the challenges and threats faced by li and fung essay


Li & A ; Fung is concern to concern company, working as a 3rd party or in-between work forces between retail merchants and providers or makers. The company has been runing successfully in this market since its constitution in 1906. Li & A ; Fung was started as a partnership venture in China and was known as an export trading company with abroad merchandisers as chief clients. Later Li & A ; Fung besides entered into the concern of repositing and fabrication. The company was shifted from being a household owned concern to listed company by the 3rd coevals of the household.

The company deals in both soft and difficult goods, but focuses more on difficult goods as they offer higher borders as compared to soft goods. The company was runing on the old traditional theoretical account of physical offline being. But the coming of cyberspace engineering has slightly changed the scenario and has raised serious concerns about the profitable company ‘s operation. There has been a tendency that the on-line rivals of about every concern are outclassing their offline rival organisations and houses.

Li & A ; Fung has been besides concerned about the outgrowth of different online concern to concern companies which can diminish the company ‘s market portion and profitableness. The direction of the company is looking for different ways and schemes in order to get by up with this menace. It is of import for about every company to alter and modify their concern and operations harmonizing to altering contexts and state of affairss otherwise the company will non be able to run profitableness.

The direction of Li & A ; Fung understands this fact and is ever ready to integrate new engineering into the concern operations. The company is looking to travel for a defensive and violative scheme at the same clip and is presenting on-line operations along with offline operations. This will non merely support the company ‘s place against the online concern to concern companies but will besides give competition to them because of good and high repute of the company.

Problems Confronting the Organization:

The different jobs faced by Li & A ; Fung are listed below in order of precedence or importance:

The increasing tendency of cyberspace engineering and online companies and concern has posed a serious menace to the fight of the traditional offline companies.

The online concern unit of Li & A ; Fung which has been established with the name of lifung.com can ensue in cannibalization of the company ‘s offline services and concern.

The uncertainness of the success of on-line concern theoretical account created by Li & A ; Fung aiming little and average sized endeavors ( SMEs ) .

The possibility of other strong rivals to copy the online concern theoretical account of the company.

The expertness required for the efficient handling of online concern theoretical account.

The employees ‘ opposition to installing and use of new engineering and concern theoretical accounts and constructs.


The chief job which is being faced by Li & A ; Fung is the menace of losing profitableness and market portion because of the outgrowth of concern to concern online companies. With more and more companies utilizing internet engineering every bit good as increasing figure of on-line concerns coming up have posed a serious menace to the fight of the traditional offline companies. Because companies can run at a lower cost and can make more clients across the universe by utilizing cyberspace, hence with less investing and aiming more clients in more markets, this has become one of the major menaces for Li & A ; Fung.

Besides because Li & A ; Fung has been majorly selling its merchandises traditionally like an offline company hence as the company has started its online concern unit every bit good with the name of lifung.com it can ache the nucleus competence of the company through which it was bring forthing gross. And this can outclass or cannibalise the company ‘s traditional manner or operations and concern. Besides this, one of the chief distinguishing characteristics of Li & A ; Fung was that it was concentrating more on traditional methods to sell the merchandises nevertheless, this focal point has besides been changed and it would alter the overall organisational civilization and its schemes. Besides this, employees would hold to larn new methods and new ways to make the concern and they need to be trained once more. So it might make a muss for the employees and the direction of the company. Therefore, new challenges would be faced by the company and this new disputing state of affairs can be a menace for the company as it can ache its client base and its current service quality.

Besides this, the other menace faced by Li & A ; Fung is that the company has started their online concern to get by up with the industry tendency nevertheless, the success of on-line concern theoretical account created by the company is unsure as it is aiming little and average sized endeavors ( SMEs ) . As the company has non been involved in making concern online therefore Li & A ; Fung does non hold the expertness and people to pull off this emerging industry tendency and hence the hereafter of the company is a large inquiry grade.

Strategic Organizational Options:

The possible strategic organisational options which can be thought for as formulating good and profitable hereafter schemes are:

The company can change over its offline concern to the online concern.

The company can run with both concern theoretical accounts i.e. traditional brick and howitzer theoretical account and new construct of online concern which will complement each other.

Another strategic option is that company offers different concern theoretical accounts for different mark markets harmonizing to their demands and demands.

The company can affect employees in the alteration procedure and can carry on acquisition and preparation plans in order to do the procedure of alteration smooth.

The first three schemes are reciprocally sole and company has to make up one’s mind on any one of it. If company decides to change over its offline concern to the online concern there is possibility of immense cost film editing and big net income borders but the company has to work on constructing an wholly new image in the head of consumers. At the minute the company is being positioned and recognized as a traditional old concern theoretical account company.

The 2nd scheme Foster that on-line concern can complement the offline concern of the company this once more will supply an chance to vie with the concern to concern online companies but this can ensue in increasing costs of operations.

The 3rd scheme of presenting different concern theoretical accounts for different mark markets will assist the company to develop and increase the market size and concern but this can ensue in cannibalization of the company ‘s traditional offline concern theoretical account.

The 4th scheme is non reciprocally sole and company will hold to integrate this scheme will any other scheme it decides to implement.


The different environmental and organisational scenarios that can be faced by the company are:

The concern to concern online companies outclass the company ‘s offline services. There is really small possibility of likeliness of this event to happen because of the efficiency and competitory advantage Li & A ; Fung has created in the market.

The failure of the on-line venture of the company with the name of lifung.com. This scenario besides has really small possibility because the company has done proper research about this determination.

The failure or prostration of the proficient support and footing required for get downing on-line concern. There is a possibility of this event because the company has entered into contract with Castling group for the proficient expertness and the staff of Li & A ; Fung is untrained. If at any ulterior phase there is job or issues in the contract or the contract is terminated the company will be confronting job on portion of proficient expertness.


It is necessary and compulsory for companies to alter and accommodate themselves harmonizing to the altering conditions and fortunes. Lapp is the instance with Li & A ; Fung, the company is successfully runing harmonizing to its traditional old concern theoretical account but the coming of new cyberspace engineering has posed serious menace to the fight of the concern.

In order to run profitableness and remain competitory in the market the company has to integrate the new engineering into its operations and have to explicate non merely defensive but besides violative schemes to retain the market place and increase the market portion.

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