Li Fung Growth For A Supply Chain Specialist Case Study Solution & Analysis
Li Fung Growth For A Supply Chain Specialist Case Study Help is presently among the biggest food cycle worldwide. It was established by Henri Li Fung Growth For A Supply Chain Specialist in 1866, a German Pharmacist who initially introduced "Farine Lactee"; a combination of flour and milk to decrease and feed infants death rate. At the very same time, the Page bros from Switzerland also found The Anglo-Swiss Condensed Milk Company. The two became rivals initially but later combined in 1905, leading to the birth of Li Fung Growth For A Supply Chain Specialist.
Li Fung Growth For A Supply Chain Specialist is now a global company. Unlike other international companies, it has senior executives from various nations and attempts to make decisions considering the entire world. Li Fung Growth For A Supply Chain Specialist Case Study Analysis currently has more than 500 factories worldwide and a network spread throughout 86 countries.
The function of Li Fung Growth For A Supply Chain Specialist Corporation is to improve the quality of life of people by playing its part and supplying healthy food. It wants to help the world in shaping a healthy and much better future for it. It also wishes to motivate people to live a healthy life. While ensuring that the company is prospering in the long run, that's how it plays its part for a better and healthy future
Nestlé's vision is to offer its consumers with food that is healthy, high in quality and safe to eat. Li Fung Growth For A Supply Chain Specialist imagines to establish a well-trained labor force which would assist the business to grow.
Nestlé's mission is that as currently, it is the leading business in the food market, it believes in 'Good Food, Excellent Life". Its objective is to provide its consumers with a variety of choices that are healthy and best in taste. It is focused on supplying the best food to its consumers throughout the day and night.
Li Fung Growth For A Supply Chain Specialist Case Study Analysis has a large range of items that it uses to its clients. Its products include food for infants, cereals, dairy products, snacks, chocolates, food for family pet and mineral water. It has around four hundred and fifty (450) factories all over the world and around 328,000 employees. In 2011, Li Fung Growth For A Supply Chain Specialist was listed as the most rewarding organization.
Objectives and objectives.
• Remembering the vision and mission of the corporation, the company has laid down its objectives and objectives. These goals and goals are noted below.
• One goal of the business is to reach zero land fill status. It is working toward zero waste, where no waste of the factory is landfilled. It encourages its workers to take the most out of the spin-offs. (Li Fung Growth For A Supply Chain Specialist, aboutus, 2017).
• Another objective of Li Fung Growth For A Supply Chain Specialist is to lose minimum food during production. Most often, the food produced is lost even before it reaches the consumers.
• Another thing that Li Fung Growth For A Supply Chain Specialist is dealing with is to enhance its packaging in such a method that it would help it to reduce the above-mentioned problems and would also guarantee the delivery of high quality of its products to its clients.
• Meet worldwide requirements of the environment.
• Construct a relationship based on trust with its consumers, service partners, staff members, and federal government.
Just Recently, Li Fung Growth For A Supply Chain Specialist Case Study Analysis Business is focusing more towards the method of NHW and investing more of its earnings on the R&D innovation. The country is investing more on mergers and acquisitions to support its NHW technique. The target of the business is not achieved as the sales were expected to grow higher at the rate of 10% per year and the operating margins to increase by 20%, provided in Display H.
Analysis of Present Strategy, Vision and Goals.
The existing Li Fung Growth For A Supply Chain Specialist method is based upon the concept of Nutritious, Health and Health (NHW). This technique deals with the idea to bringing change in the customer preferences about food and making the food things much healthier concerning about the health problems.
The vision of this strategy is based upon the secret approach i.e. 60/40+ which simply indicates that the items will have a rating of 60% on the basis of taste and 40% is based upon its dietary worth. The products will be made with extra nutritional worth in contrast to all other items in market gaining it a plus on its dietary content.
This strategy was embraced to bring more nutritious plus tasty foods and beverages in market than ever. In competitors with other business, with an intention of keeping its trust over consumers as Li Fung Growth For A Supply Chain Specialist Business has actually acquired more relied on by costumers.
Microenvironment Analysis (PESTEL Analysis).
The analysis utilized to determine the position of business in the market is done by using PESTLE analysis, offered in Exhibition A. Li Fung Growth For A Supply Chain Specialist works under the rules and policies directed by government and food authority. The company is more focused on its services and items to make sure about the item quality and security.
The political impact on the business is greatly influenced by the government laws and regulations. The business has to satisfy its requirements provided by government otherwise it has to pay fine. Li Fung Growth For A Supply Chain Specialist is considerably supported by Federal government to fulfill all the requirements of requirements like acts of health and safety. In efforts to manufacture excellent food, Li Fung Growth For A Supply Chain Specialist is changing the standards of food and beverage production. This may trigger the infraction of governmental rules and guidelines.
Initiation of business where the capital income of each private matters for the increased net sale as this differs country-to-country. The economy of the Li Fung Growth For A Supply Chain Specialist Business in U.S. is growing year by year with variable items launch specifically concentrating on the dietary food for infants.
The social environment keeps altering with regard to time like the mindset of the customer as well as their way of lives. Any service or product of any company can not achieve success till the business is not worried about the living system of the customer. Li Fung Growth For A Supply Chain Specialist is taking steps to fulfill its goals as the world remains in search of delicious and healthy food.
In the development of company, strategic procedures are somewhat necessary. Li Fung Growth For A Supply Chain Specialist is one of the top famous international company and by time it invests in different departments to take its items to brand-new level. Li Fung Growth For A Supply Chain Specialist is spending more on its R&D to make its products healthier and nutritious supplying consumers with health advantages.
There is no such impact of legal elements of Li Fung Growth For A Supply Chain Specialist as it is more concerned over its policies and laws.
Li Fung Growth For A Supply Chain Specialist, in terms of environmental impact is committed to work in eco-friendly environment with preservation of the natural deposits and energy. If the resources used are recyclable or not, as due to the manufacturing of bigger number of items there might be a threat.
Competitive Forces Analysis (Porter's Five Forces Model).
Li Fung Growth For A Supply Chain Specialist Case Study Analysis has gotten a variety of companies that assisted it in diversification and growth of its product's profile. This is the comprehensive description of the Porter's model of 5 forces of Li Fung Growth For A Supply Chain Specialist Business, given up Exhibition B.
There is severe competition in the market of food and drinks. Li Fung Growth For A Supply Chain Specialist is one of the top company in this competitive market with a variety of strong competitors like Unilever, Kraft foods and Group DANONE. Li Fung Growth For A Supply Chain Specialist is running well in this race for last 150 years. Each company has a guaranteed share of market. This rivalry is not just limited to the cost of the item however also for quality, variation and development. Every industry is striving hard for the upkeep of their market share. The competitors of other companies with Li Fung Growth For A Supply Chain Specialist is rather high.
Threat of New Entrants.
A variety of barriers are there for the brand-new entrants to happen in the customer food market. Just a few entrants prosper in this market as there is a need to comprehend the consumer need which requires time while current rivals are aware and has actually progressed with the customer loyalty over their products with time. There is low threat of new entrants to Li Fung Growth For A Supply Chain Specialist as it has rather large network of distribution worldwide dominating with well-reputed image.
Bargaining Power of Providers.
In the food and beverage market, Li Fung Growth For A Supply Chain Specialist owes the largest share of market requiring greater number of supply chains. This causes it to be an idyllic buyer for the providers. Any of the provider has actually never ever expressed any complain about rate and the bargaining power is likewise low. In action, Li Fung Growth For A Supply Chain Specialist has also been worried for its suppliers as it thinks in long-lasting relations.
Bargaining Power of Purchasers.
There is high bargaining power of the purchasers due to great competitors. Changing cost is rather low for the customers as numerous companies sale a variety of comparable items. This appears to be a fantastic risk for any company. Hence, Li Fung Growth For A Supply Chain Specialist Case Study Solution makes certain to keep its consumers pleased. This has actually led Li Fung Growth For A Supply Chain Specialist to be one of the devoted business in eyes of its purchasers.
Threat of Alternatives.
There has actually been a great danger of alternatives as there are alternatives of some of the Nestlé's items such as boiled water and pasteurized milk. There has also been a claim that some of its items are not safe to utilize resulting in the reduced sale. Therefore, Li Fung Growth For A Supply Chain Specialist started highlighting the health benefits of its items to cope up with the substitutes.
Li Fung Growth For A Supply Chain Specialist Case Study Solution covers a number of the popular customer brands like Kit Kat and Nescafe etc. About 29 brand names amongst all of its brand names, each brand name earned an earnings of about $1billion in 2010. Its major part of sale is in North America constituting about 42% of its all sales. In Europe and U.S. the leading significant brands offered by Li Fung Growth For A Supply Chain Specialist in these states have a fantastic trustworthy share of market. Likewise Li Fung Growth For A Supply Chain Specialist, Unilever and DANONE are 2 big industries of food and drinks in addition to its main rivals. In the year 2010, Li Fung Growth For A Supply Chain Specialist had made its yearly revenue by 26% increase since of its increased food and drinks sale specifically in cooking stuff, ice-cream, drinks based upon tea, and frozen food. On the other hand, DANONE, due to the increasing costs of shares resulting a boost of 38% in its revenues. Li Fung Growth For A Supply Chain Specialist Case Study Solution decreased its sales cost by the adaptation of a brand-new accounting treatment. Unilever has number of employees about 230,000 and functions in more than 160 nations and its London headquarter also. It has become the second largest food and drink market in the West Europe with a market share of about 8.6% with just a difference of 0.3 points with Li Fung Growth For A Supply Chain Specialist. Unilever shares a market share of about 7.7 with Li Fung Growth For A Supply Chain Specialist becoming ranking and first DANONE as third. Li Fung Growth For A Supply Chain Specialist brings in regional customers by its low cost of the product with the regional taste of the products keeping its top place in the international market. Li Fung Growth For A Supply Chain Specialist business has about 280,000 employees and functions in more than 197 countries edging its competitors in numerous regions. Li Fung Growth For A Supply Chain Specialist has actually likewise decreased its cost of supply by introducing E-marketing in contrast to its competitors.
Note: A quick comparison of Li Fung Growth For A Supply Chain Specialist with its close competitors is given in Exhibition C.
The internal analysis and external of the company likewise can be done through SWOT Analysis, summed up in the Exhibition F.
• Li Fung Growth For A Supply Chain Specialist has an experience of about 140 years, allowing business to better carry out, in different circumstances.
• Nestlé's has presence in about 86 countries, making it an international leader in Food and Beverage Industry.
• Li Fung Growth For A Supply Chain Specialist has more than 2000 brands, which increase the circle of its target consumers. Famous brands of Li Fung Growth For A Supply Chain Specialist consist of; Maggi, Kit-Kat, Nescafe, and so on
• Li Fung Growth For A Supply Chain Specialist Case Study Analysis has large big quantity spending on R&D as compare to its competitors, making the company business launch release nutritious ingenious innovative healthyItems
• After embracing its NHW Strategy, the company has done large amount of mergers and acquisitions which increase the sales development and improve market position of Li Fung Growth For A Supply Chain Specialist.
• Li Fung Growth For A Supply Chain Specialist is a widely known brand with high consumer's loyalty and brand recall. This brand loyalty of customers increases the opportunities of simple market adoption of various brand-new brands of Li Fung Growth For A Supply Chain Specialist.
• Acquisitions of those business, like; Kraft frozen Pizza business can offer an unfavorable signal to Li Fung Growth For A Supply Chain Specialist customers about their compromise over their core competency of healthier foods.
• The growth I sales as compare to the company's investment in NHW Method are quite different. It will take long to alter the understanding of people ab out Li Fung Growth For A Supply Chain Specialist as a business offering healthy and nutritious products.
• Introducing more health related products enables the company to record the marketplace in which customers are quite conscious about health.
• Developing nations like India and China has biggest markets worldwide. Expanding the market towards developing nations can improve the Li Fung Growth For A Supply Chain Specialist organisation by increasing sales volume.
• Continue acquisitions and joint ventures increases the market share of the company.
• Increased relationships with schools, hotel chains, restaurants and so on can also increase the number of Li Fung Growth For A Supply Chain Specialist Case Study Help consumers. For instance, teachers can suggest their students to acquire Li Fung Growth For A Supply Chain Specialist items.
• Economic instability in countries, which are the prospective markets for Li Fung Growth For A Supply Chain Specialist, can develop a number of problems for Li Fung Growth For A Supply Chain Specialist.
• Shifting of products from typical to much healthier, causes additional expenses and can cause decrease business's revenue margins.
• As Li Fung Growth For A Supply Chain Specialist has a complex supply chain, for that reason failure of any of the level of supply chain can lead the business to deal with particular issues.
The demographic division of Li Fung Growth For A Supply Chain Specialist Case Study Analysis is based on 4 factors; age, income, gender and occupation. For example, Li Fung Growth For A Supply Chain Specialist produces numerous items related to infants i.e. Cerelac, Nido, etc. and related to adults i.e. confectionary items. Li Fung Growth For A Supply Chain Specialist items are rather inexpensive by almost all levels, but its significant targeted consumers, in regards to earnings level are upper and middle middle level customers.
Geographical division of Li Fung Growth For A Supply Chain Specialist Case Study Help is composed of its presence in almost 86 countries. Its geographical segmentation is based upon 2 main aspects i.e. average income level of the consumer as well as the climate of the area. Singapore Li Fung Growth For A Supply Chain Specialist Company's division is done on the basis of the weather condition of the area i.e. hot, warm or cold.
Psychographic division of Li Fung Growth For A Supply Chain Specialist is based upon the personality and lifestyle of the client. For example, Li Fung Growth For A Supply Chain Specialist 3 in 1 Coffee target those consumers whose life style is rather hectic and do not have much time.
Li Fung Growth For A Supply Chain Specialist Case Solution behavioral segmentation is based upon the mindset understanding and awareness of the client. Its highly healthy products target those customers who have a health conscious attitude towards their consumptions.
The VRIO analysis of Li Fung Growth For A Supply Chain Specialist Company is a broad variety analysis providing the organization with an opportunity to obtain a feasible competitive advantage versus its rivals in the food and drink industry, summed up in Exhibit I.
The resources used by the Li Fung Growth For A Supply Chain Specialist company are important for the company or not. Such as the resources like finance, human resources, management of operations and specialists in marketing. This are a few of the key valuable elements of for the identification of competitive benefit.
The valuable resources used by Li Fung Growth For A Supply Chain Specialist are pricey or even unusual. , if these resources are typically discovered that it would be much easier for the rivals and the brand-new rivals in the industry to effortlessly move in competition.
The imitation procedure is costly for the competitors of Li Fung Growth For A Supply Chain Specialist Case Analysis Business. However, it can be done only in two various strategies i.e. item duplication which is produced and produced by Li Fung Growth For A Supply Chain Specialist Company and introducing of the substitute of the products with changing cost. This increases the hazard of interruption to the recent structure of the market.
This part of VRIO analysis deals with the compatibility of the company to place in the market making efficient usage of its valuable resources which are difficult to mimic. Regularly, the development of management is absolutely dependent on the company's execution technique and team. Therefore, this polishes the skills of the firm by time based upon the decisions made by firm for the development of its strategic capitals.
R&D Spending as a portion of sales are declining with increasing real quantity of spending shows that the sales are increasing at a greater rate than its R&D spending, and enable the company to more invest in R&D.
Net Profit Margin is increasing while R&D as a portion of sales is declining. This indication also shows a thumbs-up to the R&D costs, mergers and acquisitions.
Financial obligation ratio of the business is increasing due to its spending on mergers, acquisitions and R&D development instead of payment of financial obligations. This increasing debt ratio posture a risk of default of Li Fung Growth For A Supply Chain Specialist to its financiers and might lead a decreasing share costs. For that reason, in regards to increasing debt ratio, the firm ought to not spend much on R&D and should pay its present debts to decrease the threat for financiers.
The increasing risk of financiers with increasing debt ratio and declining share costs can be observed by big decline of EPS of Li Fung Growth For A Supply Chain Specialist Case Analysis stocks.
The sales growth of business is also low as compare to its acquisitions and mergers due to slow perception building of customers. This slow development likewise hinder company to more spend on its acquisitions and mergers.( Li Fung Growth For A Supply Chain Specialist, Li Fung Growth For A Supply Chain Specialist Financial Reports, 2006-2010).
Note: All the above analysis is done on the basis of computations and Graphs given in the Exhibits D and E.
2 analysis can be used to derive numerous strategies based on the SWOT Analysis provided above. A short summary of TWOS Analysis is given in Exhibit H.
Methods to exploit Opportunities using Strengths.
Li Fung Growth For A Supply Chain Specialist Case Help must present more ingenious items by big quantity of R&D Costs and acquisitions and mergers. It might increase the market share of Li Fung Growth For A Supply Chain Specialist and increase the profit margins for the business. It could also supply Li Fung Growth For A Supply Chain Specialist a long term competitive advantage over its competitors.
The global growth of Li Fung Growth For A Supply Chain Specialist need to be concentrated on market recording of establishing countries by growth, drawing in more customers through client's commitment. As developing nations are more populated than industrialized countries, it might increase the consumer circle of Li Fung Growth For A Supply Chain Specialist.
Strategies to Conquer Weak Points to Make Use Of Opportunities.
Li Fung Growth For A Supply Chain Specialist Case Analysis should do cautious acquisition and merger of companies, as it could affect the customer's and society's understandings about Li Fung Growth For A Supply Chain Specialist. It should get and combine with those business which have a market credibility of healthy and nutritious business. It would enhance the understandings of consumers about Li Fung Growth For A Supply Chain Specialist.
Li Fung Growth For A Supply Chain Specialist must not just spend its R&D on development, rather than it must likewise focus on the R&D spending over examination of cost of various nutritious items. This would increase cost efficiency of its items, which will lead to increasing its sales, due to decreasing rates, and margins.
Strategies to use strengths to get rid of dangers.
Li Fung Growth For A Supply Chain Specialist Case Solution should relocate to not only establishing but likewise to developed nations. It must expands its geographical growth. This large geographical growth towards establishing and established nations would reduce the threat of prospective losses in times of instability in various nations. It must expand its circle to various nations like Unilever which operates in about 170 plus nations.
Strategies to overcome weak points to prevent risks.
Li Fung Growth For A Supply Chain Specialist needs to carefully control its acquisitions to prevent the threat of mistaken belief from the consumers about Li Fung Growth For A Supply Chain Specialist. It should combine and get with those nations having a goodwill of being a healthy business in the market. This would not just enhance the understanding of consumers about Li Fung Growth For A Supply Chain Specialist however would likewise increase the sales, profit margins and market share of Li Fung Growth For A Supply Chain Specialist. It would likewise allow the company to utilize its prospective resources effectively on its other operations rather than acquisitions of those companies slowing the NHW strategy growth.
In order to sustain the brand in the market and keep the client intact with the brand name, there are two choices:.
The Business ought to invest more on acquisitions than on the R&D.
1. Acquisitions would increase overall properties of the business, increasing the wealth of the business. Costs on R&D would be sunk cost.
2. The business can resell the acquired units in the market, if it stops working to execute its method. Nevertheless, amount spend on the R&D might not be restored, and it will be thought about entirely sunk expense, if it do not give prospective results.
3. Spending on R&D provide slow development in sales, as it takes long time to present an item. However, acquisitions supply fast outcomes, as it provide the company already established product, which can be marketed right after the acquisition.
1. Acquisition of company's which do not fit with the business's worths like Kraftz foods can lead the company to deal with mistaken belief of customers about Li Fung Growth For A Supply Chain Specialist core worths of healthy and healthy products.
2. Big costs on acquisitions than R&D would send a signal of business's inefficiency of developing innovative items, and would outcomes in customer's discontentment.
3. Big acquisitions than R&D would extend the line of product of the business by the products which are already present in the market, making company unable to present new innovative products.
The Business ought to spend more on its R&D rather than acquisitions.
1. It would make it possible for the company to produce more ingenious products.
2. It would provide the company a strong competitive position in the market.
3. It would enable the business to increase its targeted consumers by presenting those items which can be used to an entirely brand-new market section.
4. Innovative items will provide long term advantages and high market share in long term.
1. It would reduce the earnings margins of the business.
2. In case of failure, the entire costs on R&D would be considered as sunk cost, and would affect the business at big. The threat is not when it comes to acquisitions.
3. It would not increase the wealth of business, which might supply an unfavorable signal to the financiers, and could result I declining stock costs.
Continue its acquisitions and mergers with substantial costs on in R&D Program.
1. It would enable the business to present new ingenious items with less threat of converting the costs on R&D into sunk expense.
2. It would provide a positive signal to the investors, as the general properties of the company would increase with its significant R&D costs.
3. It would not impact the earnings margins of the company at a large rate as compare to alternative 2.
4. It would offer the business a strong long term market position in terms of the business's overall wealth as well as in terms of innovative products.
1. Danger of conversion of R&D costs into sunk cost, greater than alternative 1 lesser than alternative 2.
2. Danger of misunderstanding about the acquisitions, greater than alternative 2 and lesser than option 1.
3. Intro of less number of innovative products than alternative 2 and high number of ingenious products than alternative 1.
With the deep analysis of the above alternatives, it is advised that the business must pick the alternative 3 in order to preserve a competitive position in the long run. As the alternative 3 would allow the company to not only present ingenious and brand-new products in the market it would likewise lower the high expenses on R&D under alternative 2 and increase the profit margins. It would enable the company to increase its share costs too, as investors want to invest more in business with substantial R&D costs and boost in the overall worth of the business.
Action and execution Technique
Technique can be implemented efficiently by developing specific short term along with long term strategies. These strategies could be as follows;
Short Term Strategy (0-1 year).
• Under the short term strategy Li Fung Growth For A Supply Chain Specialist Case Analysis need to perform various activities to implement its NHW technique effectively. These activities are as follows;.
• Get the audit of its brand portfolio done, to analyze the core selling brand names, which create most of its revenue.
• Evaluate the existing target audience as well as the marketplace segment which is not include in the business's circle.
• Analyze the existing financial data to measure the amount that needs to be spent on the R&D and acquisitions.
• Evaluate the possible investors and their nature, i.e. do they desire long term advantages (capital gain), or the desire early profits (dividend). It would let the business to understand that how much amount should be spent on R&D.
Mid Term Plan (1-5 years).
• Obtain those companies in which the business has possible experience to handle. Get most favorable organizations with a strong dedication to health, to develop the client's understandings in the ideal direction.
• Focus more on acquisitions than R&D to build the base in the consumer's mind about Li Fung Growth For A Supply Chain Specialist worths and vision and to prevent potential risk of sunk expense.
Long Term Strategy (1-10 years).
• Get companies with health along with taste element, as the base for the Li Fung Growth For A Supply Chain Specialist as a company producing healthy items has been constructed under midterm plan and now the business might move towards taste aspect too to comprehend the consumers, which focus more on taste instead of health.
• Be more aggressive towards R&D than the acquisitions, as it is the considerable time to develop new products.
Li Fung Growth For A Supply Chain Specialist has actually stayed the leading market player for more than a years. It has institutionalised its methods and culture to align itself with the market changes and client behavior, which has actually ultimately enabled it to sustain its market share. Li Fung Growth For A Supply Chain Specialist has actually established significant market share and brand identity in the city markets, it is suggested that the business should focus on the rural areas in terms of establishing brand name equity, commitment, and awareness, such can be done by producing a particular brand name allocation technique through trade marketing strategies, that draw clear distinction between Li Fung Growth For A Supply Chain Specialist products and other rival products. Li Fung Growth For A Supply Chain Specialist ought to utilize its brand image of safe and healthy food in catering the rural markets and also to upscale the offerings in other classifications such as nutrition. This will enable the business to develop brand name equity for recently presented and already produced products on a greater platform, making the effective usage of resources and brand image in the market.