Li & Fung

A critique of the case Li & Fung (A) Internet issues is presented below in lightheaded of the following two let on methodologies SWOT analysis Porters five forces sticker A SWOT analysis of Li and Fung Strengths of the firm Reputable human body and branding. Well informed and educated management Tightly integrated render chain management with client base. Established de centralize management behavior Ability to operate in both hard and soft markets. lively internal capital Successful acquisition dodging (bought suppliers and contests).Flexible and interactive function process. No inventories to manage. Weaknesses Lack of initial knowledge on graveling an e-commerce B2B profile. Lack of qualified personnel and subject matter experts to implement such(prenominal) a large undertaking. Poor information gathering and research former to adopting the B2B portal strategy Insufficient knowledge about the behavior of SMEs in similar portals The initial plan of developing a B2B por tal was base on the centenarian economy deterrent example, change was not sufficiently accounted for. OpportunitiesThe cyberspace is a true enabler to incorporate a much streamlined fork over chain management system. go out customers to be able to be an complicated part of the design process up to the point of product manufacture. Allow SMEs to participate in product procurement while enjoying a small commission rate. Ability to establish a business plan to develop markets in which surplus products could be sold (Electronic Stock Offer eSO) menaces Phasing the essence man out of the trading scheme is a risky strategy and an attempt to alter an existing market mechanism.Possible loss of key employees to other Internet companies through the promise of greater wage honorarium for newbornly acquired skills. Fear that an online guild would acquire or partner with an old economy trading smart set, becoming an overnight competitor. If the technology was outsourced, then th e beau monde could become dependent on that outside company for their IT postulate especially when an upgrade was needed. The possibility of outside companies being able to access copyrighted information, strategy, or the complete Li & Fung business model.Exposing the business to a new business environment with insufficiently prepared change strategies Service prime(prenominal) issues in an area where the firm has never operated before could tarnish its news report and result in loss of appraise The new e-commerce endeavor make 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. Porters five forces model Traditional Rivalry most of Li & Fungs rivals have been acquired. negotiate agent of suppliers sold stabbing materials to suppliers at a premium.Bargaining power of buyers efficient and considered high value. Threat of new entrants low curse of entry. Threat of sub stitute products- possibilities of threat in this area. air 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 services across the entire supply chain in a global, open manufacturing environment. They assess the clients product and delivery needs and direct supply, manufacture and delivery in a very tailored and narrow way. CapabilitiesLi & Fung achieve their high train of service through an executive director relationship of two close brothers who form a unique synergism of strategy and execution. In addition, they give senior managers sufficient autonomy to do to needs of specific customers. They are aided by a centralise IT as swell as financial and administrative support in Hong Kong. Managers have their have recompense package, and bon dos are based on boodle with no ceiling. There is great incentive to achieve goals. Li & Fung use a triad year planning approach in which a goal is established and a gap analysis aids in identifing steps to get there.Each three 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 europium and India, Li & Fung had grown to nearly five times that of its closest competitor by 2000. Value 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 coupled with sophisticated centralised 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 bear on about disintermediation but found that most Internet businesses were not well conceived. Instead they learne d that the threat came from the hype of Internet businesses capturing more enthronement capital thus enabling those companies to invest greatly in their companies and require away talent from Li & Fung, for example. Continuing ThreatsIn the next three year plan, Li & Fung result need to assess the possibility and court/benefit of end-to-end supply chain communications based on improved technology in developing countries. Li & 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 involvement would continue to be a threat with each increasing IT improvement. They will also need to attend to the legacy clients 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 100 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 own without such a strong historic background. Li and Fung is a publically traded family company. Speed, Solidarity, authenticity, trust, and control are the benefits to running a family business.For example, in a family business, mess can 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 School 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 rapidly industrializing Asian economies, Li and Fung expanded its regional network of offices end-to-end 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 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 lop inventory costs. Moreover, in its role as a middleman, Li and Fung cut matching 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 tractile 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 separate 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 organise allowed for adaptability and rapid reaction to seasonal shifts. In Li and Fung, performance-based promotion and salary were cardinal principles. Each Li and Fungs top executives negotiated individual compensation packages. Li and Fung bonuses were based on profits without ceiling.