Li & Fung Case

A. What is business model of Li & Fung?

Li & Fung don't have their own factories, but have efficient systems and infrastructures in trading, logistics, and distribution. Li & Fung make quit higher profits than other companies in fashion industry by using specialized systems and broadening business area by M&A.

B. Why did not Lifung.com outsource the information system? Was it efficient?

One of the core strategies of Li & Fung is M&A of competitors to broaden their business area, and several M&A is still going on, which makes Li & Fung bigger and bigger. Thus, developing and improving management information system is required for making efficient business and increasing profit. The profits and success of Li & Fung is determined by minimizing unnecessary processes and times by using globalized information systems. This is reason why Li & Fung has many software engineers and strong IT infrastructure, but not own factories, which is similar level with Apple, Google, Samsung, or Yahoo. Thus, Li & Fung must have its own system development teams and has to keep their focus on developing efficient information system.

C. Are Li&Fung offline and Lifung.com able to coexist?

Revenue and position in market of Li & Fung could become smaller by lifung.com because it was proven that lifung.com is successful model and lifung.com could reduce the cost compared to offline business. However, there is limitation in online-based massive trading because most buyers want to see and check the products directly in offline, not by online webpages, and because of possible security problems. Thus, Li & Fung should target conventional clients for massive trading, but lifung.com should target small clients, which could make coexistence and success of both Li & Fung and lifung.com.

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