Premium Essay

Corporate Strategic

In: Business and Management

Submitted By CowRiver
Words 2121
Pages 9
1. Introduction

Founded in 1906, Li & Fung is a Hong Kong based global supply chain management group that supplies high-volume and time-sensitive consumer goods to some of the world’s leading retailers and brands (Lam, 2013). Fundamentally, the company is an international supply chain manager operating primarily in three core business areas - trading, logistics and distribution. At present, their main source of income are derived from garments and apparels, followed by non-apparel products such as ‘toys, home furnishings, sporting goods, footwear, and health and beauty products’ (Li & Fung website, 2013).

Once considered as a steady blue-chip company with high dividend yield and solid earnings, Li & Fung was among one of the best performers in the Hang Seng Index (HSI) from 2007 to 2011 (Kwok, 2013). But sadly, their shares have fallen over 30% to date and is currently the second-worst performing HSI stock in 2013 (Li, 2013). With doubts over the future and the effectiveness of the company, analysts and shareholders are demanding for some new changes from the management team. Hence, the purpose of this report seeks to examine the current issues that are related within their corporate strategy. In addition, we will present a number of recommendations or changes in view of steering the company back into the right direction.

2. Key Issues

2.1. Reliance on US market and devaluation of foreign currencies

From 2007 to 2011, over 90% turnover of Li & Fung is coming from US and Europe. All of these turnovers are only less than 1% turnover of the market in China which is the second largest economic body in the world. Due to the subprime mortgage crisis, US and Europe are in a very difficult financial situation. They are still in the way of slow recovery. It caused the great decline on the demand of export services and affected the profitability of Li & Fung…...

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