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    Li & Fung Group 5

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    yogesh85
    Li & Fung is a $2 billion global export trading company with 3,600 staff worldwide. It sources and manages the global supply chain for high-volume consumer goods. To counter emerging e-commerce competitors, Li & Fung launched an e-commerce portal called lifung.com in 2000. It implemented a strategy to aggregate orders from small and medium enterprises to offer customization and lower costs. By 2004, Li & Fung expected lifung.com to generate $2 billion in sales, a third of the group's revenue. Li & Fung's competitive advantages included its backend logistics infrastructure, reliable procurement, market knowledge, and brand reputation.

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    Li & Fung Group 5

    Uploaded by

    yogesh85
    248 views15 pages
    Li & Fung is a $2 billion global export trading company with 3,600 staff worldwide. It sources and manages the global supply chain for high-volume consumer goods. To counter emerging e-commerce competitors, Li & Fung launched an e-commerce portal called lifung.com in 2000. It implemented a strategy to aggregate orders from small and medium enterprises to offer customization and lower costs. By 2004, Li & Fung expected lifung.com to generate $2 billion in sales, a third of the group's revenue. Li & Fung's competitive advantages included its backend logistics infrastructure, reliable procurement, market knowledge, and brand reputation.

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    Li & Fung is a $2 billion global export trading company with 3,600 staff worldwide. It sources and manages the global supply chain for high-volume consumer goods. To counter emerging e-commerce competitors, Li & Fung launched an e-commerce portal called lifung.com in 2000. It implemented a strategy to aggregate orders from small and medium enterprises to offer customization and lower costs. By 2004, Li & Fung expected lifung.com to generate $2 billion in sales, a third of the group's revenue. Li & Fung's competitive advantages included its backend logistics infrastructure, reliable procurement, market knowledge, and brand reputation.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    248 views15 pages

    Li & Fung Group 5

    Uploaded by

    yogesh85
    Li & Fung is a $2 billion global export trading company with 3,600 staff worldwide. It sources and manages the global supply chain for high-volume consumer goods. To counter emerging e-commerce competitors, Li & Fung launched an e-commerce portal called lifung.com in 2000. It implemented a strategy to aggregate orders from small and medium enterprises to offer customization and lower costs. By 2004, Li & Fung expected lifung.com to generate $2 billion in sales, a third of the group's revenue. Li & Fung's competitive advantages included its backend logistics infrastructure, reliable procurement, market knowledge, and brand reputation.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 15

    LI & FUNG : INTERNET ISSUES

    Prepared by: Vaibhav Rokade Sonny Laskar Mandeep Bhullar Gaurav Minocha S. Ravisankar Vemuri

    042 039 022 013 035

    LI & FUNG BACKGROUND


    A $2 billion global export trading company
    3,600 staff worldwide Sourcing and managing the global supply chain for High-volume, time-sensitive consumer goods

    Product mix hard and soft goods


    Soft goods apparel, including woven and knit garments Hard goods fashion accessories, festive or holiday products, furnishings,

    giftware, handicrafts, home products, furnishing, home products, fireworks, sporting goods, toys, and travel goods

    STRATEGY OF THE COMPANY


    Holistic Supply Chain Management
    Provided value-added services across the entire supply chain Li & Fung does not own any of the components in the supply chain but

    manage and orchestrate it


    Holistic conception of the value chain

    Growth Strategy of the company


    Organic growth Expansion through acquisition Extension of its supply chain to new markets via the Internet (E-commerce)

    SWOT

    Strength
    Faster turnaround reduce inventory costs Reduced matching and credit risks Lower cost and flexible sourcing Provided up-to-date fashion and market trend information

    Weakness
    Worldwide separate and individual management teams SME orders were small & lacked economies of scale

    Opportunity
    Flexibility to the customers for designing their own goods. SMEs get chance to earn smaller rate commission Ability to set up a business plan to build up markets

    Threats
    Fear from old economy retail customers online companies acquiring an old economy trading company, offline companies partner with a dot-com

    E-COMMERCE
    IT division started with a team of 60 Software development outsourced The building blocks of Li & Fungs e-commerce

    solution:

    1995: Intranet

    Link the groups global offices and manufacturing sites Customized sites for large customers Streamline and synchronize orders

    1997: Extranet

    E-COMMERCE STRATEGY
    To counter threat from newly emerging dot com companies, they

    decided to start an online Portal: lifung.com


    Bubble In: Entire development to be done in-house. No

    outsourcing.
    Ensure company wide adoption of new technology

    Reduce risk

    Castling Group: Helped old companies step into online markets


    Both Castling and Li & Fung wanted to enter online B2B market Strategic Partnership: Both invested in lifung.com Castlings Technology and Li & Fungs Supply Chain muscle

    E-COMMERCE STRATEGY
    Market Research
    Differentiating factor:

    Balance of Old and New economy mindsets


    Market Research

    Market STP
    Old Economy Ideas Focus group Discussions

    absolutely essential, not done by new dot coms


    Focus group research to

    identify retailers needs


    Result: Better

    understanding the retailer

    B TO b: The world of SMEs


    Market research: Potential market of $54 billion, all SMEs.
    Overlooked by most suppliers Were offered limited range of options High importer margins Scattered market, individual order size small, below factory minimum

    Li & Fungs answer through lifung.com:


    Aggregate orders of all SMEs Offer limited customization (colour, pockets, labels, etc.) Charge less import commission Allowed SMEs to respond quickly to market trends

    IMPLEMENTATION
    Lifung.com (2000) E-commerce platform matching buyers & sellers Hardware Sun Micro systems Online configuration Selectica Database Oracle Transaction system Broadvision SI Anderson consultants In-house development eSO (2001) Electronic Stock Offer Aggregates suppliers to post surplus inventory

    Seconds purchasing platform

    LIFUNG.COM: EXPECTED EARNINGS


    First 2 years: Minimal earnings
    Operating margin : Approx. 6%

    By 2004
    $2 billion in sales 1/3rd of the groups revenue Operating margin: Approx. 7- 8%

    Groups attention focused on lifung.com s bottom line

    Competitive advantages
    Back-end logistics infrastructure
    Reliable procurement Market knowledge

    Brand reputation
    Product differentiation

    NUMBERS TELL THE GROWTH STORY


    FY 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 PAT (HKS$ thousands) 195793 552709 216693 296945 374131 454673 577223 860092 712744 1080696 1211014 1529289 1932763
    0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 FY PAT (HKS$ thousands) 500000 2000000 1500000 1000000 2500000

    Li & Fung Fin Performance

    NON STOP JOURNEY.


    Business Intelligence Centre FUNG academy Continuing M&A s . Continuing public listings Indian presence investor and partner of Future supply chains

    IT STRATEGY
    Vision of the top management Continuous updation of IT skills through internal trainings IT Strategy should be in synergy with the Business Strategy Impact on revenues in short run and long run Segregation of channels/Key account management IT Strategy is an enabler to support the business model

    THANK YOU

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