Global Expansion of Li & Fung: Challenges and Opportunities

• Main Authors: James W. Eustice, 于世杰
• Other Authors: Chun-Chung Chen
• Format: Others
• Language: en_US
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/50233373360581472896

碩士 === 國立臺灣大學 === 企業管理碩士專班 === 98 === Background: Due to globalization, the world has been getting smaller for some time. Global trade has evolved greatly because of improvements in sourcing and supply chain management. Li & Fung has been at the forefront of growth for more than a century. It is the world leader in sourcing consumer goods. It is a global network with 12,000 international suppliers, and access to an estimated 10,000 factories around the globe yet it does not own its factory networks. Millions of people literally work for Li & Fung each day but they are not employees of the company. Li & Fung has created a kind of virtual supply chain where it does not own any components in the supply chain; rather they manage and orchestrate it from above. Results: Li & Fung evolved through this past century as the market leader in sourcing consumer goods. It now faces challenges due the global recession and its own incredible growth. The there are internal and external challenges facing Li & Fung. External conditions of recession, an increase in the number of customer bankruptcies, and being too dependent on America’s retail industry all leads to greater risks. Li & Fung also must now face internal risks with their own aggressive three-year plans. These plans push the company set extremely high goals for itself. To meet these goals, Li & Fung has had to look towards acquisitions to increase total turnover of goods. These acquisition are part of their capital intensive onshoing model started in America and now replicated in Europe. Li & Fung is an expert in sourcing and supply chain management and has been able to change its business model to be flexible because of its creation of its virtual business model. Will this be enough for Li & Fung to continue to grow as strong as it has been in the past and how will they ever be able to meet the next set of higher three-year goals? Conclusion: Li & Fung needs to take action to neutralize the current risks. The company needs to rebalance their country exposure and create a model to start selling to the very countries it is sourcing from now. It also needs to continue to add value to its supply chain, and set new three-year plans to accomplish these new goals. With the help of some new three-year goals Li & Fung can turn around these challenges and risks facing the company today and grow even larger in the future.