Li & Fung Case
BUSINESS 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
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Q1. Explain briefly Li & Fung’s business model today. Comment on the sources of its competitive advantage. Is it sustainable? Why?
Li & Fung: Li& Fung was founded in 1906 by Fung Pak-Liu (Pak-Liu) and Li To-ming (To-ming) in Guangzhou (South China) and was one of the first Chinese-owned export companies. Established in Hong Kong, Li & Fung is now one of the largest multinational trading companies in the developing world with annual sales of more than 4 billion dollars in 2002. Now, the company sees itself as an expert in supply chain management for its 350 or so major customers, providing the convenience of one-stop shopping for raw material sourcing, production planning and management, quality assurance, export documentation and shipping consolidation. Today, Li & Fung sources and manages the global supply chain for high-volume and time-sensitive consumer goods for large and successful companies such as The Limited, Warner Brothers, Avon etc.
Business Model: Business model of Li & Fung contains the following important aspects:
Customer segments: Li & Fung used to do simple sourcing: a customer asks to procure A at $X, and it finds a factory that can do that. Now, it provides one-stop shopping for customers: from product design and development; through raw material and factory sourcing, production planning and management, quality assurance, and export documentation; to shipping consolidation. And it packages all these into one and provides merchandise for private labels. Increasingly Li & Fung is also deeply involved in inventory management. Its customers are a
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 & Fung: Li& Fung was founded in 1906 by Fung Pak-Liu (Pak-Liu) and Li To-ming (To-ming) in Guangzhou (South China) and was one of the first Chinese-owned export companies. Established in Hong Kong, Li & Fung is now one of the largest multinational trading companies in the developing world with annual sales of more than 4 billion dollars in 2002. Now, the company sees itself as an expert in supply chain management for its 350 or so major customers, providing the convenience of one-stop shopping for raw material sourcing, production planning and management, quality assurance, export documentation and shipping consolidation. Today, Li & Fung sources and manages the global supply chain for high-volume and time-sensitive consumer goods for large and successful companies such as The Limited, Warner Brothers, Avon etc.
Business Model: Business model of Li & Fung contains the following important aspects:
Customer segments: Li & Fung used to do simple sourcing: a customer asks to procure A at $X, and it finds a factory that can do that. Now, it provides one-stop shopping for customers: from product design and development; through raw material and factory sourcing, production planning and management, quality assurance, and export documentation; to shipping consolidation. And it packages all these into one and provides merchandise for private labels. Increasingly Li & Fung is also deeply involved in inventory management. Its customers are a