What does leveraging mean in a business?

A lot of the current crisis is attributed to the fact that firms were heavily leveraged. So what does it really mean to be leveraged? Leveraging means taking debt to increase the profit on the equity of a company Take this example, you own a business and you need to invest $1000 in order to make a profit of $250. That means, the return on your money (e uity! is 25". #ow, in this example suppose that for every $1000 dollars you invest in your business, you make an additional $250. $o, if you %an &et a loan at lower than 25", then your per%enta&e return on your own money will be more. 'or example, if you take an additional loan of a $1000 on 15". Then, at the end of the year your interest payment will be $150.

(nd your profit will be) 25" of $2000) $500 minus the additional interest of $150 whi%h %omes out at $*50. +n other words, instead of makin& $250 on your initial investment of $1000, you are makin& $*50 on your initial investment of $1000. This is be%ause you %ould find loans that were %heaper than the return on your %apital. (lmost every %ompany is levera&ed, whi%h means that all businesses have some amount of debt in their %apital stru%ture. The %urrent problem arose be%ause businesses took more debt than they %ould profitably mana&e. @@@@@@@

LEVERAGING BRAND IDENTITY: Leveraging Brand Identity to Develop a Commercial Strategy Brand identity should be an everyday tool for a fashion brand firstly, to identify those features that make the brand unique and second, to determine and implement a commercial strategy that leverages those unique features. This may seem obvious, however too often, the concept of brand identity seems elusive and foreign, particularly in an industry where levels of managerial control differ dramatically between small, designer-as-founder brands and large, corporate luxury groups. oreover, the industry is predicated !something on the expression of an

affirmed or denied about something else "

individual#s creative vision whether or not he or she is still living or involved with the running of the brand. $fter all, where the designer and founder are one and the same, what need is there to define the identity of the brand% The brand is whatever and wherever the designer#s aesthetic sensibility and tastes take him or her, or whatever the archives reveal.

&owever, it would be erroneous to underestimate the importance of brand identity at all levels of the luxury fashion industry, including instances where designer and founder are one and the same. This is because within luxury, the brand identity sits at the center of the organi'ation#s competitive advantage. This is quite anomalous !irregular, strange, abnormal, inconsistent,

unusual" . $ccording to the traditional viewpoint, competitive advantage occurs when an organi'ation acquires or develops a set of resources that allow it to outperform its competitors. Brand identity is left to marketers, almost as an afterthought, to develop visual clues to differentiate one organi'ation#s product from another#s. By contrast, the resource-based view holds little traction within the fashion industry, where it is the very uniqueness of the brand and what it stands for which enables it to differentiate itself from its competitors, and it is hoped, achieve and sustain levels of return that exceed the industry average. (iven the importance of brand identity in the luxury sector, it follows that clearly articulating the brand point of view in a concise and easily understood way, which should be absorbed at all levels of the organi'ation, is paramount. $pproaching brand identity like pillars to an ancient (reek temple, one can ask, )*hat are the three pillars which support the whole brand concept%+ The answer to this question the core brand pillars or the brand identity statement should perform three useful functions, 1. Ensure that all brand elements stylistic, mar!eting and

communication

are consistent and relevant.

-f the brand identity is focused on the three words ).eduction, /owerful and $ccomplishment,+ it follows that the fundamental drivers behind product, positioning, place and promotion need to line up. -n particular, the social media strategy of a brand a hot topic and one on which 0ashion#s 1ollective seeks to provide a fresh and insightful approach may well benefit from a strong

articulation of brand identity, as a means to ensure that both the choice of platforms and the content created is consistent with what the brand is about. ". #ocus the corporate vision and team effort in one clear direction. -n the same way that if all elements are consistent, the overall experience seamless, conversely, the existence of one 2arring or incongruous element shatters the illusion. $t the core of the organi'ation the very people who make up the heart and soul of the brand there needs to be a rally around a very clear message, such as ).eduction, /owerful and $ccomplishment,+ as it is incredibly important to make sure the brand pushes towards a shared vision. $. %rovide a vital chec!&and&balance system against 'hich the

organi(ation can evaluate its performance. $ strong concentration on brand identity can help focus the discussion to areas of development or evaluate whether ongoing areas of activity are in-line with the brand 34$ for instance, the decision to extend the product ranges into new categories. *hile there are multiple choices of extensions that a brand may choose from, rooting the decision on whether the category makes sense given the focus on ).eduction, /owerful and $ccomplishment,+ may help considerably in narrowing down the options. The vacancies created during the past season at the artistic helm of many fashion houses will soon be filled either with individual designers or with a creative team, which seems to be the new fashion, in, ahem, fashion. *hat will be of particular interest as the presentations for .pring5.ummer 6786 come to a close in 9ctober will be how the different new creative forces at work were able to navigate the delicate balance of respecting brand identity and proposing an innovative, fresh perspective in their respective collections.