The Chinese company Li & Fung was created in the Guangzhou area in 1906. This is a family company founded by Fung Pak Liu, the grandfather of the actual director Victor Li. The first goal of Li & Fung when it had just been created was to act as a ‘broker': Fung, who was an English speaker, was the intermediate between Chinese manufacturers and American or European buyers, as they didn't speak Chinese. During the twenties and thirties, the company diversified its activity with proposing storage and high intensity labor force production. After the Second World War, Li & Fung was relocated in Hong-Kong and extended its activities in several fields as toys, apparels, plastic flowers and electronic products. The reason why Li & Fung's history has been so long and so successful is thanks to a smart positioning and strategic management during all those years. The brand is now recognized as a reliable trading brand, having prospectives and looking forward while keeping the old efficient methods. Moreover, Li & Fung has a very strong corporate culture, but the fact is that this corporate culture is humble and works on the bases of meritocracy. Moreover, salary bonuses are calculated on profits and not as a fixed percentage, which makes every employee do the best he can. The company works on decentralization which helps managers to be in partial autonomy and also in centralization, with their centralized IT.
[...] This allows Li & Fung to be reactive and to be more efficient in a different way. Between 1993 and 2001, three 3-year plans lasted with success. The fact that the approaches are different and that set up goals have been and are still can be managed to attract investors. This is a good way for Li & Fung to be different from its competitors to attract funding because it is another way to increase its growth. Thanks to this vision, capitalization was about 6.6 billion dollars in 2000 and the price earnings ratio has been incredibly high Acquisitions strategy This is a very competitive strategy because it involves buying rival companies. [...]
[...] Moreover, it allowed Li & Fung to increase its economies of scale with offering premium services to SME, which represents a big market in the US and Europe. It provides to this special but powerful and important target premium services with no minimum quantity to order. In this way, SME can be more flexible in its inventory, and can also save money thanks to the replenishment inventory system. Those options are not proposed by Li & Fung competitors. This supply chain strategy allows the brand to reduce its production time and then its delivery time, which is a big plus point to the competitors who are not processing in the same way. [...]
[...] Li & Fung could keep implementing e-commerce in its plans, little by little and follow its rhythm as it has always done. As it has been analyzed, the company has not too many weaknesses and is still one of the most important companies of the sector in China. Online venture cannot have bad impact on share performance if it manages it well and if it studies how it can be the most efficient. Moreover, as it can be noted in several companies of the sector, internet and e-commerce platform are developed, replacing little by little physical companies. [...]
[...] It is also a strategy to get more skills and knowledge, less operating costs, and to weaken the competition, because the sourcing companies that Li & Fung bought are the ones used by its main competitors. Moreover, Li & Fung got the privilege to buy one of its 2 largest competitors: the Swire group. This is an export trading company and this buying made Li & Fung to become the only supply chain management company. So as we can see, Li & Fung is aggressive, with buying its competitors to be the only one in the market to have an added value Li & Fung IT and e-commerce strategy In 1995, an intranet was launched for the company to simplify communication between all the offices and manufacturers and to link each actor of the supply chain with the other. [...]
[...] say that Li & Fung has a mix strategy between the competitive strategy (acquisition, high competitiveness) and the relational one (partnership, alliance). The selection of general objectives of a company must highly consider the competition. Here, Li & Fund adopted a Tripartite strategy, which is at the same time external and internal, based on organic growth, acquisition and commerce, to stay competitive and stay one of the markets' leaders Organic Growth: How Li & Fung is applying a competitive strategy? [...]
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