Li & Fung

A retrospect of the case Li & Fung (A) meshwork issues is presented infra in light of the following devil key methodologies SWOT compend Porters aboriginal forces model A SWOT digest of Li and Fung Strengths of the firm Reputable human body and branding. Well informed and educated direction Tightly integrated hand over progress worry with client base. Established change management style cogency to track d avow in twain hard and demulcent markets. Existing internal capital palmy acquisition strategy (bought suppliers and competitors).Flexible and interactional design process. No inventories to manage. Weaknesses miss of initial knowledge on maturation an e-commerce B2B profile. Lack of qualified personnel and subject number experts to implement such a mountainous undertaking. Poor information gathering and look into prior to adopting the B2B portal strategy insufficient knowledge about the behavior of SMEs in similar portals The initial outline of developi ng a B2B portal was establish on the senile economy model, change was non sufficiently accounted for. OpportunitiesThe internet is a full-strength enabler to in incorporate a to a greater extent streamline supply compass management system. stand customers to be able to be an manifold part of the design process up to the point of product manufacture. Allow SMEs to act in product procurement small-arm enjoying a smaller commission rate. Ability to establish a parentage think to develop markets in which surplus products could be interchange (Electronic Stock Offer eSO) terrors Phasing the mettle man out of the handicraft scheme is a risky strategy and an feat to alter an existing market mechanism. attainable loss of key employees to other net companies through the promise of keener pay compensation for in the alto engageherly acquired skills. Fear that an online friendship would acquire or partner with an old economy trading phoner, becoming an gigantic competi tor. If the applied science was outsourced, then the fraternity could die dependent on that outside company for their IT affects especially when an upgrade was needed. The gap of outside companies being able to admission price proprietary information, strategy, or the complete Li & Fung headache model.Exposing the business to a newborn business environment with insufficiently watchful change strategies Service quality issues in an area where the firm has never operated out front could tarnish its reputation and result in loss of value The new e-commerce purpose made some of their larger customers neuronic in that they were afraid that Li & Fung would be compromising their business by working(a) with their direct competitors. Porters five forces model traditionalistic Rivalry well-nigh of Li & Fungs rivals commit been acquired. negotiate power of suppliers sold lovesome materials to suppliers at a premium.Bargaining power of buyers efficient and considered extrav agantly value. flagellum of new entrants low threat of entry. flagellum of substitute products- possibilities of threat in this area. pipeline Concept Li & Fung is a long standing Hong Kong based company that that has evolved from an export trading company to a coordinator of value-added work across the entire supply mountain range in a global, open manufacturing environment. They appreciate the clients product and delivery needs and take supply, manufacture and delivery in a very tailored and specialized way. CapabilitiesLi & Fung achieve their high level of serve well through an executive relationship of ii close brothers who form a incomparable synergy of strategy and execution. In addition, they found senior managers sufficient autonomy to suffice to needs of specific customers. They are assist by a centralized IT as well as financial and administrative co-occurrence in Hong Kong. Managers have their own compensation package, and bon gives are based on profits wi th no ceiling. There is great incentive to achieve purposes. Li & Fung use a trey year cooking approach in which a goal is established and a gap analysis aids in identifing steps to get there.Each collar year plan had a short name or slogan for the ultimate goal. Through strategic acquisitions to expand reach of service into new markets such as Europe and India, Li & Fung had grown to nearly five generation that of its closest competitor by 2000. rank The value Li & Fung provided its clients is the view and reach into a global range of choices for performing tasks. Through their knowledge of the various raw materials suppliers, manufacturers and shippers, Li & Fung could provide a high degree of quality and reliability in all aspects of order fulfillment.This knowledge twin with sophisticated centralized information management made its services quick and reliable. Threat of Competitors The threat of e-commerce over the Internet was non as direct as expected. The brothers wer e have-to doe with about disintermediation but found that most Internet businesses were not well conceived. sooner they learned that the threat came from the hype of Internet businesses capturing more investment capital therefore enabling those companies to invest greatly in their companies and hire away talent from Li & Fung, for example. Continuing ThreatsIn the next three year plan, Li & Fung testament need to assess the possibility and greet/ get ahead of end-to-end supply chain communication theory based on improved technology in developing countries. Li & Fung celebrate their own staff, on the ground, with each supplier, olibanum ensuring valid business data in their system. From a market assesment viewpoint they will have to prove the value of that cost versus other entrants into this field that may assess suppliers differently. Channel conflict would continue to be a threat with each change magnitude IT improvement. They will also need to regard to the legacy clie nts and how they fare against the B2B portal.Li & Fung1. What has been the past strength and strategy for Li and Fung? Since Li and Fung was founded in 1906, the company has more than atomic number 6 years of history and it is the main historic strength of Li and Fung. It accumulated wads of information and experience, which other competitors couldnt have owned without such a heavy historic background. Li and Fung is a in public traded family company. Speed, Solidarity, authenticity, trust, and control are the benefits to running a family business.For example, in a family business, people place think something in the morning and depart working on it in the good afternoon after all, the family is a natural team. perpetrate is essential in all business and family businesses get a high level of trust among family members. In the early 1970s, Fung brothers who were both educated at Harvard Business inculcate returned from the United States. Fung brothers returned heralded Li an d Fungs transition from a family- owned business to a professionally managed firm, with a supply and budgeting system in place for the counterbalance time.As more source of supply emerged in the rapidly industrializing Asian economies, Li and Fung expand its arenaal network of offices throughout the Asia-Pacific region and this can be contributed to the fact that Li and Fung was Hong Kong based. By 2000, Li and Fung became a $2 billion global export trading company sourcing and managing the global supply chain for high-volume, time-sensitive consumer goods. 69% of Li and Fungs gross revenue were in the United States and 27% in Europe.With 48 offices in 32 countries, the company provided value-added services across the entire supply chain in a supposed borderless manufacturing environment. Therefore, Li and Fung clients benefited in several shipway supply-chain customization could shorten order fulfillment from three months to five weeks, and this faster turnaround allowed clien ts to slash inventory costs. Moreover, in its role as a middleman, Li and Fung reduced unified and credit risks, and also offered quality impudence to its customers.Furthermore, with a global sourcing network and economies of scales. Li and Fung could offer lower cost and more flexible sourcing than its competitors. Li and Fung even started go clients virtual manufacturing, or product design services. Li and Fung was entrepreneurial, allowing senior managers to run 90 small, worldwide management teams as eliminate and individual companies. These dedicated teams of product specialists rivet on the needs of specific customers and were class under a Li and Fung corporate mbrella that provided centralized IT, financial and administrative support form Hong Kong. This decentralized corporate coordinate allowed for adaptability and rapid reaction to seasonal shifts. In Li and Fung, performance-based promotion and compensation were cardinal principles. Each Li and Fungs pate execut ives negotiated individual compensation packages. Li and Fung bonuses were based on profits without ceiling.