BACKGROUNDFounded in 1906 in southern ChinaBegan as the ﬁrst Chinese-owned export companyToday it is the world’s leading consumer goods supply chainmanagement company, managing supply chains for retailers andbrands worldwideFamily owned and operated for over a centuryCurrently operated by Victor Fung and William LiHeadquartered in Hong Kong Chairman Victor Fung Services its customers globally through a sourcing network of over 80 ofﬁces in more than 40 various economies
WHAT DO THEY DO THE BUSINESS- Supply value added services across the supply chainServices Include:- Product Development-Raw Materials Sourcing-Production Planning-Factory Sourcing-Manufacturing Control-Quality Assurance-Export Documentation-Shipping Consolidation-Product Mix includes hard and soft goodsSoft goods = apparel, woven and knit garments for men, women & childrenHard goods= fashion accessories, holiday products, furnishings, giftware, handicrafts, home products, ﬁreworks, sportinggoods, toys, and travel goods-Customers Include:The Limited, Gymboree, American Eagle, Warner Brothers, Abercrombie & Fitch, Bed, Bath & Beyond, Tesco, AvonProducts, Levi-Strauss, Reebok, Royal Ahold, Guess Jeans, Bebe, Coke, Gap etc.
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
COMPETITORS & THREATSCompetitors: 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.
SWOT ANALYSIS Strengths Weaknesses1 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 large4 Established decentralized management style undertaking.5 Ability to operate in both hard and soft markets. 3 Poor information gathering and research prior6 Existing internal capital to adopting the B2B portal strategy7 Successful acquisition strategy (obtained suppliers and 4 Insufﬁcient knowledge about the behavior of competitors). SMEs in similar portals8 Flexible and interactive design process. 5 The initial plan of developing a B2B portal9 No inventories to manage was based on the old economy model, change10 Equal balance of technological and business sense was not sufﬁciently accounted for.11 Old business values and principles12 Positive corporate culture
SWOT CONT. Opportunities1 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) Threats1 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 strategies7 Service quality issues in an area where the ﬁrm has never operated before could tarnish its reputation and result in loss of value8 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
REFERENCESLaudon, K. & Kaudon, J. (2007). Management Information Systems: Managing the Digital Firm. Informationsystems, Organizations and Strategy (pp. 96-106). Upper Saddle River, NJ: Pearson Education, Inc.http://conversation.cgu.edu/is329/page72:1202149828Mcfarlan, 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