Li & Fung

A review of the case Li &038 Fung (A) Internet issues is presented below in light of the future(a) two key methodologies SWOT analysis Porters five forces model A SWOT analysis of Li and Fung Strengths of the firm Reputable name and branding. well up informed and educated bitagement Tightly integrated supply fibril management with client base. Established decentralized management style efficacy to operate in both hard and soft markets. Existing inner(a) detonator Successful acquisition scheme (bought suppliers and competitors).Flexible and interactive externalize process. No inventories to manage. Weaknesses miss of initial knowledge on developing an e-commerce B2B profile. Lack of qualified personnel and subject matter experts to implement such(prenominal) a large undertaking. Poor selective information gathering and research prior to adopting the B2B doorway strategy Insufficient knowledge some the behavior of SMEs in exchangeable portals The initial plan of developi ng a B2B portal was based on the old parsimony model, change was not sufficiently accounted for. OpportunitiesThe internet is a true enabler to incorporate a more streamlined supply range management system. Allow customers to be able to be an intricate single out of the design process up to the point of product correct. Allow SMEs to figure in product procurement while enjoying a smaller missionary work rate. Ability to establish a line of products 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 look for to alter an existing market mechanism.Possible loss of key employees to new(prenominal) Internet companies through the promise of greater wage compensation for freshly acquired skills. Fear that an online community would acquire or partner with an old economy trading company, becoming an oernight competitor. If the technology was outsourced, th en the company could draw dependent on that outside company for their IT need especially when an advance was needed. The possibility of outside companies being able to access proprietary information, strategy, or the complete Li &038 Fung business model.Exposing the business to a new business environment with insufficiently prepared change strategies Service quality issues in an area where the firm has never operated before could tarnish its reputation and guide in loss of value The new e-commerce endeavor made both(prenominal) of their larger customers nervous in that they were afraid that Li &038 Fung would be flexile their business by working with their direct competitors. Porters five forces model traditionalistic Rivalry most of Li &038 Fungs rivals waste been acquired. Bargaining business leader of suppliers sold raw materials to suppliers at a premium.Bargaining power of buyers in effect(p) and considered high value. Threat of new entrants low threat of entry. T hreat of renewal products- possibilities of threat in this area. Business Concept Li &038 Fung is a formn standing Hong Kong based company that that has evolved from an export trading company to a coordinator of value-added services across the entire supply chain in a world(a), open manufacturing environment. They assess the clients product and delivery needs and orchestrate supply, manufacture and delivery in a very tailored and specialized way. CapabilitiesLi &038 Fung achieve their high level of service through an executive alliance of two close brothers who form a unique synergy of strategy and execution. In addition, they give senior managers sufficient autonomy to respond to needs of unique(predicate) customers. They are aided by a centralized IT as well as monetary and administrative support in Hong Kong. Managers have their own compensation package, and bonuses are based on profits with no ceiling. There is great incentive to achieve name and addresss. Li &038 Fung us e a three year planning approach in which a goal is established and a gap analysis aids in identifing step to get there.Each three year plan had a petty name or slogan for the ultimate goal. Through strategic acquisitions to expound reach of service into new markets such as Europe and India, Li &038 Fung had grown to nearly five times that of its closest competitor by 2000. Value The value Li &038 Fung provided its clients is the view and reach into a globose range of choices for performing tasks. Through their knowledge of the various raw materials suppliers, manufacturers and shippers, Li &038 Fung could provide a high degree of quality and reliability in all aspects of modulate fulfillment.This knowledge coupled with sophisticated centralized information management made its services quick and reliable. Threat of Competitors The threat of e-commerce over the Internet was not as direct as expected. The brothers were concerned about disintermediation but found that most Interne t businesses were not well conceived. sort of they learned that the threat came from the hype of Internet businesses capturing more investment capital thus enabling those companies to invest greatly in their companies and hire forth talent from Li &038 Fung, for example. Continuing ThreatsIn the next three year plan, Li &038 Fung will need to assess the possibility and terms/ benefit of end-to-end supply chain communications based on better technology in developing countries. Li &038 Fung maintain their own staff, on the ground, with each supplier, thus 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 dwell to be a threat with each increasing IT improvement. They will likewise need to attend to the legacy clients and how they fare against the B2B portal.Li &038 Fung1. What has been the historic strong suit and strategy for Li and Fung? Since Li and Fung was founded in 1906, the company has more than deoxycytidine monophosphate years of history and it is the main historic strength of Li and Fung. It accumulated lots of information and experience, which other competitors couldnt have owned without such a strong historic background. Li and Fung is a publicly traded family company. Speed, Solidarity, authenticity, affirm, and take for are the benefits to running a family business.For example, in a family business, people substructure think something in the morning and begin working on it in the afternoon after all, the family is a natural team. Trust 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 work returned from the United States. Fung brothers returned heralded Li and Fungs transition from a family- owned business to a professionally managed firm , with a planning and budgeting system in place for the first time.As more source of supply emerged in the chop-chop industrializing Asian economies, Li and Fung expanded its roleal intercommunicate 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 sales 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 so-called borderless manufacturing environment. Therefore, Li and Fung clients benefited in several ways supply-chain customization could shorten order fulfillment from three months to five weeks, and this faster turnaround allowed clients to reduce arsenal costs. Moreover, in its role as a middleman, Li and Fung reduced c o-ordinated and credit risks, and also offered quality assurance 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 offering clients virtual manufacturing, or product design services. Li and Fung was entrepreneurial, allowing senior managers to run 90 small, worldwide management teams as name and individual companies. These dedicated teams of product specialists focused on the needs of specific customers and were grouped under a Li and Fung corporate mbrella that provided centralized IT, financial and administrative support form Hong Kong. This decentralized corporate structure allowed for adaptability and fast reaction to seasonal shifts. In Li and Fung, performance-based promotion and compensation were carmine principles. Each Li and Fungs top executives negotiated individual compensation packages. Li and Fung bonuses were based on prof its without ceiling.