re restricted from selling in those countries where there is a valid licensee. If they are caught doing so, they could lose their license. This makes things very difficult and expensive for the licensees. As a result, they will at times, try to sell us product anyway. In this event, the most important protection is through the use of proper channels of distribution, specifically, very small stores. The likelihood of a trademark representative targeting this channel is very small. If, for no other reason, there are too many stores and it would be cost-prohibitive. Also, because the merchandise is popular and high-end, it usually moves very quickly, further reducing the risk of litigation.The second example, involving quality levels is less likely. Because we repackage the merchandise into assorted pre-packs before shipping it to our customers, someone must handle each and every piece. The quality system is not formal, however there are some general rules. If one of the employees in the warehouse notices a garment that is very poor quality, they are instructed to put it aside. These "packers" are trained to quickly look over the garments as they hang them or fold them. This is considered 50% quality inspection. If the Warehouse Supervisor notices an unusually high number of rejections in a particular lot, she will request authorization from the Warehouse manager to institute 100% QC inspection. He will do an analysis of current shipping deadlines, additional labor costs involved, potential profits, etc. He will then take this information to senior management. He will inform them of the problem, the cost implications of not correcting it, the cost implications of performing 10% QC on the goods, and the impact on other scheduled tasks. If approved, 100% QC will be implemented in which each garment is thoroughly inspected. The garments are then separated into batches based quality - 1st, 2nd, 3rd, and 4th. If there is a la...
