A critique of the case "Li & Fung (A): Internet issues" is presented below in light of the following two key methodologies:
Porter's five forces model
A SWOT analysis of Li and Fung: Strengths of the firm
Reputable name and branding.
Well informed and educated management
Tightly integrated supply chain management with client base. Established decentralized management style
Ability to operate in both hard and soft markets.
Existing internal capital
Successful acquisition strategy (bought suppliers and competitors). Flexible and interactive design process.
No inventories to manage.
Lack of initial knowledge on developing an e-commerce B2B profile. Lack of qualified personnel and subject matter experts to implement such a large undertaking. Poor information gathering and research prior to adopting the B2B portal strategy Insufficient knowledge about the behavior of SMEs in similar portals The initial plan of developing a B2B portal was based on the old economy model, change was not sufficiently accounted for. Opportunities
The internet is a true enabler to incorporate a more streamlined supply chain management system. Allow customers to be able to be an intricate part of the design process up to the point of product manufacture. Allow SMEs to participate in product procurement while enjoying a smaller commission rate. Ability to establish a business plan to develop markets in which surplus products could be sold (Electronic Stock Offer - eSO) Threats
Phasing the "middle man" out of the trading scheme is a risky strategy and an attempt to alter an existing market mechanism. Possible loss of key employees to other Internet companies through the promise of greater wage compensation for newly acquired skills. Fear that an online company would acquire or partner with an old economy trading company, becoming an overnight competitor. If the technology was outsourced, then the company could become...
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