Fast, Global, and Entrepreneurial: Supply Chain Management, Hong Kong Style Harvard Case Solution & Analysis

Introduction of the company Li & Fung

Li & Fung was founded as a broker company by the grandfather of Victor Fung in 1906 in Canton.In 1976 Victor and his brother wanted to turn the company into something different. For this purpose, both brothers took the company through different stages.Firstly,by becoming regional sourcing agent and establishing the offices in Taiwan, Korea, Singapore.In the second stage the company was moved forward further and became the manager and deliverer of manufacturing program.In this process the customers asked Li & Fung for something and Li & Fung was there to manage the raw material,production process and delivery to that customer.

QUESTION 1

Activities and Capabilities which are key to the success of  Li & Fung:

The main reason for the growth of Li & Fung was a successful change management within Li & Fung by turning Li & Fung from simple broker company to an international sourcing agent and manufacturing manager and deliverer. As a sourcing agent, Li & Fung used to source the customer textile items; for example, with respect to the quotas governed by the world trade, as an individual customer does not know the quota knowledge and usage.

Secondly, the successful creation of Li & Fung’s brand as a manufacturing manager played critical role in the success of the company. This area of expertise was exploited by obtaining the order from a customer and manage the supply chain to make the output at its lowest cost; for example, the related raw material which is to be used is sourced from a country where they are cheapest and sending these materials to southern China for cheap production and then delivering finished goods to the customer.

The market knowledge of various Asian countries  with regard to the price of materials, labor and other overheads is also a competitive advantage of Li & Fung as through this market research the company is able to manage the supply chain profitably and to locate the best suppliers and manufacturers. The number of these suppliers of Li & Fung is 7,500 in 25 countries.

QUESTION 2

The role and importance of  “little John Waynes”:

It is an idea to create small units operated by one person having the responsibility to take care of one customer and giving that person full authority and autonomy as if he is operating his own company.These individuals receive full administrative and financial support from the company.The importance of this will be that the person responsible will be in a position of decision making as he has full autonomy to prove himself as a successful manager of the unit and to increase personal sales figures in order to get incentives. This will ultimately affect the performance of the company regarding the sales and overall excellent performance by the workforce.

QUESTION 3

Explanation of  the sentence “People with a computer in one hand and a machete in another”:

The purpose of the statement of Mr.Victor is to differentiate the information system of Li & Fung’s suppliers and customers.The suppliers of Li & Fung are mainly in Asian emerging countries; for example, Bangladesh and India, where the system of information gathering and the IT infrastructure is very obsolete whereas, Li & Fung’s customers are in Europe and United States where there is up to date IT infrastructure system and the flow of information is accurate and on timely basis.In other words, the customers of Li & Fung have 21st century required information systems while the suppliers lack modern information system.Fast, Global, and Entrepreneurial Supply Chain Management, Hong Kong Style Case Solution

QUESTION 4

Opportunities and Threats to the Li & Fung in future:

Opportunities

  • Currently, the Li & Fung company has customer market in the West and supplier base is in Asia and the flow of the sales is from East to the West. Li & Fung have opportunity to explore the products of the West, which have demand in the East; for example in defence and IT industry there is huge demand in East and can be fulfilled by the markets in Europe and America.
  • Li & Fung may acquire the manufacturing setup in China or in other countries where the labour is cheap. Therefore, this will help Li & Fung to secure the supplies and to capture the margins of the suppliers.

Investing in the modernization of information system of the suppliers so that Li & Fung can deliver orders timely and efficiently...........................

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