LI AND FUNG Navigating through disruptive changes Harvard Case Solution & Analysis

LI AND FUNG Navigating through disruptive changes Case Study Solution

Question 2:

Difference in Previous and Current Future Plan of Li and Fung:

The Li and Fung’s (2017 – 2019) 3 years plans was different from the previous three years plan of the company in a sense that the previous plan was focused on merger and acquisition through which Li and Fung basis motive was to expand its business and operations. The expansion of business and operations would let the company to achieve economies of scale which is the main motive in the precious three year plan through merger and acquisition. The current three year plan of 2017 to 2019 by the company is focused on the efficient management of services and operations. One of the advantage of the motive behind 2017 to 2019 plan is that it will impact the company in a way that the advantages of previous plan can also be acquired i.e. efficient management of resources and services of the company will let the company to achieve economies of scales which was only possible by expanding business and operations acquired by the company in its previous plan. To take advantage of the essence of the previous plan, the three main objectives of the current three years plan includes efficient management system, management of dispersed manufacturing and global supply chain management. All these three moves suggested by the company were focused on the efficient management of operations to compete in the competitive environment prevailing within the industry. Moreover, the efficiency in operations for the current three year plan involved efficient centralized management system which has now become a hygiene factor in the logistic industry rather than a competitive advantage because of its necessity for the companies.

The company also focused on the dispersed manufacturing operations i.e. sourcing from multiple manufacturer which will enable the company to adopt contingency plan in case any issue arises in the production process which could disrupt or delay the delivery of product on time. The company has also focused on global supply chain management in the three year plan of 2017 to 2019 which will enable the company provide a last mile service to its customer by building a user interface which will enable customer to design and order item according to their preference which will decrease the cost of contracting suppliers and retailers. Thus, the motive of the company is to increase the profit margins by efficiently managing operation rather than squeezing supplier and retailers.

New Plan Adaption of Changing Environment:

The new plan of managing operations efficiently in essence with the large network and operation of the company enabled the company to adopt the changing environment of the industry as well. The efficiency in operational management will enable the company to increase its revenue and profitability margins due to centralized management system which will enable the company to take less time in delivering the product to the end users as well as to other customers which include retailers as well. Although the company always adopted change as it was one of the strategy of the business to remain competitive but due to economic down turn and changing industry norms toward technological advancements, the company has also changed with required industry need for innovation and development of operational efficiency minimizing the time of delivery which will enable the company to increase its revenue while managing costs efficiently.

Question 3:

Accelerating Internal Change to Compete in the Changing Environment:

Spencer, CEO of Li and Fung recognized that in order to compete in the changing environment, the company had to focus on internal changes which includes innovation, research, speed and efficiency in providing services which will able the company to gain competitive advantage over other companies located in the same industry. To provide advancement in internal change, the compensation and bonus structure of the company is revised by the CEO in order to attain internal efficiency which will enable the company to focus on innovation and ideas different from traditional companies of similar work nature.

The need for human resource management was recognized to manage two different segments of business structure adopted by the company which includes services by the company i.e. supply chain management and logistic solution and products which includes sweaters, furniture and beauty. The main focus of the plan is to provide value to the end users and anticipate the macroeconomic condition which can be faced by the company in the future. To cope up with the changing environment, Li and Fung established different retail centers which includes Fung business intelligence center which was developed to identify the market trends currently prevailing or will prevail in the future so solution can be defined according to trend analysis of the situation. The other research center which was developed by Li and Fung includes Fung global institute, Fung academy and global retail and technology group. These research centers will enable the company to create and provide value to its customers with efficient management of operations which is the main motive for the three year plan adopted by the company for the year 2017-2019. Moreover, the company has company has acquired China Container Line (CCL) in 2014 which increased the scale of operations for Li and Fung. This acquisition enabled the company to acquire significant volume to deliver which provided the economies of scale to Li and Fung. Hence, all these advancement including a facility to customize product which is provided by the company to its customers of sweaters, furniture and beauty. These services created to provide value to the customers and provide them last mile service in delivering the product enabled the company to adopt the changing environment of the industry and business.


After conducting the analysis on the macroeconomic environment and internal company analysis it was found out that the company possess more than 100 years of experience in the business with a well-known prominent brand name. Hence company enjoyed good profitability margins till the year 2014 but later due to the changing industry and macroeconomic environment, the company revenues and profit margins declined. The three year strategy is then adopted by the company to provide value to its customers and internal change was adopted in order to manage operations efficiently and gain competitive advantage over other competitors. Thus, the company changed with the competitive and changing environment to remain competitive with in the industry.............


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