Returning to Healthy Growth for Li & Fung GNP Group MGT0650 Consulting Skills for Managers

1. Returning to Healthy Growth for Li & Fung GNP Group MGT0650 Consulting Skills for Managers Project Dummy Pack - Revised Class 2 – Team E Chan, Chiu Kit Jeremy Lao, Teng Chong Kelvin Mau, Ka Ying Ada Ng, Kai Li Nora Yuen, Melissa Cie

2. Executive Summary • To be updated

3. Li & Fung GNP Group is facing problem in driving business growth… Situation • GNP Group prides themselves as a market leader in gifts and promotion trading – “Your gateway to a World of Consumer Products” • [ ] of customers serviced by [ ] of teams producing more than 30,000 sku per year and revenue of over USD$600 million per year Complication • The growth in GNP Group has been stagnant in recent years. • After global economic crisis in 2008, the Group faces great threat from recruiting new customers and meeting sales budget. • As on Sep 2009, the total order has dropped by [ ] % and the total YTD sales has denoted [ ] % decrease vs. year ago. Question • How can GNP Group return to healthy growth?

4. The merchandising support teams of Li & Fung GNP Group are divided by customers. Each team is highly merchandising driven. There is limited communication and sharing in-between different teams. Organizational Chart: Gift & Promotions (GNP Group) Alice Lai Executive Vice President Gifts Group Promotions Group Catalogue/Direct Selling Susanna Ng Senior Vice President Family Entertainment Joe Maher Senior Vice President Specialty Stores Coca-Cola (GG5) Satte Tsao, General Manager McDonald (GG5) Satte Tsao, General Manager Others (GG5) Satte Tsao, General Manager Avon USA (GG1) Susanna Ng, Senior Vice President Avon International (GG3) Ellen Ng, Vice President Publishers Clearing House (GG1) Susanna Ng, Senior Vice President Bath & Body Works (GG2) Alexandra Au, General Manager Starbucks (GG2) Alexandra Au, General Manager Disney Stores (PDP) Rita Li, Vice President Cracker Barrel (PDQ) Alexandra Au, General Manager JoAnn Stores - Hardline (GG4) George Yeh, General Manager JoAnn Stores - Softline (GGJ) Ellen Ng, Vice President Source: Li & Fung Internal Information

5. 48% of the customers are not satisfied with the current mediocre sales process Source of data: 2009 customer opinion survey by Team E Consulting Group

6. GNP should improve the sales process in order to resume healthy growth. Greater customer satisfaction ratings results in greater sales growth! Company J Company I Company H Company F Company C Company G Company E Company D Company B Company A Source of data: Benchmarking study by Team E Consulting Group

7. GNP should improve the sales process in order to resume healthy growth. GNP Group should streamline its sales process in order to increase sales efficiency and capture 30% sales growth in 1 year. The marketing process is not standardized, causing long turnaround time for customer pitching. Communication on products is inadequate, results in limited product offering & untapped sales opportunity. Historical data is not readily available. Many sales opportunity are not identified and captured. • Inadequate resource to handle all customer request due to prolong marketing process • Customer satisfaction jeopardized due to variance in marketing quality • Merchandisers could not effectively pitch to customers with existing resources • Costs savings resulting from product modification not captured • Cross selling potential not captured due to unknown products by merchandisers • Sales or product experience not shared preventing effective sales analysis/projection • Extension of preparation time resulting from inadequate data • Ineffective budgeting and trend analysis due to scattered information

8. GNP should improve the sales process in order to resume healthy growth. GNP Group should streamline its sales process in order to increase sales efficiency and capture 30% sales growth in 1 year. The marketing process is not standardized, causing long turnaround time for customer pitching. Communication on products is inadequate, results in limited product offering & untapped sales opportunity. Historical data is not readily available. Many sales opportunity are not identified and captured. • Inadequate resource to handle all customer request due to prolong marketing process • Customer satisfaction jeopardized due to variance in marketing quality • Merchandisers could not effectively pitch to customers with existing resources • Costs savings resulting from product modification not captured • Cross selling potential not captured due to unknown products by merchandisers • Sales or product experience not shared preventing effective sales analysis/projection • Extension of preparation time resulting from inadequate data • Ineffective budgeting and trend analysis due to scattered information

9. Customer enquiries that are completed in 2 weeks have a much higher chance to close the deal! Source of data: 2008 GNP Group (Division GG4) internal data– account servicing team

10. Marketing tools constraint reduces quality of sales presentation. “LF has no catalog for me to easily browse through for products that I would like my team to purchase.” – JoAnn Stores VP of Sourcing & Product Development “The turnaround time for product offerings is slow as compared to other services that LF is able to provide.” – JoAnn Stores VP of Sourcing & Product Development “The displays at the showrooms are very nice, but there is no product information that I can readily obtain and team always has to go back to vendors to requote the same items.” – JoAnn Stores VP of Sourcing & Product Development Source of data: 2009 trade interviews with customer – JoAnn Stores

11. A shorter showroom preparation time will lead to more efficient and increased sales GNP Group has limited space for vast variety of product, so each time prior to customer visit, the showrooms are reset to showcase only relevant items. Competitors tends to have fixed showrooms due to their focus on narrower product offerings. Source of data: 2008 GNP Group (Division GG4) internal data– account servicing team

12. GNP should improve the sales process in order to resume healthy growth. GNP Group should streamline its sales process in order to increase sales efficiency and capture 30% sales growth in 1 year. The marketing process is not standardized, causing long turnaround time for customer pitching. Communication on products is inadequate, results in limited product offering & untapped sales opportunity. Historical data is not readily available. Many sales opportunity are not identified and captured. • Inadequate resource to handle all customer request due to prolong marketing process • Customer satisfaction jeopardized due to variance in marketing quality • Merchandisers could not effectively pitch to customers with existing resources • Costs savings resulting from product modification not captured • Cross selling potential not captured due to unknown products by merchandisers • Sales or product experience not shared preventing effective sales analysis/projection • Extension of preparation time resulting from inadequate data • Ineffective budgeting and trend analysis due to scattered information

13. Merchandisers could not effectively pitch to customers with existing resources • Salespersons believe better product information improves their sales performance Source of data: 2009 salesperson opinion survey by Team E Consulting Group

14. Comprehensive product information brings about strong sales support. • Salespersons said: • “If product database is available, I can easily obtain information about the product and vendor which are new to me so that I can spend more time on understanding the client’s needs and building relationship.” • “With the help of product database, I will be more familiar with the product range available to our clients. A thorough product knowledge demonstrates our company’s professional and expertise in the industry, which significantly affects the decision-making of vendor choice of the clients.” • “If I am provided with reliable vendor and product information, I can substantially improve my sales performance. Less time is spent on duplication of product type, assessment of vendor capacity etc.” Source of data: 2009 salesperson opinion survey by Team E Consulting Group

15. Cost savings resulting from modification of current product types are not captured. Cost advantage from modification products with similar spec (40% reduction) Source of data: 2008 GNP Group internal data – product development team

16. Modification of existing product types can be common Source of data: 2008 GNP Group internal data – product development team

17. Another potential for sales growth if GNP better understands its customers. Source of data: 2009 customer opinion survey by Team E Consulting Group

18. GNP should improve the sales process in order to resume healthy growth. GNP Group should streamline its sales process in order to increase sales efficiency and capture 30% sales growth in 1 year. The marketing process is not standardized, causing long turnaround time for customer pitching. Communication on products is inadequate, results in limited product offering & untapped sales opportunity. Historical data is not readily available. Many sales opportunity are not identified and captured. • Inadequate resource to handle all customer request due to prolong marketing process • Customer satisfaction jeopardized due to variance in marketing quality • Merchandisers could not effectively pitch to customers with existing resources • Costs savings resulting from product modification not captured • Cross selling potential not captured due to unknown products by merchandisers • Sales or product experience not shared preventing effective sales analysis/projection • Extension of preparation time resulting from inadequate data • Ineffective budgeting and trend analysis due to scattered information

19. Incomplete Sales/Product Information Hinders Sales Sales and Product Data Availability in System for Team GG4 • Missing piece leading to incomplete information and hinder the sales pitching process and business analysis Source of data: GNP IT Department

20. Inadequate Date Lengthens Preparation for Sales Pitching Preparation Time Required for Sales Pitching for Team GG4 • Preparation time will be lengthened if data are not promptly available in the system +700% +200% * Other sources e.g. information obtained from other teams, from documents etc Source of data: Survey conducted by Team E

21. Scattered Info. Leads to Ineffective Budgeting & Sales Analysis • Same happened to business/trend analysis. Fail to effectively observe business insights Data are partly input to the system Staff from all teams I’m bombarded with information from various sources and have to spend tremendous time to consolidate them, what could make the target setting process easier? Catalogue/ Direct Selling Team Family Entertainment Team External reports e.g. ranking Specialty Store Team Customers’ survey / feedback Top Team/ Managers Promotions Team Historical reports Business analytical reports Source of data: 2008 GNP Group internal data – product development team

22. Recommendation • To be written after finalizing all analysis

23. Implementation/ Phasing To be written after finalizing all analysis

24. Appendix

25. Appendix 2Sales Process of GNP Group

26. Customer Li & Fung Vendors Creation of Trend Guide Creation of Sourcing Brief 8 weeks Trend Guide Sourcing Brief Review and communicate on requirements Arrange Samples & Quotation 6 weeks 2 weeks Review Quotation & Samples Quotation Samples Customer Quotation Customer Samples Is Quotation OK? No Review Quotation & Samples Yes Is Quotation OK? Is Sample OK? No No Is Sample OK? No Yes Yes Yes Orders Issued Consolidate for Buy Trip Presentation 4 weeks Process Time: 20 weeks