Li & Fung Case Study Case Study

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Perhaps one of the most important challenges of the it project, as any Internet venture, is the fact that moving fast is of essence. This is an area of economy that changes almost from day-to-day, because new technologies appear and because the entities participating in the online activities become more and more innovative in developing new solutions to improve the activities of their companies. This is why Li & Fung also needed to move fast in its approach.

The main target of the project, as the case study showed, were the small and medium enterprises (SME), clients that Li & Fung knew and that it had collaborated with over the last decades, but also potential clients the company's representatives had met at fairs and in the business world.

The effect of such a portal for a SME would be tremendous, mainly because these types of economic entities usually paid very high margins to importers, while Li & Fung charged significantly less. Additionally, SMEs would generally receive a comparatively poorer service and would have fewer options than other companies. As we can see, the target market for Li & Fung was carefully researched and the results best matched the portfolio the company offered: SMEs would be a perfect target because they would indeed be in need of the type of services that Li & Fung was offering and because such a segment would likely most benefit from the B2b services.

Due to the increased streamline and better and more efficient communication, SMEs would become viable customers for Li & Fung, despite not having dealt with them in the past. The online option, much cheaper and faster, would thus allow for customization and other services on the SME segment in the future.

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The model could be successful, but there were several challenges involved. First of all, one needed to consider the fact that this was still a beta test and that there were no answers as to whether the system would actually work, whether the investment would prove viable and whether the forecasts for 1,000 SMEs and $2 billion in revenues from the portal would actually prove realistic enough.

Additionally, other companies were already well established in the e-commerce market and could prove dangerous competitors. Companies such as Ali Baba, with alibaba.com, had a significant presence and great leverage power on the market. Further more, in general, a model is successful once it is innovative and unique. The moment that other companies start to implement it as well, the original company loses its competitive advantage. Unfortunately, this is exactly what could have happened here and Li & Fung was keen to take this into consideration.

One of the last things worth mentioning is related to the future of the portal business itself. As previously seen, one of the objectives of Li & Fung was to implement technology throughout the company rather than through a separate division. However, if the model proved successful, it was highly possible that the online, e-commerce business would eventually spin-off, disintegrate from the original company operations and become an entity in itself, as….....

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