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Hermès – Strategy Insights Of Luxury Brand

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Hermès Strategy Insights Of Luxury Brand,Startup Stories,Latest Business News 2019,Strategy of Luxury Brand,World Most Valuable Luxury Brand,Best Global Brands,Hermès Paris,Insights Behind Hermès Luxury Brand,Hermès History,Hermès Founder,Hermes Brand History


Hermès, a French fashion luxury goods manufacturer, has been ranked consistently as world’s most valuable luxury brand and one of the best global brands.  Hermès, which is also known as Hermès International or Hermès Paris, has maintained an iconic status in the luxury market with products ranging from leather goods, perfume and lifestyle accessories to watches.

In 2018, the Company’s net profit rose to 1.41 billion euros, a 16 % increase from 1.22 billion euros in 2017.  Fifty percent of the Company’s profits came from the brand’s leather goods and saddlery products. With competitors like LVMH and Richemont in the luxury business, Hermès still enjoys the top position in the market because of its exquisite craftsmanship and eye for detail through the entire manufacturing process. 

 

History

 

Founded in the year 1837 by Thierry Hermès, the Company’s initial purpose was to build saddles, bridles and other leather riding gear for European nobility.  After taking over the Company from his father, Charles-Émile moved the Company to 24 Rue Du Faubourg Saint-Honore in Paris in the 20th century. This remains the global headquarters of Hermès till date.

Through the generations, the Company slowly expanded from selling leather saddles to other products.  The Company started selling “Haut à Courroies” bags in 1900, which were used by riders to carry saddles in it.  The Company introduced its first leather handbag in 1922, a product which has played a significant role in increasing the popularity of Hermès in the global market. 

 

Strategy

Hermès has a unique strategy in place to ensure it retains its position on top in the market.  Hermès is very strict about the traditional way of manufacturing and rejects any form of mass production.  Every product produced by the Company is handmade by craftsmen who are trained for a period of two to three years.  According to the Company, every product is made from beginning to end by a single person to preserve the product quality and uniqueness.

Jean Louis Dumas, the chairman of Hermès from 1978 to 2006, told Vanity Fair, “We don’t have a policy of image; we have a policy of product.”  Hermès has always claimed, it values creativity more than anything and to this day, maintains a deep connection to its French identity.  Most of Hermès’ products are manufactured in France and 60 % of the Company’s workshops are located in different parts of the Country.

Another strategy the Company uses is giving a sense of exclusivity.  In order to do so, Hermès uses the “Limited Edition” strategy and releases only a handful of products at a time.  The Birkin bag, created by Hermès for Jane Birkin in 1982, remains the most popular product by the Company. One of the reasons behind this is the brand’s strategy to make the customer wait for a few months or a year after making an order.  The cost of each Birkin bag ranges from 7,000 USD to 300,000 USD. Every Birkin bag is made of crocodile skin and has exquisite handiwork by a single craftsman.

The brand continuously collaborates with other ultra luxury brands to maintain its reputation in the market.  Hermès has collaborated with luxury designers like John Lobb, Saint Louis as well as tech mogul Apple. Each collaboration brought the Company media attention and skyrocketed its brand value and sales.

 

Keeping it in the family

For the last 180 years, since the founding of Hermès, it has been run exclusively by the Hermès family.  Currently, the brand is managed by Axel Dumas (6th generation,) who is the sole manager of the Company. The Company maintains its independence and uniqueness by keeping the control within the family. 

 

Even though Hermès  is 180 years old, it still maintains an ultra luxury status because of its ability to evolve by maintaining a perfect balance between tradition and modernity.  With its clever strategy of exclusivity, controlled marketing and limited edition, Hermès is able to engage potential and wealthy clients, which ensures continuous profits and growth of the Company.

 

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Emerging Startup Stories

How KhataBook Grew From Simple SMS App To Leading FinTech App In India

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How KhataBook Grew From Simple SMS App To Leading FinTech App In India

If you are an Indian citizen living in any of the urban cities of the Country, you might not have heard of this application until recently when the Indian Cricket Team Captain Mahendra Singh Dhoni, invested in a startup called KhataBook.  The question that was on many minds when Dhoni invested in this startup was what is KhataBook doing that has made Dhoni, one of the most popular celebrities in India, invest in this finance technology.  However in order to answer this question, we need to understand how KhataBook came into being and what it is today.

Beginnings

KhataBook was founded by Ravish Naresh, Dhanesh Kumar, Vaibhav Kalpe and Ashish Sonone in 2018.  The idea for KhataBook however has been on the minds of the founders for a long time before 2018.  It all began when Ravish Naresh along with his friends began a digital spending manager app called Kyte.ai in 2016.  The app lets a user understand their spending patterns by making use of the transactional SMS alerts.  The initial traction for Kyte was good but the growth was not reaching the scale the founders had in mind.  After researching the user data they realized that most of their users are based out of metro cities.  Upon digging deeper the data revealed that first time online users did not deal in digital transactions. They were still relying on traditional ‘khata,’ or ledger books. That is when the idea for KhataBook materialised for the Kyte team in 2018.  ‘Khata’ simply stands for account in Hindi.  

Growth

In 2018, the Kyte team decided to work on a simple cash management application called KhataBook on the premise that a real life ‘Khata’ can be replaced by a digital ‘Khata.’  The idea was to shift the focus of small time traders and businesses to move their accounts to digital platforms.  The team also included Kyte’s SMS checking mechanism to track data and provide free SMS updates on a user’s customer transactions.  This feature has ensured a three times faster return on credits for their users. The app has recorded $ 5 billion+ cash transactions by November 2018.  What makes this app attractive is that it employs artificial intelligence to track SMS alerts for transactions and use that to keep a track of accounts and spending.  With the internet penetration Reliance Jio offered, it was easier for KhataBook founders to target users in smaller cities and towns.  KhataBook is unique in the finance technology sector and has no major competitors.  However, OkCredit and Vyapaar app are the closest competition KhataBook has in the market currently.

ALSO READ: How One Indian Startup Is Tackling The Problem Of Floral Waste

Kyte is still an ongoing process for the founders of KhataBook, but KhataBook has managed to record 100x of Kyte’s users.  KhataBook currently has 5.5 million active users per month and the startup aims to reach 20 million active users by the end of 2020.

Upon reaching a quick growth KhataBook got its first big publicity push when Dhoni invested an undisclosed amount in the startup and also became its brand ambassador.  KhataBook is now being used in more than 5000 cities and the users range from kirana shops, merchants, recharge shops.  The app currently supports eleven languages and even has users in Nepal, Pakistan and Bangladesh.

 

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Types And Details About Corporate Loans

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Types And Details About Corporate Loans

Guest post by Ashish Gupta

Corporate loans are loans that are taken for the purpose of business. There are many banks which provide corporate loans.  However, the eligibility criteria and the upper limit for the sanction of such loans would differ.  The loans are generally sanctioned for those businesses that have been in existence for at least 5 years and have been making profits for a period of at least 2 years before making such an application for the loan.  The funds of the loan when sanctioned can be used for long term as well as short term business expenses.

Corporate loans can be either secured or unsecured loans.  Secured corporate loans require collateral like business assets, for the sanction of the loan, and such collateral can be seized in case of non payment of principal or interest amount depending on the contract between the lender and the borrower.  On the other hand, unsecured corporate loans are those that do not require any collateral as such.  However, unsecured loans can be obtained only if the borrower has a good credit score.

Types of Corporate Loans

There are various types of corporate loans offered to be lent by financial institutions.  Few of them are:

  1. Term loan is a loan that can be secured for the purposes of buying property for business, or for buying new equipment with better technological advancement.
  2. Loans against securities are those where the borrower can obtain a loan by pledging securities like mutual funds, bonds, insurance policies, and any other securities of similar nature.
  3. Letter of Credit Facility and Bank Guarantee is when the bank acts as a surety for transactions made by the concerned person for business purposes.
  4. Cash Credit Facility is wherein the borrower can avail up to 70% to 80% of the value of assets that he/she pledges for business needs.
  5. Overdraft Facility is an offer by the bank to debit your current account beyond the money that is present in there. Such a facility is generally provided according to the assets pledged by the borrower.
  6. Channel Financing helps the distributors in obtaining the funding required for buying new equipment, tools and other items.
  7. Working Capital GST Corporate loans help in attaining quick cash on the basis of the applicant’s GST returns and also eliminates some cumbersome paperwork.
  8. Drop-line overdraft facility is where the lender deposits certain money in a separate account for the borrower, from which the latter can utilise business expenses.  The speciality of this kind of loan is that the borrower only needs to pay interest up to the amount of loan that has been used by him/her from the money deposited in the account.

ELIGIBILITY CRITERIA

The eligibility criteria for each financial or lending institution may vary according to their policies and rules.  However, few of the basic requirements that are necessitated by almost all lending institutions for availing a corporate loan are as follows:

  1. AGE: The applicant must at least be 21 years old, but less than 65 years.
  2. INCOME: The expected annual income of the applicant is generally Rs.1, 00, 00,000. However, some financial institutions may provide loans for a slightly lower income level as well.
  3. INCOME TAX RETURN: The income tax return for at least one year must be filed before applying for such a loan. Some lenders may even expect the applicant to have filed income tax returns for two years before applying for the loan.
  4. PROFIT: Most lenders require that the business must have made profits for at least 2 years before submitting the application for a corporate loan.
  5. CREDIT RATING: The applicant must have good credit ratings and credit score before making an application for a corporate loan, especially for those who wish to obtain unsecured loans.
  6. STABILITY: The history of the business is also looked into by financial institutions to know the stability and growth of the business. 

Documents Required

The documents required may also be subjective depending upon the lender.  However, few documents are fundamental that all lending institutions would need when an application for a corporate loan is submitted. They are:

  1. Permanent Account Number card, or the PAN card
  2. Identity proof
  3. Address proof
  4. Bank Statements for the past 6 months of one years
  5. Continuance proof of the business
  6. The latest Income Tax Returns which have been filed
  7. Other Documents like the certified copies of Memorandum of Association and Articles of Association of the company, or a declaration of sole proprietorship or partnership deed.

Things to consider before applying for a corporate loan

  1. CREDIT SCORE: The applicant must check his/her credit score before applying for such a loan, as credit scores would drastically affect the availability of a loan.
  2. INTEREST RATE: It is important to analyse the interest rates of each bank to ensure that more of the profits in business do not end up getting spent for interests.
  3. TENURE: The tenure of the loan is another important aspect that needs to be considered and analysed for the benefit of the applicant’s business.  If the applicant knows that more profits can be made quickly, then he/she must opt for a shorter term of repayment of loan.  On the other hand, if the applicant is aware that the business might not make profits immediately, then it is better to opt for a long-term loan.
  4. FILING INCOME TAX RETURNS:  The applicant must ensure that the ITR has been filed for at least 1 or 2 years before applying for a corporate loan.
  5. OTHER ALTERNATIVES: The applicant must consider other feasible alternatives than loans while in need of funds for business. For instance, if the business is a registered company, then alternatives such as shares, and debentures must also be considered.

Term of repayment for corporate loans

The term for repaying corporate loans depends on the contract between the lender and the borrower, and the kind of loan that has been secured by the borrower.  The repayment period of some corporate loans may be about 12-48 months, or it can even extend up to 5 years.

 

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How The Events Industry Is Impacted By The COVID-19 Pandemic

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How The Events Industry Is Impacted By The COVID-19 Pandemic

The COVID-19 pandemic has undoubtedly changed the way businesses will operate in the future once the world recovers from the aftermath of the virus.  The demand across various sectors went haywire and in some cases has completely dried up, which means these are the industries which are the worst affected.  These are industries which rely on mass gatherings of people and in the current scenario governments across the world are cracking down heavily on large gatherings.  Aviation, Tourism, Movies, Malls, Hospitality, Transportation, sports and events are the worst hit amongst all the sectors.  Events industry in particular falls under the bracket of Meetings-Incentives-Conventions-Exhibitions (MICE) and is a Trillion dollar industry worldwide.  The COVID-19 pandemic is responsible for impacting almost 25 millions jobs across the world.  This is just the tip of the iceberg and the actual impact could be much higher when we consider indirect jobs and sporting events.

Multiple large scale events across the globe have been cancelled or deferred until further notice.  The cancellations began in February when the world is waking up to the fact that the virus is highly contagious and is spreading across borders with ease.  The first major cancellation was the Mobile World Congress 2020 edition, which takes place in Barcelona and is an event to exhibit mobile communication technologies.  This was just a premise for what was to follow in the coming months.  

In a survey done by Events and Entertainment Management Association (EEMA) and which was shared with Ernst & Young the events and exhibitions sector in India is expected to take a one trillion rupees hit.  According to the report, in India alone it is estimated that 60 million people are unemployed and another 10 million directly affected by the crisis.

Business events like Annual General Meets (AGM,) corporate retreats, product launches, partner meets, conferences and seminars have been cancelled and have instead shifted online to Zoom, Google Meets, Skype and YouTube.  The best example would be the much anticipated OnePlus product launch of their OnePlus 8 series of smartphones.  The event was live telecasted on YouTube and the smartphone is now available for purchasing on e-commerce platform Amazon.

Exhibitions and trade fairs have been cancelled all over the world.  One of the biggest trade fairs which is the Dubai Expo 2020, has cancelled in light of the pandemic.  Some of the largest sporting events in the world like Tokyo Olympics, Football’s Premier League, National Basketball Association (NBA) and the much anticipated Indian Premier League in India stands cancelled at the moment.  

Corporates have been using video conference facilities for conducting internal meetings already, mostly with the intention of trying to run the operations effectively with due consideration to the ‘work from home’ initiative.  Video conferencing solutions by Go-to-Webinar, Kaltura and Zoom have seen an unprecedented surge in demand.  In India Event and Entertainment Management Association (EEMA) have urged the government to extend processes such as tax refunds, loan facilities for the Ministry of Micro, Small and Medium Enterprises (MSME) sector and artistes to help reduce the negative impact on the livelihood of people involved in the entertainment and event space.  The Indian Government has responded with initiatives for the MSME sector with its Atma Nirbhar Package.

At present, technology applications such as video-conferences, webinars, virtual (events, meetings) and others are playing their individual parts to try and keep the operations running, especially for the corporate segment.  In the future however, we can see a hybrid approach to hosting events by integrating both virtual and physical components.  However, we will have a better understanding once the industry resumes its operations in three to four months down the line.

 

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