International Business CaseStudy2 - Essay Example

The company has set up quality standards and code of practice that decides their business strategy for allowing suppliers to remain in the network or have their supply agreements terminated for failing to meet these standards. Most companies do not have the ability to set up this type of monitoring and control along a very diverse and geographically-dispersed supply network. Li & Fung’s model is difficult to imitate because of the investment and organization necessary to have such a well developed supply management strategy.

Buyers and other intermediaries do not have the knowledge or resources to be this efficient or have office presence in so many different countries. It would take considerable capital investment in order to even try to imitate Li & Fung’s diverse business model. Though the case study does not give indications of organization, it would appear that Li & Fung are able to successfully coordinate such a vast supply network and supply management strategy. Having presence in many countries gives the business an edge and provides them with access to many small suppliers unknown to buyers. . It is more practical from a leadership perspective and a cost perspective to use experts in the field especially if they have provided very proven results in the intermediary business model.

Liz Claiborne sold their sourcing operations to Li & Fung for over $80 million, which shows the very high costs associated with trying to manage these negotiations. It is more cost effective to pay Li & Fung since it guarantees results, expansion of supply opportunities, and reduces the high capital costs of setting up the offices and facilities needed to perform these regular bargaining tactics. QUESTION 3 During the financial crisis, companies have their resources stretched even more thinly.

Coupled with market instability, there are risks of their stock values being hit negatively, which reduces even more capital availability. Li & Fung have set up a streamlined and productive (not to mention cost effective) business model. It makes more cost sense for companies to seek out the talents and quality philosophy of intermediaries during economic slumps. Not only that, but the company earned $12 billion in revenue between 2004 and 2007 with expectations of record profit in 2009. This puts the business into a unique position to invest this capital in improving supply chain strategies (e.g. technologies, etc.) that will only make their reputation for quality business more effective in the industry to attract more international customers wanted efficiency and cost savings in procurement.

DenTek Case Study QUESTION 1 Domestic growth producing a 30 percent growth rate and annual revenues around $50 million is not a small victory in a very competitive market