Li Fung Essay

Li & Fung (A): Net Issues

What has been the traditional strength and strategy of Li and Fung?

100 years of the past

Publicly traded friends and family company

Both William & Victor educated in HBS

Victor earned Ph level. D. & taught there for some years

1972 Returned to Hong Kong to modernize organization management

Hong Kong Centered

Trading Business – simply by 2000

69% sales USA

27% sales Europe

Key retailers (the Limited, Gymboree, American Skull cap, etc) Global sourcing network

Holistic Source Chain Supervision

48 offices in 32 countries

Value added services through entire source chain – borderless-manufacturing –next slide Delegate manufacturing which in turn requires significantly less capital

Entrepreneurial structure –

clubs of product specialists in 90 independent, individual businesses Meritocracy – compensation performance based

What capabilities of Li and Fung truly does Studio-Direct. com leverage? IT in 2150

10 protected customer Extranet sites (launched 1997)

Customized to demands of crucial customers

On the web product development, buy tracking

Consumers could transform order as it progressed

sixty IT staff in Hong Kong– creation outsourced

Outsourced Intranet/Extranet

Preferred narrow/deep connections to customers

Nevertheless saw how internet could transform industry

studiodirect. com (gone by 2007)

70 staff Operating out of San Francisco

Goal:

Retailers beneath $100 Meters (20, 000)

Wholesalers underneath $50 Meters (2, 800)

What are the hazards of this strategy?

Costs to develop project could go beyond budget – Hong Kong beyond the boundary from A bunch of states Danger of feature slip in specifications which may increase development costs Backlash via import providers who may slash all their fees enough to make project unprofitable. Risks during diffusion of technology to new firms that could make rollout more costly. May try preliminary project first

Could damage Li & Fung's status because they cannot provide each of the goods for this set of clients Existing clients may resent addition of smaller opponents who will reap the benefits of Li &...



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