Ans#1- Li & Fung Limited is a global trading group. A company would like to use the supply chain management services of Li & Fung because it manages the supply chain for high volume, time sensitive consumer goods, delivering the right location. It focuses on providing a one- stop shop service through a network of 69 sourcing offices in 40 countries. Company would prefer Li & Fung rather than organising in-house department or appointing a senior manager to handle these activities because it provides services range from product design , development, through raw material and factory sourcing, production planning and management, quality assurance and on to export documentation and shipping consolidation. Moreover company use Li & Fung because it could be an effort to also reduce costs.
Ans#2- Li & Fung expand its global sourcing network through acquisitions since it has found developing networks from the ground up tends to take a long time and to be relatively expensive. Li & Fung acquired companies like Inchcape Buying Services in 1995, Swire & Maclaine Ltd , Camberley Enterprises Ltd and Colby Group Holdings Ltd. These all are well established companies. Li & Fung company is in favour of acquisitions because it doubled the size of company and expanded the company’s customer base in Europe and strengthen its position in the U.S. These acquisitions increased the size of Li & Fung’s sourcing network from 48 offices in 32 countries in 1999 to 68 offices in 40 countries in 2001.
Ans#3- Internet opens the door to new levels of connectedness to customers. Successful firms on the Web have used cyberspace to achieve their objectives. Li & Fung use the Internet to capture additional business like small to medium- size -businesses that is characterized by small order size and shorter delivery requirements. But they cannot afford large sum of money in inventory. Internet provides solution to these kind of problems. It could allow Li & Fung to consolidate small orders for mass production by existing supplier network. Li & Fung allow these smaller businesses to have their own private label.
The choices available online would allow a product to have the small business’s own distinctive label attached with choices available online and would choices of embroidery colors and packaging. Li & Fung should use search engine optimization for increase the awareness of its website. In order to make the additional businesses profitable Li & Fung could use their website ”www.studiodirect.com” in many ways. The studio direct will combine its expertise in sourcing and merchandising of apparel with supply chain efficiency. It will derive from its web- based trading. Studio Direct has outsourced every aspect of delivery from pick and pack, shipping and customer clearance.