Li & Fung: Internet Issues Essay Example

providing quality assurance to customers. Additionally, Li ; Fung formed a global sourcing network, gaining economies of scale and providing lower costs and more flexible sourcing options compared to competitors. The company also provided clients with current fashion and market trend information, increasing their flexibility in adapting to industry changes.

Li ; Fung had several key advantages in their supply chain management approach. Firstly, they had strategic links within the chain and even provided raw material sourcing to manufacturers, which ensured better quality control and cost-effective quantities of raw materials. Secondly, they fostered an entrepreneurial spirit by empowering senior managers to run their teams as they saw fit. With 90 teams worldwide, this decentralized structure allowed for adaptability and rapid response to seasonal fashion trends. Finally, Li ; Fung maintained a corporate culture that prioritized diversity and remained humble, agile, and responsive for both their workforce and customers.

Li ; Fung, an international company with over 100 years of experience, has built a strong reputation. To achieve growth, companies should implement strategic plans, and Li ; Fung is no exception. They utilize a mix of strategies such as organic growth, acquiring new companies and expanding their supply chains through online markets. Organically, they secure new orders from current clients and acquire new mandates from key customers.

Li ; Fung implemented various measures to achieve its strategy, including expanding and diversifying its global network through the establishment of new offices in countries like Bangladesh and Manchester, England. In 1996, it introduced a "three-year plan" system that sets a new target every three years. These actions led Li ; Fung to exceed the Hang Deng Index by more than

75% in 2000. Moreover, the company adopted an acquisition strategy as well.

Li ; Fung's acquisition strategy was centered on purchasing competitor sourcing companies to gain new clients, integrate operations, and elevate acquired unit operating margins to Li & Fung levels. Swire Group and Camberley were among the companies acquired. This approach enabled Li & Fung to increase market share and control a larger portion of the market. As a result, Li & Fung grew substantially, expanding to five times the size of their closest competitors, William E. Connor and Colby International. Additionally, Li & Fung implemented a new strategy for growth by launching their own internet initiative.

Li & Fung initiated the creation of an intranet that connected their global offices and manufacturing sites, serving as a tool to simplify and facilitate internal communication. This intranet enabled real-time tracking of orders and shipments, as well as online inspections by providing visual content. Subsequently, an extranet was established to connect Li & Fung with its primary customers. The extranet allowed for the online development of products and order tracking, streamlining communication and improving the supply chain process.

Despite incorporating the internet, Li & Fung maintained a traditional approach, resulting in the utilization of various Li & Fung capabilities on lifung.com. Preceding the website's launch, the company conducted market research to determine target segments and their requirements.

Despite being uncommon for online companies, Li ; Fung

decided to conduct market research due to their old-economy mindset. Additionally, thanks to their economies of scale, Li ; Fung was able to offer lower prices compared to competitors and operate alongside large companies. Moreover, for SMEs, Li ; Fung utilized economies of scale by manufacturing aggregated orders concurrently while providing ample choices for embellishment differentiation.

Li ; Fung provided a unique solution for SMEs by offering customization options such as color, pockets, and label to differentiate their products. As a result, SMEs were only charged a commission of 10% - 15%, which is significantly lower than the industry standard of 25% to 30%. In addition, clients were able to develop their products online with no minimum order size and track the progress of their orders. Li ; Fung also revolutionized their financing method.

The Li ; Fung-owned website, Lifung.com, differed from typical internet companies in several ways, including its funding strategy. Rather than relying on online fundraising methods, it raised $250 million by placing 60 million shares through Goldman Sachs. Additionally, the website's intranet and initial extranet made data transfer easy for users and offered the same benefits to SMEs.

Lifung.com boosted the supply chain's visibility, resulting in quicker and more dependable order fulfillment and customer service. The online company embraced a "business-to-business" model that mirrored its offline counterpart. This approach took a "back-to-basics" stance by implementing Li ; Fung's supply chain management expertise to small and medium-sized enterprises on a "back-to-back" order basis. This old-economy standard minimized inventory risks for Lifung.

Although there are advantages to transitioning to an online platform, doing so also poses certain risks for Li & Fung, just as it did in

the past. The project is quite expensive, costing around $200 million, and if it were to fail, it could lead to significant financial difficulties for the company. Additionally, if the website lifung.com were not handled properly, it could damage the overall reputation of Li & Fung.

While Li & Fung is headquartered in Hong Kong, com is based in San Francisco. This separation of the two systems could cause issues with both order placement and order fulfillment. Additionally, since the market for SMEs is quite large, it is possible that lifung.com may not be able to adequately serve all of its customers. This could lead to concerns regarding the quality of service provided, ultimately damaging Li & Fung's reputation and leading to customer dissatisfaction.

Li ; Fung, being new in the SMEs market, may face competition from rivals who can lower their fees for SMEs, which can potentially make their website unprofitable. However, going online could be a viable solution for Li ; Fung. The SMEs market is currently underserved and lacks differentiation options. Hence, by offering customization options and lower fees for SMEs, Li ; Fung can profitably target this segment. Besides, by aggregating the orders of the SMEs, they can benefit from economies of scale and enjoy lower costs in the long haul.

Li ; Fung can achieve a competitive edge over its competitors due to its low costs. Additionally, Li ; Fung's proficiency in traditional economy practices has contributed to its success and can be seamlessly integrated into their online operations, resulting in strong performance. Furthermore, Li & Fung is currently operating.

Being located near its clients can be an advantage for com, a

company based in the US. Nevertheless, it is crucial to implement strong security measures to prevent unauthorized access to Li & Fung's information by hackers. It's important to ensure that the systems are well-integrated and undergo constant monitoring to avoid any potential issues. As of today, this can be observed by visiting the lifung website.

According to a review by (com), lifung.com has not been effective in catering to the needs of SMEs. This is primarily due to the absence of a portal where SMEs can place orders. The website currently offers only details about Li & Fung's activities and operations. Moreover, upon examining the performance graph on the next page, it is evident that Li & Fung had the lowest return in 2003.

Despite experiencing losses from its online strategy, Li ; Fung was able to recover and maintain its success, as shown in the figures on the next page. To continue thriving in today's highly competitive market, Li & Fung needs to implement effective strategies that enhance its performance. This can involve offering value-added services and adopting growth strategies focused on improving its position.