CASE ABSTRACT: LI & FUNG: GLOBAL VALUE CHAIN CONFIGURATOR Li & Fung Limited was
ID: 400803 • Letter: C
Question
CASE ABSTRACT: LI & FUNG: GLOBAL VALUE CHAIN CONFIGURATOR Li & Fung Limited was a Hong Kong-based global consumer goods trading company and a manager of customers supply chains. It was one of the worlds leading textile export traders and the largest textile trader to the U.S. In 2004 it announced that it had become the first wholly-owned foreign trading company to be offered direct export rights in China. The company was authorized to export China-sourced goods directly to customers worldwide and to import raw materials for manufacturing in China. Previously, Li & Fung had been dependent upon Chinese partners for exporting from China. This license freed the group from many Chinese trading restrictions. As a result, Li & Fung was increasing the number of its offices in China from 16 in 2004 to 36 by 2007. In 2004, Li & Fung faced a number of challenges, such as a slowdown in its overall revenue and net profit growth, heavy dependence on the U.S. market, declining market share in Europe, and negligible revenue growth in the rapidly growing Asian markets. The company was concerned that its major competitor in value chain configuration, William E. Connor & Associates, would soon match Li & Fungs strengths in sourcing and its customer base. Li & Fungs management was wondering how it could utilize the recently-acquired direct export license from China to strengthen its position in the global export trading market. Decision Date: Early 2004 2003 FY Sales: HK$42.6 billion 2003 FY Net Income: HK$1.22 billion Assignment Questions: 1. Li & Fung owes much of its ongoing success to its expertise in global value chain configuration. Define the concept of value chain and critically discuss the importance of value chain management for global companies. How did Li & Fung use the value chain configuration in its globalization process? 2. According to John Mathews, a Professor of Management in Macquarie Graduate School of Management, Sydney; and the author of Dragon Multinational: A New Model for Global Growth, Li & Fung is one of the first truly global companies. Describe the various stages in the globalization process. Examine the role played by alliances and acquisitions in a companys globalization strategy, with specific reference to Li & Fung. 3. William Fung believes that Li & Fung is an information and knowledge-based business. Discuss the importance of knowledge management for global companies. Describe the knowledge management initiatives typically taken by global companies and examine the implementation process of a knowledge management system at a company. Study Li & Fungs organizational structure and examine how such a structure enables efficient and effective knowledge management at the company. 4. According to William Fung, it has always been a policy at Li & Fung to embrace information technology (IT) in all aspects of the companys business to provide more value added services to its customers worldwide. Critically comment on the importance of IT for global companies. How did Li & Fung use IT to enhance its global competitiveness?Explanation / Answer
The case examines the evolution of Hong Kong based Li & Fung Limited from a traditional trading company into a global consumer goods export trading giant and a manager of customers' supply chains. It discusses in detail the company's efforts to constantly evolve its business model in response to the changes in the external environment and the customer needs and preferences. The case examines Li & Fung's major strategies viz. positioning itself as supply chain manager, integration of operational strategy with its organizational strategies, customer-centric organizational structure, technology and Internet initiatives, and globalization efforts, which contributed to the company's emergence as one of the world's leading consumer goods trading companies.
Finally, the case explores the challenges facing Li & Fung in 2004 and discusses its future prospects in the light of these challenges. The key focus of the case is on enabling the students to gain a comprehensive understanding of globalization - rationale, levels of globalization, managing global operations, globalization strategies and challenges.
Issues:
» Understand how a regional trading company used its core advantage (its vast sourcing knowledge and network) to become a global value chain manager, providing global economies of scale and scope to its customers
» Study the importance of efficient value chain management for a global company
» Critically analyze the strategies adopted by Niall SK Booker to make HSBC India an aggressive, performance-oriented organization
» Examine the role of IT and the Internet as major drivers of globalization
» Study the importance of acquisitions and alliances in a company's globalization strategies
» 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 a global player
» Appreciate how visionary leadership and management capability can work as a core advantage for a company to attain success in global markets
» Study the changes taking place in the retailing and trading industry with respect to customer requirements and examine the need for a customer-centric business model for an export trading company
» Gain insights into the dynamics of Hong Kong's export trade industry
REFER TO:
www.ecch.com/educators/products/view?id=62324
The case examines the evolution of Hong Kong based Li & Fung Limited from a traditional trading company into a global consumer goods export trading giant and a manager of customers' supply chains. It discusses in detail the company's efforts to constantly evolve its business model in response to the changes in the external environment and the customer needs and preferences. The case examines Li & Fung's major strategies viz. positioning itself as supply chain manager, integration of operational strategy with its organizational strategies, customer-centric organizational structure, technology and Internet initiatives, and globalization efforts, which contributed to the company's emergence as one of the world's leading consumer goods trading companies.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.