The Case Study of Li & Fung – the Global Value Chain Configurator

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The Case Study of Li & Fung – The Global Value Chain Configurator  

TITLE: THE CASE STUDY OF LI & FUNG LIMITED
ABSTRACT:
The case illustrates the business history and evolution of Li & Fung Limited, one of the Hong Kong’s oldest and largest trading companies. The case gives an overview of its evolution from a traditional trading company to a global export giant and a customers’ supply chain management giant. It discusses the company’s strategies to change its business models to the changing external environment and customer needs and preferences. The case elaborates the company’s strategies such as integration of operational strategy with its organizational strategies, customer-centric organizational structure, supply chain management strategies, technology and Internet initiatives, and globalization efforts to become a global company. Finally the case analyses the current situation of Li & Fung of 2004 and future challenges facing ahead. HISTORY:

The Company was formed in early 1900 in Hong Kong.LI & Fung was formally established in Hong Kong as limited company in 1937.In 1943 Fung family became the sole owner of the company. In 1973 the company went public and was listed on the Hong Kong Stock Exchange. In 1989 the company again made a private company. In 1992, the firm’s export trading business, I & Fung (trading)Pvt. Limited, was relisted on the Hong Kong Stock Exchange. By the end of 20th century, I &Fung was a premier global trading company, with more than 95% of revenues coming from North America and Europe. East Asia and South Hemispherecounted the rest. The company’s major products were both soft goods and hard goods. The soft goods constitute garments whereas the hard goods constitute fashion accessories, footwear, gifts, and furnishings. KEYWORDS:

Value Chain Configuration, SCM Strategy, Global Supply Chain, Internet-enabled Supply Chain, Knowledge Sharing, Customer-Centric Organizational Structure, Global Expansion, Hong Kong's Export Trade Industry and External Environment  

OBJECTIVE:
1. To study the efficient and effective value chain management for a global trading company and its importance in maintaining its global competitive advantage.2. To analyze the role of Information Technology (IT) played in a company in expanding its business globally3. Study the importance of acquisitions and alliances in a company's globalizationstrategies.4. Understand how innovation, differentiation and customization can be used as strategic and competitive advantages by a company, to maintain its leadership in the domestic market, and emerge as global play5. To study how visionary leadership and management capability can work as a core advantage for a company to attain success in the global market ISSUES:

1. The company’s much hyped B2B initiative “Studio Direct” failed to get expected response. Symptom: Due to conversion of Studio Direct from a full service e-commerce company into a private label golf wear specialist and the company reduced its stakes from 57 to 15%.The Studio Direct failed to major progress in U.S. market which was not conducive for its growth. 2. The continuous fall in the growth of the revenues and revenues Symptom: For the fiscal year ending December 31, 2000, the growth in profit and revenue came down to 14.35 percent and 12.06 percent respectively, by the fiscal2003. The sharp decline in overall revenues derived from European market during early 2000s, was also a bad symptom. 3. The high dependence on large retailers of Europe and America. Symptom: a major consolidation in North American retailing industry, the largest export market for Li & Fung, might severely affect the company’s business.4. The fear of “antisurge” quotasymptom: The United States and Europe were entitled to impose “antisurge” quotasuntil the end of 2008, in case they felt any threat to domestic industries due to exports. ALTERNATIVES:

1.The optimal use of global acquisitions for manufacturing purposes. 2.The expansion...
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