The Case Study of Li & Fung - the Global Value Chain Configurator

ABSTRACT:

The case illustrates the business history and evolution of Li & Fung Limited, one of the Hong Kong's oldest and largest trading company. The case gives an overview of its evolution from a traditional trading company to a global export giant and a customers' supply chain management giant. It discusses the company's strategies to change its business models to the changing external environment and customer needs and preferences. The case elaborates the company's strategies such as integration of operational strategy with its organizational strategies, customer-centric organizational structure, supply chain management strategies, technology and Internet initiatives, and globalization efforts to become a global company.

Finally the case analyses the current situation of Li & Fung of 2004 and future challenges facing ahead.

HISTORY: The Company was formed in early 1900 in Hong Kong.LI & Fung was formally established in Hong Kong as limited company in 1937.In 1943 Fung family became the sole owner of the company. In 1973 the company went public and was listed on the Hong Kong Stock Exchange. In 1989 the company again made a private company. In 1992, the firm's export trading business, I & Fung (trading) Pvt.Limited, was relisted on the Hong Kong Stock Exchange. By the end of 20th century, I &Fung was a premier global trading company, with more than 95% of revenues coming from North America and Europe. East Asia and South Hemisphere counted the rest. The company's major products were both soft goods and hard goods. The soft goods constitute garments whereas the hard goods constitute fashion accessories, footwear, gifts, and furnishings.

KEYWORDS: Value Chain Configuration, SCM Strategy, Global Supply Chain, Internet-enabled Supply Chain, Knowledge Sharing, Customer-Centric Organizational Structure, Global Expansion, Hong Kong's Export Trade Industry and External Environment

OBJECTIVE:

1. To study the efficient and effective value chain management for a global trading company and its importance in maintaining its global competitive advantage.

2. To analyze the role of Information Technology (IT) played in a company in expanding its business globally

3. Study the importance of acquisitions and alliances in a company's globalization strategies.

4. Understand how innovation, differentiation and customization can be used as strategic and competitive advantages by a company, to maintain its leadership in the domestic market, and emerge as global play

5. To study how visionary leadership and management capability can work as a core advantage for a company to attain success in the global market

ISSUES:

1. The company's much hyped B2B initiative "StudioDirect" failed to get expected response.

Symptom: Due to conversion of StudioDirect from a full service e-commerce company into a private label golf wear specialist and the company reduced its stakes from 57 to 15%.The StudioDirect failed to major progress in U.S. market which was not conducive for its growth.

2. The continuous fall in the growth of the revenues and