Li and Fung Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Li and Fung Case Study Solution

A decentralized organizational structure by creating small divisions which were given autonomy to make certain decisions. The company hired people whose second alternative was to own and run their own businesses and appointed them as the lead for their division. Empowered them to use company resources and hire the personnel’s to grow their team and make decisions regarding the trends and opportunities in the market.
The division’s members were relatively small in numbers, and their focus was to cater a particular customer or a segment of customers with similar requirements.
By creating divisions and assigning them to a particular customer segment, they remove the possibilitiesof traditional fights in the organization on the basis of geographies and products.
No ceiling on bonuses for the division executives, improved the performance of the divisions. As, bonuses were directly related to the performance of a particular division.
Successfully avoided becoming a bureaucratic organization, by making small units.
Provide them more flexibility as, small units operations can be initiated and stopped at will.

The company restructured successfully, from a trading agent to an efficient supply chain management company. By, altering its business practices both internal & external, the company achieved tremendous financial growth.
Created value for their target customers by implementing the ‘disperse manufacturing’ technique, and successfully managed it, to deliver high quality global products.
Has started to diversify its business portfolio, by penetrating the European markets. Which is very important for an organization to compete in today’s global environment.
Division management and compensation alignment practices propelled the business to reach new heights. Divisions focus on a particular customer segment, enable them to understand their customers’ and deliver excellent service. Tying the compensation to the division’s performance increased motivation and productivity.
Continuous innovation and adaptation to cater the customers need is of essential importance for an organization, in order to succeed and stay competitive in the business world.

The company has already started to capture the European markets as its revenue percentage from this region has increased from 18% to 26% in the preceding year. This region provides exponential growth opportunity for the company along with expansion in the African region.
Due to globalization and intense market competition, the companies are only focusing on their core competencies and outsourcing the remaining processes and services. The strength of Li & Fung is its tailor made supply chain management according to each customer. Which adds more value to the customer’s finished products, as they are manufactured in the different countries who possess more expertise in the development processes than any individual country like China can provide.

Their customized services are providing exceptional value to their customers’ and they don’t need to change their current business model. But, yes they can introduce new services like the recent success of onshore business, where they switch their role from being an exporter to become an importer. And with success in the US by offering value added services they have entered the European markets, as an importer as well. With recent figures of this new onshore business yielding higher profit margins in comparison to their offshore business..............

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