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Use the Three-Year Plan as the Periodical Target

By:   •  March 18, 2018  •  Essay  •  812 Words (4 Pages)  •  145 Views

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黄涵 115020045

陈可为 115020008

谢子豪 115020288

Q1:Core strength:

1.    Use the Three-Year Plan as the periodical target.

Definition: It is a planning process that starts from zero-based, which began with various goals and revenue targets were then established for different divisions and business units. 

Benefits: It is cast in concrete for three years. If goals were unmet at the end, the process provided the means to measure and analyze why they failed. Especially when it has a global financial meltdown, it can keep the target and think out of the box. Besides, it can also lessen work fatigue. The responsibility and reward systems track the plan, helping the whole culture and planning process excite people and retain them.

Result: In recent years, Li& Fung has set and met the goal of double profits with each plan.  

2.    Use Acquisition as a growth strategy

For Li & Fung, acquisition is a means to sustain growth momentum, trying to ‘fill in the mosaic’ by acquiring competitors in areas where they lack positioning, expertise or talent. Acquisition could be divided into 3 parts: 

a)Broadening the business model. Each acquisition, strengthens its management team, enhanced its product offerings, and expanded its geographic reach. 

b) Integrating the acquired businesses. It provides better sourcing, better logistics, more customers and more products. Another critical integration practice is to co-locate the acquire business at a single location or in nearby area, which is an application of pooling. Less inventory due to pooling. Lower total operating costs because of larger scale 

c)Information technology as a core strength. It helps to centralize back-end operations. Then Li & Fung could concentrate on the true value of the acquisition-front-end customer relations.


3.    An all-rounded network has been formed.

The efficient trading network. As an ultimate middleman, Li & Fung aggregate buying power on products, buying the right products or raw materials just-in-time with multiple production locations, and shortening delivery cycles. With this wide array of services, it can reduce matching and credit risks; What’s more, by get top-notch quality at the best price in the timeliest manner, it transforms the customer experience, which is good for having a good relationship with customers.

The segmented Distribution Network. In order to get customers closer, Li & Fung develops segmented distribution network in different countries.  In details, it launched onshore distribution business named LF USA, using three-pronged approach, including licensing recognized brands, private label, and proprietary brands. Besides, unlike USA, LF Europe's operations were scattered across the continent. This helps Li & Fung become one of the largest pan-European suppliers of consumer goods. Furthermore, it changes its business model dramatically because of the emergency of consumer markets in Asia, which shows its business acumen.

The creation of the Logistics Network. Li & Fung always finds new ways to create its logistics network. The values of this is the consolidation of third-party volumes with its in-volumes to lower freight costs has led to profits.


4.  Others

①Li & Fung is a customer-focused company, it can make the jobs perfectly and let customers have a good experience. 

②Li& Fung emphasis on the core business in the supply chain positioning, and outsourcing its non-core business. 

③It saw ample opportunities for cross selling its services. The logistics division could eventually bring in sizable orders for the other networks. It could also cross-sell different products to a single customer, thereby generating additional revenues without much hassle. Li&Fung offers a one-step shop for the products of other brands.


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