Li&Fung

Summary Li & Fung, which is a long-standing Hong Kong base caller-up, has evolved from an export trading ac federation to a coordinator of value-added go across the total add chain in a global, open manufacturing circumstance. Its integrated culture has enabled it to sustainment pace with the current turn off of global subscriber line. The happy acquisitions and the jeopardy corking make the company grows stably and rapidly. However, the company now faces some repugns coming from Asiatic financial environment and related policies.High sensitive of the trade in macro environment is essential for the company to success. At the resembling clipping, keeping Asia in an primal position could retain long time warlike advantages. Finally, the update of breeding and technology may contract to a greater extent efficiency and effective within the fundamental law. incoming Li & Fung was the off come in printing export company that whole funded by Chinese capital in C hinese trade history. Fung Yiu-hing and Li To-ming founded it in 1906 in Guangzhou, China. The so functiond grew to be a limited company in Hong Kong on December 28, 1937.The company expanded readily to globalize by the leading of the second gear propagation from the Fung family. The high-speed maturement of Li & Fung express started when the ternary generation of Fungs family took over the organization. The core part of the companys melody ar external trade, logistic, distribution and retail. professional and William tried to restructure the company, use the directionm human resource wariness, and utilized professional focus skills to control the company without eliminating the Chinese style management.Li & Fung special made use of acquisition to take over the competitors and expanded their suppliers and clients all over the world. The most celebrated and prospered one is the acquisition of Inchcape Buying serve (IBS), which helped Li & Fung Limited to open the E uropean trade. At the same time, the brothers establish a venture capital corporation to accompany the suppliers and stable its supply chain. consort to one anonymous (1999), Li & Fung is the worlds deepst trade sourcing company and it pioneers a crude case for multinationals.By now, William and Victor want to expand the company from Asia establish company into a region closer to their marking market. With the new trend of the global economy, Li & Fung Limited result encounter to a greater extent challenges and uncovering a way out of a ruggedy. Since its foundation, the company has establishes a culture that incorporates pragmatism and innovation. According to Msmith (2008), the progressive corporate culture, which blends traditional pragmatic reasoning with entrepreneurial innovation, has enabled adaptability and growth in a dynamic market.Additionally, it combines the Chinese business culture (Chineseness) with the foreign operations. Not only is it expects truth and rew ard diligent, but it also has a rational and transparent bonus system, where bonuses were based solely on profit performance. Generally, the company is employee-concerned, where the workers and managers are encompassed as family. As is the vision of the corporation, they strive to use resources expeditiously to add business value for our customers and their suppliers to focus on the health and comfortablybeing of our colleagues and to positively impact our communities and societies (2013).Analysis of Li & Fung Li & Fungs outsourcing matrix suits particularly well to its global position and activity To begin with, outsourcing teams are firstly divided into two chief(prenominal) merchandise categories soft and hard keens. Since they specialized in a certain(a) kind of good, they offend a certain expertise, which is an asset in their discussions with external agents. Besides, inside each(prenominal) category, the teams are divided depending on their geographical market. This o rganization displays an advantage in satisfying specific topical anaesthetic need.Further more(prenominal), connection and communication is established and fostered betwixt the divisions, which go exactly whom to contact for each particular issue. Finally, Li & Fung is able to efficiently master the 4Cs (connections, communications, control of quality, and desegregation of shipments), and obtain a competitive advantage because of their organisational chart. In terms of Li & Fungs business model, it is a virtual factory or cloak-and-dagger label manufacturing program. This means that it specializes in providing return itself, not brand or promotion.Although there is wide-ranging scale merit in production of stuff industry, it is difficult that each company has a uncollectible factory as there are very much of competitors and fashion of the clothes are always changing, as is thought by Swan (2008). As to company which has a talent of designing or marketing, it is repair no t to chip in its manufacturing and outsourcing. Maybe this is wherefore Li & Fung is always required from some(prenominal) customers. Also, Li & Fung has certain the relationship through its network so that it gouge get such soft goods as textiles at high speed and excellent quality with the lowest cost.Successful acquisition Li & Fungs mergers have been the main way of expending their business. Among all the mergers, the biggest merger during 1994 to 1997, which is getting IBS, is the most successful and famous one even so in the global range. The main reason why Li & Fung stooge get so many benefits from merger is based on the following reasons. The first reason is that, Li & Fung knows which company to merge. When Li & Fung ingest companies, they give look for what the company is having at that time, the sourcing, the customers and the employees.In this way, Li & Fung can complement the mindless its current business. For example, although the strand of IBS was only 0 . 8% and the combined average was 2. 2%, the sourcing supplement brought by IBS has make up the blank of Li & Fungs South Asia, Europe, the Mediterranean and Latin America. The second reason is that Li & Fung knows how to merge. At that time Li & Fung is the largest worlds supplier of retailers and IBS was the second largest. So the merge was very difficult and was treat as an elephant eat elephant merger.Especially for the huge difference between the two companies, Li & Fung was a U. S. style Chinese-family business, enchantment IBS was a British company. There would be a lot of unaccustomed and conflicts as expected. So Li & Fung created a transition team to review organizational processes and implement a unit-by-unit transition. Instead of doing the transition after the merger, Li & Fung did it ahead of the merger, in prepare of livery accustoming time. When the scale of the company increases, the operational mode of the company has to keep changing as well. aft(prenominal) the merger, Li & Fungs scale is twice as big. Li & Fung changed its mode into a more efficient and suitable one. It designate managers to customer groups and not countries. This has made the management to be more professional and make the production more efficient. The merger has made the sourcing matrix of Li & Fung more mature. The margin of Li & Fung was higher than those of other companies due to their regionally coordinated sourcing wait ons. Small Venture enceinte Arm In 1986, Li & Fung established a small venture capital group in order to amend and perfect the whole supply chain.LFI invested in companies, which could assist the Li & Fungs sourcing services. Magretta (1998) indicates that Victor said A big piece of our corporate development is plugging those holes-the phrase we use is filling in the mosaic and we use venture capital to do it. LFI pay the same solicitude on the companies management system as the product when they were choosing the company to invest. Bie rs (2000) said, Its venture activity has remained modest by industry standards, with nevertheless two or three new investments a year, each typically of just a few million dollars or less. The CEO of LFI mentioned that they only invested in companies that had at least $3 million profit, escape of resource and kept the control of the company. At the same time, they were looking for the young and creative companies that owned by people with design and marketing talent. The most successful capital injection is the investment to a promotional company Cyrk Inc. LFI spent $200,000 in order to take 30% shares in Cyrk Inc. during 1990. At the very start, Cyrk Inc. provided service of T-shirt print.Three year after the capital injection, the gross revenue volume raised 20 times more than before through capitalized on its logo and promotional design capabilities. In this case, they made contract with Philip Morris to flummox a full line of promotional clothing. louver years later, LFI so ld their shares of Cyrk Inc. for about $65 million. After spending a great deal of investment in America, LFI transferred their sight to the European market. As a result of diverse culture and language, it was more difficult to invest in several companies to cover the whole European market.The complex situation required the managers in European have more come and diametrical strategies for diametrical countries. During the process of helping these companies, they gain experience about the selection of the collaborate companies and create more opportunities to broaden their business fields. At the same time, Li & Fung can gain high reputations among the growing companies, because the endeavor of the LFI is not acquire these companies. In this case, these companies could unconstrained develop themselves. And Li & Fung could not only maintain the good relationship with both potential partners and current partners.Challenges & Recommendations For Li & Fung, although it is already th e largest export company in the world, it is mum facing a lot of challenges. According to the trend of international Economics, Asian Financial Crisis will be gone. By then, the labor cost of Li & Fung will not be as low as now. So margin will be set down in the coming afterlife. But even if the Asian market has recovered, its labor cost is still degrade than other countries also the gap between the besotted and poor is huge. Most of people are life story under average level, which will bring a low cost of labor.Also Asian has a large population, which will involve a large spell of rich people, whose price sensitivity is low and postulate are high. They can purchase the products, which have been produced in Asian. So Li & Fung could give more attention to Asian Market, instead of giving it up. Policies of trade protection, which have been published by governments in different countries, will also be a huge challenge to Li & Fung. Under this circumstance, all that Li & Fung c an do is to prevent before it or actively adjust after the coming of policies.Li & Fung should do market research and macropolitical economy analysis regularly in order to choose the very best sourcing places. Also, it ought to try to find outstanding suppliers in different economic regions and different fields, so that the risk will be shared. Thereby, Li & Fung should closely monitor the changes of economics and adjust it in time. With the development of technology, information system is playing an eventful role in supply chain management. In this case, Li & Fung could establish a proprietary information network that enabled clients to view the status of an order.This will improve their customer relationship management. At the same time, they could set up a powerful selective informationbase to do data mining, which could collect the data of suppliers and consumers, in order to foreshadow the shortest time and distance and lowest cost in operation. Also they can collect the data of customers, so that they can know better of market needs and offer better service. Overall, for Li & Fung, challenges and chances are coexisting. If it could hap to reflect, to improve, it would keep up with the trend of world economics and update information and technology timely.References 1. Biers, D. (2000). Thinking small. far Eastern Economic Review, 163(46), 48-48. Retrieved from http//search. proquest. com/docview/208225120? accountid=9744 2. Li & fung pioneers a new model for multinationals. (1999). Strategic Direction, 15(6), 24-25. Retrieved from http//search. proquest. com/docview/218626878? accountid=9744 3. Li & Fung Beyond pickax in the Mosaic, 1998-1998(HBS Case 9-398-092). 4. Magretta, J. (1998), Fast, global, and entrepreneurial go forth chain management, hong kong style An interview with victor fung.Harvard blood line Review, 76(5), 102-114. Retrieved from http//search. proquest. com/docview/227758445? accountid=9744 5. Mismith068 (2008, 12). Li and Fung Ca se Analysis. StudyMode. com. Retrieved 12, 2008, from http//www. studymode. com/essays/Li-Fung-Case-Analysis-185365. html 6. Swan (2008, 9). Agri-Future trendspotting & future thinking. Retrieved 9, 2008, from http//swan-futurethinking. blogspot. ca/2008_09_01_archive. html 7. Sustainability (2013, 3). Retrieved March 14, 2013 from http//www. lifung. com/eng/csr/csr1. php