Gary W. Loveman, Jamie O'Connell
Harvard Business School (396075-PDF-ENG)
October 26, 1995
Li & Fung, one of Asia’s largest export trading companies, works primarily as an intermediary to connect American and European manufacturers and retailers of short-lived mass market consumer goods with East Asian suppliers who manufacture products to the designs of the clients. Li & Fung’s network of 2,000 suppliers in more than a dozen countries is one of Li & Fung’s main competitive advantages. This network consists of relationships with providers and knowledge of their skills and strengths. The network offers customers a number of advantages, the most important of which is a multitude of manufacturing options that differ in price, quality and delivery time. Li & Fung’s business activities are organized into largely independent and customer-oriented business areas supported by regional branches. The internal structure and incentives (especially remuneration) are aimed at motivating employees to tailor the service to each customer and use the entire network to place each customer order with the provider that best suits the customer’s requirements. This design is especially important due to the low margins of the trade.
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