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Li & Fung: Internet Issues (B) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Li & Fung: Internet Issues (B)


Supplements the (A) case.

Authors :: F. Warren McFarlan, Iris T. Li

Topics :: Technology & Operations

Tags :: Globalization, IT, Supply chain, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Li & Fung: Internet Issues (B)" written by F. Warren McFarlan, Iris T. Li includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fung Li facing as an external strategic factors. Some of the topics covered in Li & Fung: Internet Issues (B) case study are - Strategic Management Strategies, Globalization, IT, Supply chain and Technology & Operations.


Some of the macro environment factors that can be used to understand the Li & Fung: Internet Issues (B) casestudy better are - – technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, etc



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Introduction to SWOT Analysis of Li & Fung: Internet Issues (B)


SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Li & Fung: Internet Issues (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fung Li, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fung Li operates in.

According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.




SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix


SWOT analysis of Li & Fung: Internet Issues (B) can be done for the following purposes –
1. Strategic planning using facts provided in Li & Fung: Internet Issues (B) case study
2. Improving business portfolio management of Fung Li
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Fung Li




Strengths Li & Fung: Internet Issues (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Fung Li in Li & Fung: Internet Issues (B) Harvard Business Review case study are -

Low bargaining power of suppliers

– Suppliers of Fung Li in the sector have low bargaining power. Li & Fung: Internet Issues (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Fung Li to manage not only supply disruptions but also source products at highly competitive prices.

Successful track record of launching new products

– Fung Li has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fung Li has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.

Strong track record of project management

– Fung Li is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Superior customer experience

– The customer experience strategy of Fung Li in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Effective Research and Development (R&D)

– Fung Li has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Li & Fung: Internet Issues (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

High brand equity

– Fung Li has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fung Li to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Training and development

– Fung Li has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Li & Fung: Internet Issues (B) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.

Cross disciplinary teams

– Horizontal connected teams at the Fung Li are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.

Sustainable margins compare to other players in Technology & Operations industry

– Li & Fung: Internet Issues (B) firm has clearly differentiated products in the market place. This has enabled Fung Li to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Fung Li to invest into research and development (R&D) and innovation.

High switching costs

– The high switching costs that Fung Li has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.

Diverse revenue streams

– Fung Li is present in almost all the verticals within the industry. This has provided firm in Li & Fung: Internet Issues (B) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.

Innovation driven organization

– Fung Li is one of the most innovative firm in sector. Manager in Li & Fung: Internet Issues (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.






Weaknesses Li & Fung: Internet Issues (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Li & Fung: Internet Issues (B) are -

Interest costs

– Compare to the competition, Fung Li has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.

No frontier risks strategy

– After analyzing the HBR case study Li & Fung: Internet Issues (B), it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.

Increasing silos among functional specialists

– The organizational structure of Fung Li is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Fung Li needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fung Li to focus more on services rather than just following the product oriented approach.

Lack of clear differentiation of Fung Li products

– To increase the profitability and margins on the products, Fung Li needs to provide more differentiated products than what it is currently offering in the marketplace.

High operating costs

– Compare to the competitors, firm in the HBR case study Li & Fung: Internet Issues (B) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Fung Li 's lucrative customers.

Capital Spending Reduction

– Even during the low interest decade, Fung Li has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.

Skills based hiring

– The stress on hiring functional specialists at Fung Li has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.

Workers concerns about automation

– As automation is fast increasing in the segment, Fung Li needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.

Products dominated business model

– Even though Fung Li has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Li & Fung: Internet Issues (B) should strive to include more intangible value offerings along with its core products and services.

High bargaining power of channel partners

– Because of the regulatory requirements, F. Warren McFarlan, Iris T. Li suggests that, Fung Li is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.

Aligning sales with marketing

– It come across in the case study Li & Fung: Internet Issues (B) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Li & Fung: Internet Issues (B) can leverage the sales team experience to cultivate customer relationships as Fung Li is planning to shift buying processes online.




Opportunities Li & Fung: Internet Issues (B) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis


The opportunities highlighted in the Harvard Business Review case study Li & Fung: Internet Issues (B) are -

Building a culture of innovation

– managers at Fung Li can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Technology & Operations segment.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Fung Li can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Manufacturing automation

– Fung Li can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.

Changes in consumer behavior post Covid-19

– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Fung Li can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Fung Li can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fung Li to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Fung Li to hire the very best people irrespective of their geographical location.

Use of Bitcoin and other crypto currencies for transactions

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Fung Li in the consumer business. Now Fung Li can target international markets with far fewer capital restrictions requirements than the existing system.

Reconfiguring business model

– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Fung Li to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.

Better consumer reach

– The expansion of the 5G network will help Fung Li to increase its market reach. Fung Li will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Fung Li can use these opportunities to build new business models that can help the communities that Fung Li operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.

Developing new processes and practices

– Fung Li can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.

Buying journey improvements

– Fung Li can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Li & Fung: Internet Issues (B) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.

Identify volunteer opportunities

– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Fung Li can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Using analytics as competitive advantage

– Fung Li has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Li & Fung: Internet Issues (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fung Li to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.




Threats Li & Fung: Internet Issues (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis


The threats mentioned in the HBR case study Li & Fung: Internet Issues (B) are -

Capital market disruption

– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Fung Li.

High dependence on third party suppliers

– Fung Li high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.

High level of anxiety and lack of motivation

– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Fung Li needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.

Technology disruption because of hacks, piracy etc

– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.

Shortening product life cycle

– it is one of the major threat that Fung Li is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Fung Li in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fung Li with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Fung Li can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Li & Fung: Internet Issues (B) .

Regulatory challenges

– Fung Li needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Technology & Operations industry regulations.

New competition

– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Fung Li in the Technology & Operations sector and impact the bottomline of the organization.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Li & Fung: Internet Issues (B), Fung Li may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .

Backlash against dominant players

– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Fung Li business can come under increasing regulations regarding data privacy, data security, etc.

Environmental challenges

– Fung Li needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Fung Li can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.




Weighted SWOT Analysis of Li & Fung: Internet Issues (B) Template, Example


Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Li & Fung: Internet Issues (B) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants. We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –

First stage for doing weighted SWOT analysis of the case study Li & Fung: Internet Issues (B) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.

Second stage for conducting weighted SWOT analysis of the Harvard case study Li & Fung: Internet Issues (B) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.

Third stage of constructing weighted SWOT analysis of Li & Fung: Internet Issues (B) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Fung Li needs to make to build a sustainable competitive advantage.



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