Li & Fung is a global trading group sourcing and managing the supply chain for high volume, time sensitive consumer goods. The group is associated with strong brands such as The Limited, Gymboree, American Eagle, Warner Brothers, Bed, Bath & Beyond, Levi-Strauss. With the rise of the internet, and the thrive of the B2B intermediaries, this memo will discuss the Li & Fung's E-Commerce strategy and how to use internet to facilitate supply chain management.
Competitive advantages
Li & Fung's product mix includes hard and soft goods. Soft goods refer to apparel. Hard goods include fashion accessories, festive or holiday products, furnishings, giftware, handicrafts, home products, fireworks, sporting goods, toys and travel goods. Hard goods provide higher margins than soft goods because they require higher value added services. Hard goods items such as watches, shoes, suitcases, kitchenware, or teddy bears require an inspector for quality control evaluation for even the smallest batch order, thereby greatly increasing what Li & Fung could charge. Margins for soft goods are roughly 6% to 8%, while margins on hard goods ranged anywhere from 10% to 30%. Li & Fung attempts to expand its sales of hard goods.
The group has extensive global network of over 48 offices covering about 32 countries and territories around the world. The group's network extends outside Asia and into other markets like North America, Europe and South Africa. The group sources from around 10,000 internal supplies. Global network enables the group to source its goods from various locations and distribute it in different countries mitigating its exposure to any particular economy.
Its clients benefited in several ways: supply chain customization could sho...
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... brands and reducing their reliance on the larger brands. In addition, retailers such as Wal-Mart and Target are increasingly offering private label premium goods at affordable prices. A huge advantage with private label brands is that they can be positioned as a lower cost alternative for national and international brands. Increase in demand for the private label products provides better margin and would generate more business for the group.
The cost of fuel has increased substantially in recent years. It would increase the logistics cost for the group and reduce its margins.
The retail discounters and departmental stores industry have been experiencing increasing consolidation, and the consolidation would lead to the formation of stronger and bigger entities, commanding greater bargaining power from suppliers which could adversely affect the Li & Fung's margin.
As the private brands may not achieve or maintain market acceptance these brands may provide the adverse results expected. Financial condition and results of operation can be negatively affected if pricing, quality and other factors are not up to customer’s satisfaction levels. With all brands sold by Dollar General there is the unfortunate shrinkage that may occur. Profitability may be negatively affected by inventory shrinkage and the inability to properly manage the inventory balances. Effective inventory management is a key component of Dollar General’s business success and profitability. If the company’s buying decisions do not accurately predict consumer trends, excess inventory will negatively affect financial results. Inventory turnover has improved and the company is aware and focusing on addressing all of these risks in the most productive way possible. The biggest risk that the company is facing from a consumer’s perspective is that their sector is highly competitive. Operating in a basic consumer goods market there is already a strain on margins, and low prices are necessary to stay competitive. This restriction on increasing prices may result in a loss when costs increase. The objective is to keep overhead, salaries, marketing and all costs to a bare minimal. Other competitors have saturated the geographic market where Dollar General once was
Competitors in the grocery store industry must compete on many facets, including price and inventory, to obtain a competitive advantage. Many stores are following suite with Whole Foods and moving into the organic food markets. Whole Foods and Trader Joe’s are in the forefront of this market, but stores like Kroger, Walmart, and HarrisTeeter are adding organic aisles and increasing their natural product supply. Companies are also competing over variety of food. Many companies are attempting to amass a variety of products from a multitude of cultures and climates to enhance the consumer experience. Lastly, grocers compete on brand strength. Consumers often show allegiance to one particular store, so companies must generate a large base of loyal customers.
The success of Wal-Mart is so great, that many people believe that Wal-Mart is becoming a monopsony . Suppliers are forced to deal with Wal-Mart because of the large percentage of sales at Wal-Mart cash registers. As such, Wal-Mart also has the ability to dictate prices of the goods it receives from the suppliers. Every day, more and more retail stores close their doors for good because Wal-Mart controls such a huge margin of the retail sector.
Private labels are helpful to department stores because they increase margins. On average, private label margins are 6-10% higher than national brands.
Furthermore, the company 's global position is high (Schultz & Williamson, 2005). For example, currently, it has over 35000 service stations across the globe and operates about 35 refineries across 21 countries.
General Motors is knocking on the door to world class business performance. Ohmae’s five stages of global operation support General Motors aspirations. From stage one to stage five there are significant differences to becoming a global organization. For instance, stage one, states that a company supports arm’s length customer export activity by a domestic company that links up with local and distributors to function. This stage represents the entry level global corporation. General Motors is at stage 4 of Ohmae’s five stages of becoming a global corporation, because it has exemplified the following traits: Systems and tools used globally not just at headquarters, R&D, Engineering and other business operations have a global focus, and all support functions are applied globally. (MFGO 601, WK. #2 Lecture Notes) An example of Ohmae’s, stage ...
Understanding the changes in the market and the growth of e-commerce prompted the organization to invest heavily in its supply chain management forecasting and management system. The development of a network of distribution centers and Direct Fulfillment Centers to position the company to capitalize on the growing e-commerce market indicate a strong understanding of the need to adapt to changing market forces. The company spent over $300 million on new distribution center facilities in 2014 alone, and continues to expand to maintain efficiency in product movement (Cassidy,
... its prices (Trefis Team, 2013). Moreover, petroleum price have a significant impact on its gross margin, as petroleum is one of a raw material of apparel product. In the past few years, the company had to face with the high oil price because of global economic that decreased its gross margin (Trefis Team, 2014).
The LG Group was born in South Korea in 1947, combined other two Korean companies named Lucky and Gold-star. And has operations in various segments such as chemical, energy, machinery, metals, finance and services. Its logo consists of two elements, the letter LG gray and symbols in red, the letters "L" and "G" stand for "Life's Good" in the slogan, however LG stands for its name. (Huang, J. & Kim, H., 2013). LG Inc. is one of the global leaders and technology innovators in consumer electronics, mobile communications and home appliances in the world. The main arm of the group is LG Electronics. Established in 1958, quickly became a global force in converging technology products in electronics, information and communication, designed to meet the needs of different customers and improve their lives. As a worldwide corporation, LGE's operates under the product concept of marketing management. Is a company that is devoted to "fast innovation and fast growth" (LG Electronics Sustainability Report, 2013). Focused on developing new electronics products, according to the LG Annual Report 2013, based on an LG internal survey of “TV models available for purchase in 2013” the first TV with OLED technology in the world is of LG, the Curve LG OLED TV in the first moment, is being a product development for a rich and specific niche, LG believes that this model will be standard in the coming years. The objective of this essay is to analyse the marketing mix of the this new LG TV.
Target is the second leading discount store in the United States, which makes looking at market structure easy to identify. In this case Target would be considered a perfect competition market structure due to several factors. This type of marketing structure also helps to explain the financial performance that Target has and how it is able to maintain its position among the U.S.’s discount stores. By understanding more about market structure, we are able to understand how companies, such as Target, are able to be so successful.
Given the dominance and fiercely competitive nature of Wal-Mart and Target within the big box discount retail industry, Dollar General avoided competing head-to-head with these larger rivals by differentiating a classic generic bu...
In today's competing world, many organizations are rethinking their strategies in terms of the online business and its capabilities and culture. Organizations are taking advantage of the widespread web to buy and sell goods from other companies and recently from individual customers. Exploiting these opportunities of convenience, availability and widespread reach of the web or Internet, many companies such as Amazon have benefited from the use of web successfully.
The rivalry aspect of Porter’s Five Forces that influence’s the grocery industry finds that there is a high degree of competition for consumer’s business among the dominate retailers as well as those companies trying to take any share of the market they can get. The large retailers engage in intense competition among each other as well as other stores that are competing for sales. Price wars drive down the profit margins for individual items and new and improved store design to bring in customers increases fixed cost. Improved distribution lines affect distribution and storage cost is competitive adjustments that the major retailers use to stave off the increasing competition. The last area of rivalry that the major companies use is the relationships they have with their suppliers to sign exclusive deals or lower cost than those prices paid by competing firms. As more retailers such as Wal-Mart and Target add groceries to their sales floor the competition increases as well as the stores that offer individual grocery items in their stores such as Dollar General, Walgreens and CVS. The grocery rival...
Supply Chain Management (SCM) is the management and control of the flow of goods. It includes the movement and the storage of raw materials, work-in-process inventory, and also finished goods from the origin to the consumption. SCM has been defined as “design, planning, execution, control, and also monitoring of supply chain activities with the goal of creating net value, building a competitive site, leveraging global logistics, combining supply with demand and measuring performance universally” 1. As part of my task, I will discuss the topics of logistics, communication within the supply chain, such as, information systems and Electronic Data Interchange (EDI), relationships with partners, the environment of SCM and the marketing channels and process. My objectives are to inform you how the process of SCM works, how it enables profitable growth and enhances customer satisfaction. SCM creates all positive outputs, according to the Journal of Operations and Supply Chain Management, results showed positive effects of SCM on all performance dimensions, backed-up by the resource-based and relational views of strategy 2.
On the other hand, most factors prove otherwise. The retail industry does not have high Economies of Scale to be exploited in general . Yet, it is impossible to run department stores like Metro on a small scale . A large retail space, inventory, and warehouse are necessary to host a specialized portfolio of brands and products to better attract both customers and suppliers. Heavy capital requirements and operational expen...