Analyze the factors that may impact an industry and the successful marketing of a company’s product.
Evaluate the factors perceived to be the biggest strengths and weaknesses.
Describe some opportunities for growth that could be capitalized.
Rahul Jacob, "Inside Track: Traditional Values at the Click of a Mouse," Financial Times, August 1, 2000, p. 14. Online book retailer Amazon.com changed the book business driving conventional book retailers to react. Some data in this area originates from past Harvard Business School Case Studies: "Li and Fung: Beyond "Filling in the Mosaic"- 1995-98," (HBS Publishing No. 398-092) Michael Y. Yoshino, Carin-Isabel Knoop, Anthony St. George; January 1, 1998; and "Li and Fung (Trading) Ltd.," HBS Publishing (No. 396-075) Gary Loveman, Jamie O'Connell, October 26, 1995. With a question and answer session the next day, William was certain of the Group's execution and lifung.com's prospects. In any case, he realized that imperative issues stayed uncertain: Was there any shot of channel strife or cannibalization between the disconnected business and the start-up? How might the market respond to the start-up once it was propelled the next year? What's more, how particularly would web based business at last change his family's extremely old organization? Organization Background Li and Fung was established in 1906 by William's granddad, Fung Pak-Liu and his accomplice, Li To-Ming in Guangzhou, China as a fare exchanging organization pitching to abroad dealers. In the 1930s the organization expanded into warehousing and the make of crafted works. Soon after Fung Pak-Liu passed away in 1943, his child Fung Hon-Chu expected charge of the organization. After two years, quiet accomplice Li To-Ming resigned and sold his offers to the organization. The organization held Li's surname, a homophone "I'm not an Internet fellow, I'm a business fellow," jested William Fung, overseeing executive of Li and Fung Trading Co. Clad in his chinos and dark American Eagle T-shirt, Fung looked substantially more like another economy business person than the selfdescribed disconnected, "old economy relic": "I'm 51, I'm in excess of a silver hair in Internet terms, I'm a fossil."1 Nor did lifung.com, his senior sibling Victor's new online organization, take after an ordinary Internet start-up, especially with a 96-year-old parent conceived toward the finish of the Qing Dynasty. In August 2000, the day preceding beta dispatch of the new business-to-business (B2B) online business entryway, William portrayed the difficulties confronting Li and Fung: About three or four years back, Victor and I examined the Internet and how it impacts us. Our beginning stage was a protective stance: Would the Internet disintermediate us? Would we get Amazoned2 by somebody who will assemble the greater part of the data about purchasers and manufacturing plants on the web? After a great deal of research we understood that the Internet encourages store network administration and we wouldn't have been disintermediated. The key is to have the old economy know-how but then be available to new economy thoughts. Display 1 Li and Fung Consolidated Income Statement (December 31, 1999), in HK$* 2000 1999 1998 (HK$ thousands) (HK$ thousands) (HK$ thousands) (HK$ thousands) (June 30) (December 31) (June 30) (December 31) Turnover 10,267,606 16,297,501 6,583,730 14,312,618 Cost of offers (9,262,171) (14,585,881) (5,895,432) (12,891,709) Offering costs (191,616) (354,124) (143,136) (287,524) Managerial costs (87,741) (867,842) (56,436) (747,725) Benefits before tax assessment 328,943 613,861 208,936 471,098 Tax assessment (29,805) (36,638) (14,536) (16,425) Benefit after tax assessment 299,338 577,223 194,400 454,673 *In August 2000, US$1 _ HK$7.78. for "benefit" in Chinese, which, alongside "Fung," a homophone for "wealth," had a promising ring when joined. Li and Fung moved forever to Hong Kong toward the finish of World War II, extending its tasks to incorporate toys, articles of clothing, plastic blossoms, and gadgets. In the mid 1970s, both Fung siblings had quite recently come back from the United States: William had earned his MBA from Harvard Business School and came back to the business in 1972. Victor had as of late finished his PhD in financial matters at Harvard University and, following a two-year stretch educating at Harvard Business School, rejoined the business in 1974. Their arrival proclaimed Li and Fung's change from a family-possessed business to a professionally oversaw firm, with an arranging and planning framework set up out of the blue. William and Victor, the third era to run the organization, felt that the following legitimate advance in developing the organization was to open up to the world. In 1973, Li and Fung turned into the holding organization for the Group and was recorded on the Hong Kong Stock Exchange (HKSE). All through the 1980s, Li and Fung extended its territorial system of workplaces all through the Asia-Pacific locale as more wellsprings of supply rose in the quickly industrializing Asian economies. In 1988 the Group was privatized and streamlined, fused in Bermuda in 1991, and its exchanging exercises were again recorded on the HKSE in July 1992. With the 1995 obtaining of Inchcape Buying Services (in the past Dodwell), Li and Fung extended its client base in Europe while at the same time moving its sourcing system past East Asia to incorporate the Indian subcontinent, the Mediterranean, and Caribbean bowls. By 2000, Li and Fung was a $2 billion worldwide fare exchanging organization with 3,600 staff around the world, sourcing and dealing with the worldwide production network for high-volume, time-touchy buyer merchandise. (Display 1 indicates ongoing Li and Fung budgetary information.) By 2000, 69 percent of Li&Fung's deals were in the United States and 27 percent in Europe. Key clients incorporated The Limited, Gymboree, American Eagle,Warner Brothers, Abercrombie and Fitch, and Bed Bath and Beyond. Tesco, Avon Products, Levi-Strauss, and Reebok had progressed toward becoming clients inside the most recent two years; Royal Ahold, GUESS? pants, and bebe had marked on in 2000. Li and Fung's item blend included hard and delicate products. Delicate merchandise alluded to clothing, including woven and weave pieces of clothing for men, ladies, and youngsters. Hard merchandise included mold embellishments, merry or occasion items, furniture, giftware, painstaking work, home items, firecrackers, wearing products, toys, and travel merchandise. Hard products gave higher edges than delicate merchandise in light of the fact that, regardless of a by and large lower thing esteem per unit, they required higher esteem included administrations for orders that were additionally normally substantially littler than delicate products orders. Hard products things, for example, watches, shoes, bags, kitchenware, or teddy bears required a reviewer for quality control assessment for even the littlest cluster arrange, in this way significantly expanding what Li and Fung could charge. Edges for delicate products were around 6 percent to 8 percent, while we get a request from an European retailer to create 10,000 pieces of clothing. We discover that, on account of quantities and work conditions, the best place to make the pieces of clothing is Thailand. So we transport everything from that point. What's more, on the grounds that the client needs speedy conveyance, we may Item Improvement Crude Material Sourcing Creation Arranging Manufacturing plant Sourcing Assembling Control Quality Confirmation Fare Documentation Delivery Solidification Form Accessories Happy Products Furniture Articles of clothing Giftware Handiworks Home Products Donning Goods Toys Travel Goods Li and Fung Add up to Esteem Added Bundle Show 2 Li and Fung Add up to Value- Included Services Source: Company archives. partition the request crosswise over five manufacturing plants in Thailand. Successfully we are altering the esteem affix to best address the client's issues. Five weeks after we got the request, 10,000 pieces of clothing touch base on the racks in Europe, all seeming as though they originated from one factory.5 Li and Fung customers profited in a few different ways: production network customization could abbreviate arrange satisfaction from three months to five weeks, and this quicker turnaround enabled customers to decrease stock expenses. Besides, in its part as a go between, Li and Fung diminished coordinating and credit dangers, and furthermore offered quality affirmation to its clients. Besides, with a worldwide sourcing system and economies of scale, Li and Fung could offer lower cost and more adaptable sourcing than its rivals. Also, through acquisitions and worldwide development, Li and Fung was stretching out this information base to sub-Saharan Africa, Eastern Europe, and the Caribbean. At long last, Li and Fung gave up and coming design and market incline data to customers. Because of its Camberley procurement in 1999, it began offering customers virtual assembling or item configuration administrations. As per Victor, "Li and Fung does not claim any of the crates in the inventory network, rather we oversee and organize it from above. The making of significant worth depends on an all encompassing origination of the esteem chain." lately, be that as it may, Li and Fung had started to enhance tasks by controlling or owning vital connections in the chain. Now and again, Li and Fung offered crude material sourcing. In the past when customers put in a request, Li and Fung would decide the maker most appropriate to supply the merchandise, and that processing plant would source its own crude materials. However, Li and Fung comprehended its customers' needs superior to anything its assembling plants did, so by offering crude materials to its providers, the organization both guaranteed more prominent quality control and purchased bigger and hence more practical measures of crude materials, in this way delivering cost reserve funds for every maker. In such cases, Li and Fung additionally earned income by charging its manufacturing plants a commission on every crude material buy they made. By mid-2000, almost 15 percent of Group deals included Li and Fung's crude material sourcing administration. Joan Magretta, "Quick, Global, and Entrepreneurial: Supply Chain Management, Hong Kong Style, A meeting with Victor Fung," Harvard Business Review, September-October 1998, p. 106. Corporate Culture and Compensation From the 1992 privatization on, the division of work between the Fung siblings was obvious: as Group administrator, Victor was principally worried about the Group's vital issues and long haul arranging; as Group overseeing chief, William took care of ordinary tasks of the freely recorded exchanging arm, or as>GET ANSWER