2. BACKGROUND
Founded in 1906 in southern China
Began as the first Chinese-owned export company
Today it is the world’s leading consumer goods supply chain
management company, managing supply chains for retailers and
brands worldwide
Family owned and operated for over a century
Currently operated by Victor Fung and William Li
Headquartered in Hong Kong Chairman Victor Fung
Services its customers globally through a sourcing network of over 80 offices in
more than 40 various economies
3. WHAT DO THEY DO
THE BUSINESS
- Supply value added services across the supply chain
Services Include:
- Product Development
-Raw Materials Sourcing
-Production Planning
-Factory Sourcing
-Manufacturing Control
-Quality Assurance
-Export Documentation
-Shipping Consolidation
-Product Mix includes hard and soft goods
Soft goods = apparel, woven and knit garments for men, women & children
Hard goods= fashion accessories, holiday products, furnishings, giftware, handicrafts, home products, fireworks, sporting
goods, toys, and travel goods
-Customers Include:
The Limited, Gymboree, American Eagle, Warner Brothers, Abercrombie & Fitch, Bed, Bath & Beyond, Tesco, Avon
Products, Levi-Strauss, Reebok, Royal Ahold, Guess Jeans, Bebe, Coke, Gap etc.
4. BUSINESS MODEL
Clients benefited from:
-Differentiation of product options
-Low cost products
-No minimum orders
-Reduced Inventory
- High quality products with timely
response
-Order flexibility
6. COMPETITORS & THREATS
Competitors:
UPS Supply Chain Solutions
William E Connor & Associates
APL Logistics
Through strategic acquisitions to expand reach of service into new markets such
as Europe and India, Li & Fung had grown to nearly five times that of its closest
competitor by 2000.
7. SWOT ANALYSIS
Strengths Weaknesses
1 Reputable name and branding. 1 Lack of initial knowledge on developing an e-
2 Well informed and educated management commerce B2B profile.
3 Tightly integrated supply chain management with 2 Lack of qualified personnel and subject matter
client base. experts to implement such a large
4 Established decentralized management style undertaking.
5 Ability to operate in both hard and soft markets. 3 Poor information gathering and research prior
6 Existing internal capital to adopting the B2B portal strategy
7 Successful acquisition strategy (obtained suppliers and 4 Insufficient knowledge about the behavior of
competitors). SMEs in similar portals
8 Flexible and interactive design process. 5 The initial plan of developing a B2B portal
9 No inventories to manage was based on the old economy model, change
10 Equal balance of technological and business sense was not sufficiently accounted for.
11 Old business values and principles
12 Positive corporate culture
8. SWOT CONT.
Opportunities
1 The internet is a true enabler to incorporate a more streamlined supply chain management system.
2 Allow customers to be able to be an intricate part of the design process up to the point of product manufacture.
3 Allow SMEs to participate in product procurement while enjoying a smaller commission rate.
4 Ability to establish a business plan to develop markets in which surplus products could be sold (Electronic Stock
Offer - eSO)
Threats
1 Phasing the "middle man" out of the trading scheme is a risky strategy and an attempt to alter an existing market mechanism.
2 Possible loss of key employees to other Internet companies through the promise of greater wage compensation for newly
acquired skills.
3 Fear that an online company would acquire or partner with an old economy trading company, becoming an overnight
competitor.
4 If the technology was outsourced, then the company could become dependent on that outside company for their IT needs
especially when an upgrade was needed.
5 The possibility of outside companies being able to access proprietary information, strategy, or the complete Li & Fung
business model.
6 Exposing the business to a new business environment with insufficiently prepared change strategies
7 Service quality issues in an area where the firm has never operated before could tarnish its reputation and result in loss of value
8 The new e-commerce endeavor made some of their larger customers nervous in that they were afraid that Li & Fung would be
compromising their business by working with their direct competitors
9. REFERENCES
Laudon, K. & Kaudon, J. (2007). Management Information Systems: Managing the Digital Firm. Information
systems, Organizations and Strategy (pp. 96-106). Upper Saddle River, NJ: Pearson Education, Inc.
http://conversation.cgu.edu/is329/page72:1202149828
Mcfarlan, W. & Young, F. (2005). Harvard Business School Cases: Li & Fung (A)(B) Internet issues (pp. 1-23).
Value Chain Framework of Li & Fung. Retrieved November 9, 2008, from web site: http://lifung.com/eng/business/
service_chain.php
