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V Li & Fung founded in 1906 by Fung Pak-Liu

and Li Toming in Guangzhou, China.


V 1920s & 1930s ± expanded to warehousing and
handicrafts manufacturing
V 1945 ± Li sold his shares to Fung Family
V 1973 ± listed on HKSE
V 1988 ± privatized, streamlined and
incorporated in Bermuda
V 1995 ± acquiring Inchcape Buying Group
V 2000 ± 2 billion dollar global trading
company
V It operates in 40 economies and employs
26,000 employees worldwide.
V Li & Fung sources and manages the global
supply chain for and successful companies such
as The Limited, Warner Brothers, Avon, Bed,
Bath & Beyond, etc.
V Li & Fung joined with the technologically
savvy company ± Castling, to form lifung.com.
V The intranet and extranet technologies were
successfully implemented at Li & Fung in 1995
and 1997 respectively.
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 processes that have to be
performed in designing, production, marketing,
delivering, and supporting a product or service.
V   
  
  

  
of processes and activities
each of which adds value to the product or
service for the customer
V Comprised of a global network of partners and
clients.
V 69% of total sales from the U.S.
V Products include a mix of hard goods (quality
controlled products such as toys and sporting
goods) and soft goods (clothing and apparel).
Profit margin for soft goods was between 6%
- 8%.
Profit margin for hard goods was between
10% - 30%.
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PRIMARY Activities ± that creates value to
customers
SUPPORT Activities ± that support and facilitate
the primary ones
The primary value chain activities
are:
V Inbound Logistics: the receiving and
warehousing of raw materials, and their
distribution to manufacturing as they are
required.
V Operations: the processes of transforming
inputs into finished products and services.
V Outbound Logistics: the warehousing and
distribution of finished goods.
V Marketing & Sales: the identification of
customer needs and the generation of sales.
V Service: the support of customers after the
products and services are sold to them.
These primary activities are
supported by:
V The infrastructure of the firm: organizational
structure, control systems, company culture,
etc.
V Human resource management: employee
recruiting, hiring, training, development, and
compensation.
V Technology development: technologies to
support value-creating activities.
V Procurement: purchasing inputs such as
materials, supplies, and equipment.
V We can use the   


± plan for a better way of meeting customer
demands;
± identify processes that add value;
± identify processes that reduce cost.
(ALUE CHAIN IN LI & FUNG
V For Li & Fung, the primary activities included:
å receiving an order from the customer
å Li & Fung utilized its global sourcing network
to place an order for raw material and send the
raw material to the production center to plan
and design the product as per the customer
requirements.
å After product planning, the order was
outsourced to manufacturing factories.
Contd«
å Manufacturing factories were chosen from its
world wide system of factories so as to benefit
from labor costs, quotas, laws, transportation
costs etc.
å Li & Fung generated revenues by charging a
commission to the factories it supplied raw
materials to.
å Through the new information systems and B2B
platforms, customers could also make last
minute changes to their order requirements..
Contd«
å This flexibility served to increase customer
satisfaction.
å Further quality and order control was
maintained by keeping one central office in
Hong Kong to oversee this process.
å Dedicated and professional teams also managed
the shipping and export of the products to
ensure that the finished products were delivered
in an efficient and timely manner
V Support activities play an important role of
making the delivery of the products possible.
For Li & Fung, an important support activity
included
å the technology department in New York,
å the 60 employees involved in managing the
IS/IT systems
å the financial and administrative support
departments in Hong Kong
VALUE CHAIN PROCESS OF LI &
FUNG
The strong historical experience of Li & Fung, its
brand name, its well established reputation for
high quality low cost products and its continued
implementation of information systems and
technologies, helped it achieve significant
competitive advantages through this efficient
value chain process.
BENEFITS OF THIS (ALUE
CHAIN
V To Li&Fung:
å higher profits
å lower risks
å economies of scale
V To clients:
å Timely
å high quality
å differentiated products
å low cost products
Li & Fung Trading
Li & Fung Group

Li & Fung Group

Li & Fung Trading IDS Group Li & Fung Retailing

Export Sourcing Integrated-Distribution Retailing


Services
å £SD14 billion in 2008 å £SD1.7 billion in 2008 å £SD900 million in 2008
å Soft & Hard goods å Asian Distribution å Toys µR £s, Trinity, BLS
å 40 countries, 70 offices å Global Logistics å Circle K º 
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Our China Advantage
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Sourcing Trend In 2008
a A true Asian multinational
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ROLE PLAYED BY ALLIANCE AND
ACQUISITIONS IN LI FUNG·S
GLOBALIZATION STRATEGY«
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USE OF I.T TO ENHANCE GLOBAL
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Information Pipeline ViTAL
Khat are the benefits of
knowledge management?
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 What are the 5 biggest export trading Cos of
the world
1.Sogo shosha
2. Hong kong Dexi(xuzhou) import and export
company
-. What are the biggest 5 export trading Cos of
India, China and Hongkong respectively
currently
INDIA
1.Bello jewels pvt ltd.
2. Prakash enterprises( alloys and steels)
3.Rishikesh Electronics ltd.(textile labs, chemicla
labs, knitting machines)
4. Aura Trading(generic drug)
5. Bhawal Steel Agency
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