Review The Li Fung Challenges Commerce Essay

With the turning of the cyberspace concern, the bing concern theoretical account of Li-Fung is being dispute as more and more B2B portals and on-line exchange starts to unify. A new manner of carry oning concern is required. This instance is to look into the Li-Fung traditional concern theoretical account and analysis the new IT scheme that LI & A ; Fung had implemented and what type of hazard and recommendation can be given.

Li-Fung Background and its success

Li & A ; Fung ( following will show as LF ) was able to surpass its rivals within the same industry for grounds that originated from its effectual direction, relationships with providers and clients, and operations. LF has a really long and solid experience into carry oning sourcing concern ; the company was founded more than 100years. The company scheme is to beginning and pull off the planetary supply concatenation for High volume and clip sensitive consumer goods. By working in both Hard and Soft line, LF was able to avoid market hazard associated with merely concentrating on one class. Further, the Holistic Supply Chain Management was one of LF nucleus strength as it provides value-added services across the full supply concatenation procedure. Such supply concatenation customization provide shorter order turnaround clip from 3 months to 5 hebdomads which in translate into less stock list cost for the clients. Further, LF being besides cut down the matching and recognition hazard and offering QA to its client. The given economic of graduated table and planetary web that LF is equipped with, helped to offer a lower cost and more flexible sourcing than its stiff rivals. Further, LF has an extended cognition base globally through acquisitions of rival sourcing companies. Furthermore, Li & A ; Fung provided up-to-date manner and market tendency information to its clients, which made the clients more flexible to alterations in their industries

IT route of Li-Fung

Equally early as 1995, LF had launched an intranet to associate the full group offices and fabricating sites to simplify and hasten the internal communicating. Real clip and digital image capablenesss allowed on-line review and troubleshooting. In 1997, unafraid extranet sites were launched to associate the client with the company. Online merchandise development and existent clip tracking are accomplishable. Customization on clip is now non any longer a phantasy. LF staffed approx 60 people within the IT section and holding the development of both the intranet and extranet outsourced.

Menaces from the WEB

LF recognized the menaces from the online companies as the followerss: 1. Equipped with good of hard currency excess, on-line companies can utilize those to damage the offline companies by geting them or their staff. 2. Off-line rivals spouse with a dot com and go a important rival in short clip.

IT STRATEGY OF Li-Fung ( E-commerce )

LF decided that an E-commerce scheme is necessary for LF. LF farther decided the lone manner to be competitory is to implement the system in-house. was setup to organize the in-house e-commerce incubation squad by financing through Castle group. The Entire squad was composed with both Castle and Li-Fung staff. The Business Strategy of was to aim the SME market which is the little retailers/wholesalers. Further LF acknowledged that these SMEs had demands of variegation of merchandises at a competitory monetary value. They are besides deficiency of up to day of the month market information that would assist them to do of import determinations and they were presently served at the lowest precedence in the old concern theoretical account. These were due to that the traditional theoretical account was n’t cost effectual to make so. With new B2B Portal, LF would be able to group the SMEs little orders in order to supply this client with limited sum of customization, little batch ordination, and differentiated merchandise scope with a competitory monetary value. Further the Business is planned to bear down 10-15 % of the committee in which the SMEs used to pay much more. interacts with LF as being one of its Group ‘s key clients which linked the old concern theoretical account with the new 1. Further, internal preparation classs and day-to-day exposure to new engineering helped to demystify the fright of LF ‘s veterans. LF described such IT scheme that would support their place against on-line menaces while at the same time widening operations into the SME ( small-medium endeavor ) market sector. Finally, program was besides made in front that in the hereafter the will be able to function the provider more expeditiously by aggregating the providers to post their stock list excess on the net every bit good.

Hazard of E-commerce

Although many benefits are associated with traveling online, hazards accompany the new scheme. The hazards are differentiated into the undermentioned country: Rival, industry, Customer, People, and Financial. Financially, the cost of apparatus is tremendous and LF would travel into major fiscal job if the undertaking is non a success. Peoples wise, bing LF employees would hold some resent against this venture which would take to take down working moral and higher employee turnaround rate. Speaking of the rival, this concern theoretical account barrier is non high ; rivals could develop a much similar one overnight. Industry standardisation of the package and hardware will further take down the benchmark and doing the system of obsolete. Further by associating the internal system to the web, LF is exposed to a higher rate of virus attacks/security breach that would interrupt the full system that might tremendous cause harm to LF. Within the country of client, bing offline cardinal client ( major importers, jobbers ) fright of will damage their concern by the slogan of “ extinguishing the jobber ” . Finally the whole concern theoretical account is formed under the premise of able to aggregate little orders to let customization and competitory monetary value. If the orders are non sufficient to warrant, LF could merely take between fulfilling their client at the cost of destroying their overall border ; or by rejecting the order on the hazard of staining LF long established repute.


In position of all the benefits and hazard that the e-commerce that are presented, I would propose that a stage integrating. Phase 1, Beta launch of the system to “ prove the H2O ” of the new market. During this initial phase, dedicated marketing/sales squad are grouped to aim the US SME ( whereas that market can follow much easier ) . Phase 2, Integrate the E-commerce with their Key bing clients which allow the Key bing client to profit from the same procedure. Phase 3, integrate the full E-commerce faculty within its substructure to further better its outstanding supply concatenation direction system. If at any phase that the direction finds that the undertaking is non any longer executable, so it is recommended to cut the losingss. In position of the possible complains of the bing client, LF can offer certain exclusivity for the key clients on some design in which would assist the cardinal client to keep competitory. Besides, some farther price reduction on the committee strategy could be offered to identify client for larger majority telling. As the engineering being developed, it is ever an option to see the usage of a more standardised platform ( off the shelf merchandise ) that can expeditiously linked with LF intranet/extranet as the apparatus cost would be minimum and care every bit good. To the terminal, LF should non loss its focal point on what it is good at: the full holistic supply concatenation direction system that LF has implemented for the past decennary that made its success. In position of the possible failure of the system, an option is to utilize Distributed DBMS. The Distributed database is several databases which relates to each other and they all have the same information. However, they can hold different policies and different direction on them. This is why, if one of them in anyplace faces failure, the others still keeps on working and no user gets mistake caused by that failure. These databases might be at different portion of the Earth with the least shared information.

Finally, security steps is an of import. To avoid unauthorised use, decision makers can set procure Gatess on some of these beds. Gatewaies are utile for one of these beds and firewall for the other 1. Antivirus, anti Spam, anti worm, and etc are utile for the last top bed which is application bed and can be programmed. E-commerce is no longer an aesthetic gesture, but a necessary and critical portion of the hereafter. Failure to admit and encompass engineering can go forth a company exposed to competitory menaces and functional obsolescence.