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Copy of Li & Fung (BIS Presentation)

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Ashikur Rahman

on 24 November 2014

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Transcript of Copy of Li & Fung (BIS Presentation)

Colin Yong
Mohammad Enamul
Cherdass Dunamos

Company Background
Business Model
Industry Analysis
&
Business Evaluation

Value
Chain

Li & Fung
Case Study By
Information
&
Internet
Technologies

Recommendations
1937-1945
1970s
1995
1906
1937-1945
1937 - Formally established in Hong Kong.
1943 - Company taken over by Fung Hon-Chu.
1945 - Ling To-Min left the company.
1920s-1930s
Developed into warehousing and manufacture of handicrafts.
1970s
Sourcing Agent
1975
1979
Li & Fung expanded its trading network throughout East Asia as China opens up its trade network.
Li & Fung Trading
Li & Fung Distribution Group
Li & Fung Retailing Group
1920s-1930s
1995
McFarlan, FW & Young, F 2000, Li & Fung (A): Internet Issues, Business Source Complete, EBSCOhost.
Established by Fung Pak-Liu and Ling To-Min in Guangzhou, China as an intermediary company selling export goods.
Supply Chain Manager
The company utilizes the internet to manage their supply chain to be more effective and more attractive to worldwide clients.
1906
Enterprise Resource Planning (Internal Operations)
Export Trading System (XTS)
Enterprise Resource Planning
Financial Management
Oracle's Financial Management Solutions
Extranet
Sites
Electronic Data Interchange
Sterling Gentran
Data Sharing & Storage
Industry Analysis
Current Business of Li & Fung, the company is operating a Supply Chain Business with a low cost delivery system.
Competitors
UPS Supply Chain Solutions
Willian E-Connors & Associates
APL Logistics
Wel-Mart
Amazons


SWOT
ANALYSIS

Strengths
Reputable Name and Branding
Some of the big clients Li & Fung are working with includes Coca-Cola, The Limited and The Gap.
Supply chain management is highly integrated with the customers
Eliminated the need to manage inventories
Advantageous mix of IT and old-style business practices
Positive Corporate Culture
Weakness
Inadequate familiarity on dealing with SMEs which eventually led to the fall of the B2B portal, lifung.com
Dependence on a small number of major customers for a substantial share of revenues

Targeting the SMEs in the product procurement industry through the offering of a reduced rate of commission
An effort to push excess products to discount retailers via an online portal
Opportunities

Brick-and-mortar companies adopting an IT approach may become significant competitors
Reproducibility of Li & Fung’s business strategy and model by the competitors
Weak world economy may affect the revenues and growth of Li & Fung in certain markets

Threats
Human
Resource Management
Communications
VOIP Phones
Web Conferencing
Involve SMEs with the design and planning of a B2B portal
Collection of data and feedback from customers
Incentive schemes for suppliers
Procurement
On-site
Inspectors & PDA Technology
Business Strategy
Holstein, WJ 2002, ‘Middlemen Becomes Master’, Chief Executive Magazine, October, pp. 1-2.
Nagappan, P 2009, 'Li & Fung Streamlines Acquisitions and Supply Base with IT', Apparel Magazine, vol. 50, no. 12, p. 27.
Nagappan, P 2009, 'Li & Fung Streamlines Acquisitions and Supply Base with IT', Apparel Magazine, vol. 50, no. 12, p. 27.
Nagappan, P 2009, 'Li & Fung Streamlines Acquisitions and Supply Base with IT', Apparel Magazine, vol. 50, no. 12, p. 27.
Question 1
Why would companies outsource the coordination of manufacturing to Li & Fung?
With Li & Fung managing the entire manufacturing and supply business, its customers are free to focus on their core business. Also, Li & Fung has positioned itself as an expert in supply chain management. The company, with its wide network of independent suppliers, locates the best manufacturer to fill its customers’ orders.
Question 2
What is the role played by Li & Fung and how does the company creates value?
Li & Fung takes apart the value chain and identifies the activities which can be further optimized to create value. The company identifies how manufacturing activities should be distributed among its network of suppliers, ensuring stringent quality controls are met, and completing the process in a timely manner.

Li & Fung’s expertise in this process, together with its extensive network of suppliers, allows it to offer customers a service that would be difficult to develop in-house.
Question 3
What is the source of Li & Fung’s competitive advantage in the global economy?
Li & Fung’s has extensive expertise in supply chain management along with good relationships with its suppliers. This type of competitive advantage takes years to develop, and so sets Li & Fung apart from competitors. Also, the right blend of traditional economic strategy coupled with technology is crucial to Li & Fung's sustainability in the future.
Nagappan, P 2009, 'Li & Fung Streamlines Acquisitions and Supply Base with IT', Apparel Magazine, vol. 50, no. 12, p. 27.
Nagappan, P 2009, 'Li & Fung Streamlines Acquisitions and Supply Base with IT', Apparel Magazine, vol. 50, no. 12, p. 27.
Feng, B 2006, 100 Years of Li & Fung: Rise from Family Business to Multinational, Thomson Learning, Singapore.
McFarlan, FW & Young, F 2000, Li & Fung (A): Internet Issues, Business Source Complete, EBSCOhost.
'The Li & Fung Debate' 2005, Home Textiles Today, vol. 26, no. 18, p. 1.
Fung, VK, Fung, WK & Wind, YR 2007, Competing in a Flat World: Building Enterprises for a Borderless World, Pearson Prentice Hall, Upper Saddle River.
Full transcript