Business Environment in Asia and Europe - Case Study Example

It is considered that the business environment in Europe is quite promising, as compared to that in Asia. Therefore, by comparison, countries that are based in Europe have more opportunities for flourishing, unlike those that are based in Asia.

In Asia, there are high oil-related costs, yet oil is an essential aspect of the economy of most countries. The high cost of oil, therefore, has a considerable adverse effect on most companies in Asia.  This also has an effect on a company’s selection of best sourcing. In addition, this also influences transport and shipping costs, including freight and sea. Therefore, these among other aspects of the business environment in Asia have resulted in most Asian-based companies raising their costs.

On the contrary, the European market

1. What would you recommend for Li & Fung in terms of increasing its competitiveness in Europe?

So far, Li & Fung has registered poor sales in the European market. This, therefore, poses a risk to its overall profitability. In order for this company to realize an improved performance in its European market, there are different adjustments that it needs to undertake in its approach in this specific market.

First, Li & Fung should be customer-centered, and be driven by the demands in the market. This means that the company must have a special interest in its customers in the European market. This includes understanding the needs of the customers in this market. By being customer-centered, the company will be able to deliver products that are specific to the customer's needs, thus ensuring customer satisfaction. Similarly, the company should understand the product demands of the customers in Europe, in order to avail themselves of the products that they require.

Li & Fung should also focus on its major competency. The company should as well consider outsourcing its non-major activities. This way, the company will develop a positioning in the supply chain. This aspect will be important in ensuring that the company lessens its cost and time on non-major activities while paying more attention to the core activities that are of importance to the customers and the company itself.

Li & Fung should also ensure that the production lead time for products is short, as well as the delivery. This is important in ensuring that there is a high level of efficiency in its operations in the market. Efficiency is an important aspect, as far as customer satisfaction is concerned. Therefore, Li & Fung should endeavor to see to it that products reach the European market on time. In addition, this is important to the company, as delays in delivery are a sign of inefficiency on the side of the company. Most customers will shun inefficient companies, as these fail to meet their (customers’) needs. Overall, Li & Fung should master well supply chain in order for it to provide its customers in Europe with better service while maintaining strong relations with suppliers. This in turn results in an important competitive advantage that will enable the company to beat its competitors in the region, hence increased market share.

  Question 3

The shift by most companies from outsourcing and offshoring to the supply chain is quite advantageous for Li & Fung. This is for the major reason that Li & Fung primarily makes use of the supply chain. However, there are also a number of threats associated with this position of Li & Fung. Therefore, supply chains expose Li & Fung to both risks and benefits today. Nonetheless, Li & Fung has ensured to adapt its global supply chain in order to address the dynamic conditions in the market as well as satisfy the needs of its customers.

The widespread adoption of offshoring and outsourcing helped Li & Fung to realize numerous benefits. A major benefit was that since the company had great capabilities for supply chain and network management, thus it was in a position to capitalize on the trend.

When it comes to supply chains, Li & Fung adopts this approach widely. This, therefore, exposes the company to the opportunity of creating many partnerships with different manufacturers across the world. This is mainly because, in its global supply chain, Li & Fung does not own manufacturing, but engages in coordination. This decision not to manufacture is therefore essential for the company’s formation of partnerships that add positive value to the company.

A major threat that Li & Fung is faced with relates to the current unpredictable financial position of world countries. Today, the economy of most countries are still experiencing the aftermath of the global financial crisis. For this reason, therefore, the flexibility of most global supply chains, including Li & Fung’s, is put to the test. For instance, the level of demand for products by different countries is affected in various ways. While companies can control some of the challenges they might face with regard to the business approaches they employ, Li & Fung has no power of controlling the demand of countries for various products. However, the company can only change the ways in which it manages its supply chains, in order to avert the adverse consequences that an effect in demand of products would have on the company’s productivity and profitability.