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Product cover image for Li-Ning Co. Ltd.: A Leading Chinese Company Stumbles

Li-Ning Co. Ltd.: A Leading Chinese Company Stumbles

Daniel Han Ming Chng; Ziqian (Stella) Zhao

Product #:9B16M068
Supplier:CEIBS-Ivey
Discipline:International Business, Strategy
Setting:China, 2013
Details:Case (PDF) • 15 pages • 2016-04-27 (Rev: 2016-04-28)

Subjects:

Business managementInternational businessStrategy

Industries:

Fabrication and manufacturing

Geography:

ChinaAsia
Your Price:$9.71

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In 2012, Li-Ning Co. Ltd. (LNCL) was the third-largest sportswear company in China in terms of revenue, after international brands Nike and Adidas. Following its highly successful founding in 1990 by China’s Olympic champion and company namesake, Li Ning, the firm attempted to formalize its organizational structure and establish a professionally managed organization, while dealing with the rise of well-established international sportswear brands in China like Nike and Adidas. By 2013, however, the company’s performance had started to decline. LNCL found itself caught in a tough spot, with profit margins falling as the company was squeezed between international and local sportswear brands. Furthermore, its aggressive past expansion had resulted in heavy expenditures in market promotion, large unsold inventories, and low operational efficiency. What should the new leadership team do to turn around the company’s performance?

Learning Objectives

The case has been designed for courses on corporate turnaround and organizational design and change. It can also be used in a strategic management course to illustrate the strategic positioning of both international and domestic sportswear brands in China.

The primary purpose of this case is to illustrate how a company changes over the course of its development. This goal is achieved by looking at an organization’s life cycle and considering how a leading company may stumble if it cannot make necessary strategic changes as the business environment evolves. Students will consider how a company can change over its development life cycle from a small entrepreneurial venture — taking advantage of unique market opportunities and internal organizational resources — to a well-established leading company, and how it can later struggle and decline in a fast-changing market environment.
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Case Study: Li-Ning Co. Ltd.: A Leading Chinese Company Stumbles (English version) | Ivey Publishing