1. The trading sector is a complex industry that involves dealing with many different stakeholders while at the same time forming strategic alliances with raw material suppliers, manufacturers and transporters. A Porters 5 Forces analysis reveals that suppliers in this industry (including those who supply raw materials and those who produce) are highly fragmented and numerous. As a result, no single supplier company has a dominant market share in their respective product markets. Trading companies not only have more bargaining power on the bargaining table, but they also set guidelines for their suppliers to follow. As a result, suppliers in this industry do not wield much bargaining power. Buyers of the services rendered by this industry include large multinationals who outsource their supply chain management activities as they are outside their core competencies. Some customers are extremely high-volume buyers and as a result have a large influence on the price of these services. The cost of switching from one merchant to another is low and the process is quick, so price-sensitive buyers are most likely to switch to those merchants who can provide the same goods at a lower price. But while there are many traders in the industry, only a handful have stood out for their extensive global sourcing and manufacturing networks, such companies can even charge a premium for their services as they offer extremely high levels of value and quality. Therefore, although buyers in this industry are price sensitive, there is a constant struggle between value for money (quality, on-time delivery, customer service) and low cost. In the commercial sector there are no significant barriers to entry... paper... network which allows them to organize their functions as if they were different phases of the production process. They will typically only use 30-70% of the supplier's capacity, thus allowing flexibility and access to new suppliers. This also prevented suppliers from becoming completely dependent on Li & Fung. The contracts Li & Fung entered into with these companies also had a clearly defined exit strategy that gave Li & Fung enough power to abandon a supplier without problems if necessary. In order to improve the performance of suppliers, Li & Fung provided them with feedback on the quality and timeliness of production, suppliers who performed poorly were dropped and new ones were found in their place. Li & Fung was a “smoke-free factory” that did not own any manufacturing facilities but was deeply involved in their management and manufacturing processes.