What is the source of Li & Fung’s success? Is it based on human capital, on ownership of a natural resource or on ownership of capital?


Based on your reading of the Business Case – Li & Fung: From Guangzhou to You on page 244 in the 4th edition of your textbook answer the following questions.

1. Why do you think it was profitable for Li & Fung to go beyond brokering exports to becoming a supply chain manager, breaking down the production process and sourcing the inputs from various suppliers across many countries?

2. What principle do you think underlies Li & Fung’s decisions on how to allocate production of a good’s inputs and its final assembly among various countries?

3. Why do you think a retailer prefers to have Li & Fung arrange international production of its jeans rather than purchase them directly from a jeans manufacturer in mainland China?

4. What is the source of Li & Fung’s success? Is it based on human capital, on ownership of a natural resource or on ownership of capital?

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