Threats Faced by Li & Case Study

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Functional strategy

Functional strategy

Functional strategy

SWOT Analysis

Strengths:

The major strength of the company is that Li & Fung has been operating for a long time in the industry and they have been able to establish themselves as an important market player.

The supply chain solution provided by Li & Fung is more sophisticated than the other trading companies.

Li & Fung has strategic competitive advantage over its competitors as they have the expertise in the relevant field.

Also company has a strong corporate culture and they have been able to manage diversity effectively which has helped them in gaining competitive advantage.

Weaknesses:

One of the weaknesses of the company is that they prefer to stick to the old business model rather than using online business model.

The other weakness of the company is that they do not have the expertise in it field and therefore they have to outsource such tasks.

Opportunities:

According to the market research conducted by Li & Fung, there is a lot of potential if the company targets SMEs by providing online services, as this will reduce the cost and company can offer services to SMEs at relatively lower commission than before. Only in USA, the market has a potential of $54 billion.

Threats:

Online business will affect the profitability of the company as this would decrease the traditional sales of the company.

Investors prefer to invest in companies that are also operating online.

With potential in the industry and high profit margins, more companies are looking to capitalize from this growing industry.

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Porter's Five Forces:

Buying power of supplier:

As company does not only use few suppliers or manufacturers but they have a network of suppliers therefore the bargaining power of supplier is low.

Threats of new entrants:

As the profit margin is high and the market is expected to grow, therefore Li & Fung faces high threats of new entrants.

Threats of substitute products:

Many customers are shifting towards online B2B companies because customers can get the same things done more quickly therefore company faces high threats.

Competitive Rivalry

Although the company has a strong position in the market even then new trends have created serious threats.

Buying power of customer:

Bargaining power of customer is also not much high because the company has the competitive advantage and at the same time Li & Fung offers high level of customization for each and every individual customer.

Conclusion:

It is necessary and mandatory for companies to change and adapt themselves according to the changing conditions and circumstances. Same is the case with Li & Fung, the company is successfully operating according to its traditional old business model but the advent of new internet technology has posed serious threat to the competitiveness of the business.

In order to operate profitability and remain competitive in the market the company has to incorporate the new technology into its operations and have to formulate not only defensive but also offensive strategies to retain the market….....

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