LI & FUNG: GROWTH FOR A SUPPLY CHAIN SPECIALIST This case highlights the journey of Hong Kong-based trading company during global economic downturn of 2009

1. LI & FUNG: GROWTH FOR A SUPPLY
CHAIN SPECIALIST
Title

2. 1 CASE SYNOPSIS
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This case highlights the journey of Hong Kong-based trading
company Li & Fung Group which was a trading company
renowned for skillful management of its supply chain.
With the global economic downturn in 2009 following the
collapse of the American housing and credit markets, and
with the fashion industry expected to be severely affected,
how could Li & Fung continue to grow its business and
achieve the target of doubling its turnover to US$20 billion
for the period 2008-2010?

3. 2 CASE
BACKGROUND
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BRIEF CASE BACKGROUND
 Hong Kong-based Li & Fung Group was a trading company
renowned for skillful management of its supply chain with 80
offices in 40 different countries.
 The bulk of its business came from the trading of soft goods,
which comprised garments and apparel, with the remainder
consisting of hard goods such as furniture, fireworks and
promotional items. Its major market was the US, followed by
Europe, which contributed about one-quarter of its turnover.
1906:
Establishment
1937:moved
headquarter
s to Hong
Kong
1949:Transforme
d to garment
trading

4. 3 KEY ISSUE
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IN THE ENVIRONMENT UNCERTAINITY
DUE TO GLOBAL ECONOMIC
DOWNTURN OF 2008 HOW COULD LI
& FUNG CONTINUE TO GROW ITS
BUSINESS & ACHIEVE ITS TARGET OF
DOUBLING TURNOVER TO US$20
BILLION FOR PERIOD 2008-2009?

5. 4 INFERENCES
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0
50000000
100000000
150000000
200000000
250000000
300000000
350000000
400000000
450000000
2002 2003 2004 2005 2006 2007 2008
PROFITS(US$)
SITUATION ANALYSIS (EXHIBIT 1)
The EPS has declined from US$ 4400 in 2002 to
US $ 8900 in 2008

6. 4 INFERENCES
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SALES
69%
31%
Sales
Soft goods
Hard goods , health and cosmetic products
65%
26%
9%
Sales
US Europe Others

7. 4 INFERENCES
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VALUE ADDED ACTIVITIES IN SUPPLY CHAIN
Support
Trends
Information
Design
Sourcing
material from
extensive
network
Coordination of
sourcing
activities
Material
Outsourcing
Quality
control
Prototype
testing
Manufacturing
Consolidation
of goods
Custom
clearence
Shipping

8. 4 INFERENCES
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CRITICAL SUCCESS FACTORS
 Extensive network of
suppliers- buying
office in about 40
countries, with most
no. of offices in
European
&Mediterranean
countries
 Acquisition
strategy &
Venture
Capital to
expand the
market
 Customer
centric
organizational
Structure –
ensured no
bureaucracy
 Diversified Products
& Services-Hard
goods, soft goods ,
health and cosmetics
products, Sourcing
 Onshore Business-
Services such as
design, product
development quality
control and
distribution.

9. 5 suggestions
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1.More Stress on Europe markets
2.Use of US$ 100 million for acquisition
to be utilized to expand in Asian
countries which were less affected by
2008 down turn.
3.Sticking to diversification into health
and cosmetics.
4.Leveraging its supplier relationship into
performing sound trade overseas.
5.Avoid cases like KB toys

10. THANK YOU!
Anjali Mehta Traya Roy Chowdhury