipper Gold hardware (handles & luggage tag) Handles Inner zipper (TOTAL TRIMS) CMT COSTS:

Yds/Qty

Unit Price

$ Amount

1.25 $ 17.50 0.5 $ 14.00

$ 21.88 $ 7.00

1 $ 1.40

$ 1.40 $ 30.28

1 $ 1.50 1 $ 5.00 1 $ 3.00

$ 1.50 $ 5.00 $ 3.00

5 $ 2.50 2 $ 2.00 1 $ 1.00

$ 12.50 $ 4.00 $ 1.00 $ 27.00

Grading: Marking: Cutting: Make Charges: Thread

$ 0.75 $ 0.75 $ 2.00

Sewing Top-­‐Stitching Labor

$ 2.00 $ 1.00 $ 5.00

Wash/Type QE/Bag & Tag

$ 2.00

$ 0.85

(TOTAL LABOR) PACKING MATERIALS: Tissue Polybag Dust bag

3 $ 0.03 1 $ 0.15 1 $ 1.00

$ 0.09 $ 0.15 $ 1.00

Inner Box Outer Box

1 $ 0.75 1 $ 1.00

$ 0.75 $ 1.00 $ 2.99 $ 74.62

(TOTAL PACKING) (TOTAL COST): WHOLESALE PRICE WHOLESALE MARGIN RETAIL PRICE RETAIL MARGIN

14.35

$ 124.36 $ 49.74 $ 448.00 $ 323.64

Orchard Street Penelope Style #: PXRU6391 Color: Tulip Pink

COMPONENT COSTS: Fabrics: Pebbled cowhide leather Lining: Poly-­‐twill lining (TOTAL FABRICS) Trims: Kate Spade New York Logo Crossbody strap Magnetic closure Gold hardware Inner zipper Tassel (TOTAL TRIMS) CMT COSTS: Grading: Marking: Cutting: Make Charges: Thread Sewing Top-­‐Stitching Labor

Yds/Qty

Unit Price 0.75 $ 18.00

$ 13.50

1 $ 3.00 $ 3.00 $ 16.50 1 1 1 1 1 1

$ 1.50 $ 3.00 $ 0.75 $ 4.00 $ 1.00 $ 3.00

$ 1.50 $ 3.00 $ 0.75 $ 4.00 $ 1.00 $ 3.00 $ 13.25 $ 0.75 $ 0.75 $ 2.00 $ 0.85 $ 2.00 $ 1.00 $ 5.00

Wash/Type QE/Bag & Tag (TOTAL LABOR) PACKING MATERIALS: Tissue Polybag Dust bag Inner Box Outer Box (TOTAL PACKING) (TOTAL COST): WHOLESALE PRICE WHOLESALE MARGIN RETAIL PRICE RETAIL MARGIN

$ Amount

$ 2.00 $ 14.35 3 1 1 1 1

$ 0.03 $ 0.15 $ 1.75 $ 0.75 $ 1.00

$ 0.09 $ 0.15 $ 1.75 $ 0.75 $ 0.50 $ 3.24 $ 47.34 $ 78.90 $ 31.56 $ 348.00 $ 269.10

Shipping Route

Shipping Route

New York, USA

Mumbai, India

Ocean Freight Type of Box 5-ply carton cardboard box measuring 14in x 14in x 12in Each handbag will already be prepackaged in a Kate Spade box with a plastic bag and a dust bag Number of Boxes 500 cartons containing 1,000 pieces of the Orchard Street Penelope bag 364 cartons containing 728 pieces of the Emerson Place Olivera bag Type of Container 20 foot container; capable of holding 864 cartons at full capacity Shipping Timelines Distance to travel: 7,482 miles Speed at sea: 23 knots Delivery Time: 36-38 days Production, packaging, preparing for shipment: 18 days Shipment taken to port via roadway: 1 day Traveling from Mumbai to New York: 14-15 days Unloading shipment: 1 day Distributed to stores: 2-3 days

COUNTRY PROFILE PRESENTATION Ashley Chan & Nikia Hunt