STRATEGY CASE ON LI & FUNG By SUJITHA VATTIKONDA (57) PGDM-IB Submitted to: PROF.C.P.JOSHI K.J. Somaiya Institute of Management Studies and Research Mumbai ` Q1. Explain briefly Li & Fung’s business model today. Comment on the sources of its competitive advantage. Is it sustainable? Why? Li &
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1. What has been the historic strength and strategy for Li and Fung? Since Li and Fung was founded in 1906‚ the company has more than 100 years of history and it is the main historic strength of Li and Fung. It accumulated lots of information and experience‚ which other competitors couldn’t have owned without such a strong historic background. Li and Fung is a publicly traded family company. Speed‚ Solidarity‚ authenticity‚ trust‚ and control are the benefits to running a family business. For example
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Li & Fung (A): Internet Issues What has been the historic strength and strategy of Li and Fung? 100 years of history Publicly traded family company Both William & Victor educated at HBS Victor earned Ph.D. & taught there for 4 years 1972 Returned to Hong Kong to modernize company management Hong Kong Based Trading Company – by 2000 69% sales USA 27% sales Europe Major retailers (the Limited‚ Gymboree‚ American Eagle‚ etc) Global sourcing network Holistic Supply Chain Management
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The goal of effective supply chain management is to "gain competitive advantage through optimizing flows within the enterprise". The Hong Kong listed company Li & Fung Ltd represents one of the world ’s best examples of achieving this goal. The company financial history clearly tells that story. Just last year‚ L&F saw profit attributable to shareholder increase by 23%. In fact‚ over the past 14 years‚ L&F has seen steady compound annual growth rate of 22%. Not bad performance for a small family
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Strategy Management (Case study 1: Li& Fung) SWOT Analysis Strength Opportunity Extensive network of suppliers (global reach supplier with SCM) Provision of value added service (customer centric structure) Entrepreneur corporate culture Low –end with hard goods Emerging Market Weakness Threaten Over dependence on US Market Vast supplier network makes it tough to maintain Increasing expense from acquisiton Continuing global economy downturn - Collapse of the American
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Introduction Li and Fung‚ a Chinese company founded in 1906 has been experiencing high growth rates due to a series of acquisitions and the offer of a wide range of services in the whole elements of the supply chain (from raw material till finished goods). Recently the question its managers have to deal is how to face the challenges posed by the internet‚ more specifically‚ its lifung.com (after was renamed studiodirect.com) internet site. This company was an extension of its brick and mortar operations
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such as Li & Fung need to be paid. Why‚ after paying Li & Fung a fee‚ buyers and suppliers still find it valuable to deal through an intermediary? In other words‚ why don’t they trade directly? Li & Fung provides an interface between multiple buyers and suppliers by linking larger retailers in the developed world to a network of suppliers and factories throughout Asia. Buyers still find it valuable to deal through an intermediary because the experience and connection of Li & Fung in Asia
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How does Li & Fung make the supply chain more responsive? Li & Fung manages about 7500 suppliers in more than 26 countries but does not run any of the factories because that would be a humungous task to manage such a large workforce. But working with these factories the company takes anywhere from 30% to 70% of their production so that Li & Fung is their largest customer. Li & Fung is customer focused company where they focus an entire division on serving one customer or has a smaller
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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
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How does Li & Fung create value for its customers and suppliers Value for customers: low cost‚ high quality‚ fast delivery time‚ and customized services; and these are achieved by a. Knowledge‚ experience‚ and network of connections with around thousands of suppliers and because of the knowledge network‚ the company knows who is good at producing what at the lowest cost level and delivery time b. Organizing around customer-oriented divisions‚ combining the competitive advantages of different countries-
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