li fung case analysis

8/10/2019 li fung case analysis

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Li & Fung: InternetIssues

Presented byTara BellomyJeff Bookout

Jerry Harrison

Jeremy Schopper Travis Tucker

Lesley WilkersonJim Yancey


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Li & Fung OutlineI. Overview of ompany Jeff BookoutII. !ro"lem I#entification Jeff BookoutIII. Business $o#el Jerry HarrisonI%. S.W.O.T. &nalysis

Stren'ths Jeremy Scho er Weaknesses Lesley !ilkersonOpportunities Jim "anceyThreats Jim "ancey

%. Strate'ic positionin' #ra$is #ucker %I. &lternatives ( )ecommen#ations #ara Bellomy%II. *iscussion an# +uestions %LL


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Li & Fung O$er$ie

LI & Fung Export Trading Company Li ( ,un' foun#e# in - /0 "y ,un' !ak1Liu an# Li Tomin'

in 2uan'3hou4 hina,rom - 5/1- 6/ *iversifie# into $anufacturin' an#Warehousin'By - 784 owne# an# operate# "y the ,un' "rothers

In the - 9/:s e;pan#e# operations throu'hout the &sia1!acific


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Li & Fung O$er$ie

By - < they e;pan#e# to offices aroun# the 'lo"e &c=uisition strate'yLi ( ,un' evolve# into a lar'e 'lo"al supply chainIn - < Li ( ,un' launche# an intranet to link corporateofficesIn - 7 Li ( ,un' launche# secure e;tranet:s)e#efinin' the "usiness strate'yTar'etin' Small to $e#ium1si3e# >nterprises


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Problem Identification

Li ( ,un' nee#e# to e;pan# their supplychain mana'ement component of their"usiness to on1line to e;pan# their market"ase.


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Business 'odel

What is the Business $o#el?Li ( ,un' will provi#e supply chain mana'ementservices that will #etermine what supplier in which

country will "est ma;imi3e it:s clients =uality an# timee;pectations at the lowest cost possi"le.


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Business 'odel

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan., Corporate Information Strategy and Management . Burr Ridge, IL: McGra!"ill#Ir in, $%%$.

&o'ponents o( a Business Model

Introduction Figure I!)


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Business 'odel

oncept@Li an# ,un' was to provi#e an online service thatwoul# streamline the supply chain mana'ement

process for their esta"lishe# clients an# at thesame time open an opportunity to enter into anew market that was previously too costly toenter4 the S$> ASmall ( $i#1Si3e# >nterprise

market .


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Business 'odel

%alue@A- Shorter or#erin' timesA5 )e#uce# inventory costA6 +uality assuranceA8 %irtual manufacturin'Cmore pro#uct #esi'nservicesA< Dp1to1#ate fashion an# market tren# information


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S(!(O(#( %nalysis

STRENGTHS &c=uisition strate'y A"ou'ht suppliers an#competitors,le;i"le an# interactive #esi'n processEo inventory to $ana'e


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S(!(O(#( %nalysis

WEAKNESSESThe initial lack of knowle#'e of #evelopin' an e1commerce B5B profile.The initial lack of =ualifie# personnel to implementsuch a lar'e un#ertakin'.*i# not know if a B5B portal woul# "e "eneficial to

the company "ecause4 in the "e'innin'4 marketresearch ha# not "een #one on the Small ($e#ium1si3e >nterprise AS$> tar'et markets.


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S(!(O(#( %nalysisOPPORT NITIES

The internet allowe# for a "etterCfaster way toincorporate a more streamline# supply chainmana'ement system

&llow the customer to "e a"le to "e an intricate part ofthe #esi'n process up to the point of pro#uctmanufacture

&llow S$>s to participate in the mainline of pro#uct

procurement while enFoyin' a smaller commission rateoul# esta"lish a "usiness plan to #evelop markets inwhich over stock pro#ucts coul# "e sol# A>lectronicStock Offer 1 eSO


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S(!(O(#( %nalysisTHREATS

!hasin' the Gmi##le man out of the tra#in' scheme!ossi"le loss of key employees to other Internet companies throu'h the promiseof 'reater wa'e compensation.

,ear that an online company woul# ac=uire or partner with an ol# economytra#in' company4 "ecomin' an overni'ht competitor.If the technolo'y was outsource#4 then the company coul# "ecome #epen#enton that outsi#e company for their IT nee#s especially when an up'ra#e wasnee#e#The possi"ility of outsi#e companies "ein' a"le to access proprietaryinformation4 strate'y4 or the complete Li ( ,un' "usiness mo#el

>;pan#in' the "usiness into a new area that ha# not "een teste# openin' thecompany to a possi"le venture failure that not only coul# tarnish the companiesname to some #e'ree4 "ut also loose their investors startup capitalThe new e1commerce en#eavor ma#e some of their lar'er customers nervous inthat they were afrai# that Li ( ,un' woul# "e compromisin' their "usiness "yworkin' with their #irect competitors.


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#o 'anagement)sStrategic Positioning

$arketC hannel1 customers to serve4 nee#se;pectations to "e met4 an# the channels to "eserve#!ro#uct1 choice of pro#ucts an# services to offer4the features of those offerin's4 an# price char'e#%alue hainC%alue network1 activities it performswithin an e;ten#e# network of suppliers4 pro#ucers4#istri"utors4 an# partners

Boun#ary1 #etermines markets4 pro#ucts4 an#"usinesses not to pursue


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Sustainable com etiti$e%d$antage

Sustaina"le a#vanta'eoccurs when "arrierse;ist that make it

#ifficult for competitorsto imitate an#Corcustomers to switch

&c=uire# mostcompetitorsSophisticate# IT

infrastructureTar'et har# to servecustomer se'ment


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*om etiti$e %d$antage

ustomer "ase of tra#itional company%alue create# with IT infrastructure

ontrollin' of the supply chainapture# smaller "usiness se'ment withstartup Glifun'.com


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%lternati$e Solutions

2o online .or not?!ros1 not 'oin' online woul# eliminate nee# fortrainin' an# e;tra capitol.ons1 not 'oin' online woul# leave the companyvulnera"le to threats from competitors who coul#steal mana'ement talent throu'h influ; of newmoney.


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Only tar'et one type of customer.!ros1 tar'etin' only lar'e companies or S$>swoul# lea# to servicin' similar customers withcommon nee#s.ons1 Li an# ,un' woul# lose any woul# "e profitpro#uce# from servicin' only one type of"usiness.


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&sk lar'e suppliers to invest in the new onlineventure.

!ros1 not all of the success or failure of the newwe" portal woul# "e the result of Li an# ,un':sefforts.ons1 Li an# ,un' woul# lose some control overinternet mana'ement an# #esi'n.


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*o not keep ta"s on manufacturin'electronically.

!ros1 customers an# suppliers woul# still havethat personal feel that Li an# ,un' is known for.ons1 no information coul# "e viewe# in real time.$ana'ement woul# have to make time to visit

with suppliers an# customers.


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+ecommendations

Li an# ,un' shoul# em"ark on the we" portal#esi'n an# incorporate it into their "rick an#mortar "usiness.2o with the ori'inal plan1 service "oth lar'e"uyers as well as S$>s.*on:t ask suppliers for investment capitol4

use stock purchase for capitol.eep ta"s on suppliers electronically4 inperson4 an# "y phone or fa;.


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,rou -uestions

What a#vice woul# you 'ive Li an# ,un':smana'ement to ai# them in pro#ucin' theirnew we" portal?What is Li an# ,un':s most #etrimentalweakness in "uil#in' their online "usiness?What is Li an# ,un':s 'reatest stren'th?


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-uestions and .iscussion

li fung case analysis

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