Li & Fung Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Li & Fung Case Solution

Expansion of Business towards Latin America or Africa:

After the recession, the company should expand towards these countries to gain a competitive advantage as these countries will be the business hub in the future.

As it can be seen, Europe is a growing market therefore,it should focus on the European market as well asin Turkey there is low production and transportation costs.

Benefit of Diversified Portfolio:

As the company has well-diversified portfolio, therefore it should focus on other countries where production cost is low and that it should tryto reduce expenses as much as it can.In order to reducethe risk of making low profits, the company should go towards virtual marketing.

Low Profits:

In the USA market, after recession there was arisk of making low profits.

Answer 2:

Following is the analysis of Li Fung’s internal assets, capabilities, and competencies:

Li and Fung has an extensive network of supplies, provision of value added services, entrepreneurial structure, and is a global market leader. Its objective is to make good quality products, and has proper quality control department.

Its supply chain management is good, as well as it has 80 offices over 40 countries. As shown in exhibit 2, Li and Fung owns many companies, which suggests that the greater the portfolio, the lesser is the risk for the company.

By analyzing annual reports for the years ended 2006, 2007 and 2008, their reporting reports are 68,010,257, 92,459,949 and 110,722,117 respectively, which shows positive trend as the company is growing and making profits.

The percentage of turnover is decreasing on a yearly basis, however the company is performing well as the company has become globally recognized by operating in 40 countries.

The EPS of the company for the years ended 2006, 2007 and 2008 is 67.1 cents, 89.5 cents, which shows a mix trend. Soft goods and hard goods both are performing well in respective markets.By analyzing, it can be seen that most of the percentage of the turnover is from USA.

Acquisition is the key to the growth of the market share in geographical target markets, and Li and Fung is expanding through global integration. Moreover, its reserves increased which indicates acquisition future plans, which is a positive sign for the company.

Li and Fung arranges sources from virtually anywhere in the world and builds a solution for all its retail customers. Li and Fung has a network of 10000 supplies and staff all over the world, which is known as Borderless manufacturing.

As the company builds customized solutions for its retail customers, which is applied locally as well as globally, this strategy is known as Virtual manufacturing which is beneficial for the company’s success. It has global supply chain centers, and its customers are global brands.

Traditionally both buyers and trading companies focus on putting pressure on factories to lower the costs.Moreover,Li Fung started consolidation service which increased its efficiency in each link of the supply chain which would provide competitive edge in future, expansion of its supply chain to new markets as well as it would be able to expand its customer base.

It has sophisticated IT structure which helps to expand globally, as well as the customers will be attracted to it, as it can be seen that they try hard to serve customers. Its primary focus is customers’ satisfaction, and till date it has been performing well.

In 2004, it began experimenting with a new onshore model which helped the company to become an importer and to earn greater profit yield due to value added feature of this business.

Li and Fung opened a buying office in Turkey where the production cost was low, and by 2008, he had become larger exporter of this region.The reason for this expansion was to gain competitive advantage in the market.Previously,it took 25 days to reach the European market, but now it takes only 7 days to reach European market from Turkey, therefore this expansion will further help in future....................

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