OPERATIONS STRATEGY AT GALANZ
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O VERVIEW
Case Summary
Conclusion
Answers to Questions
Case Summary
Galanz was founded by Liang Senior, father of Liang Zhaoxian .
Initially, it employed a few workers and dealt with the
trading of down feather products.
On a visit to Japan, Liang Senior identified that
microwave oven has a great potential in China.
It imported magnetrons, an important component
required to make microwave ovens from Toshiba.
Case Summary
When Galanz oven became popular; Toshiba reduced its
supply.
They again outsourced magnetrons to a Japanese
company to meet the rising demand.
They utilized the resources fully and the main strategy
focused on was cost leadership that made them
popular through out China.
Conclusion
Started with the concentration strategy at the initial stage
of establishment.
Followed a total cost leading strategy.
Carried out a corrective diversification strategy on the
precondition that it had gained absolute
competitive advantages in the original field.
Main disadvantage is the lack of clear brand strategy
Answers to Questions
1
What were the order winners/order qualifiers for Galanz in
the microwave oven business during the early stage of its
development?
an abundant
supply of
cheap labor
and land.
Free
production
line transfer
Attract
component
suppliers
setting up
facilities in
Galanz
2
Rank the importance of Galanz’s operations objectives
of cost, quality, flexibility, delivery, service and
innovations. How has the importance changed over the
years?
Q3. What is the role technology has played in the success of Galanz?
technology has had an influence in the
following ways:
1、The purchase of the blueprint from Toshiba for the original microwave over
2、The import of assembly technologies has helped reduce costs for the business.
3、The ability to provide more products with different features.
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4、The mastering of the magnetron technology has enabled the business to produce onmasse.
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Q3. What is the role technology has played in the success of Galanz?
technology has had an influence in the
following ways:
5、Technology change over the years has enabled the re-brand from Made in China to create
in China.
6、Local design of our products.
7、Investment in R&D has proven fruitful along with learning from overseas partners and
importing the most advances technologies through these relationships.
8、Costs have been reduced as different features in its products give increased flexibility.
9、Manufacturing around 90% of our own components has ensured greater efficiency.
Q number 4- What are Galanz’s competitive and operations strategies, and how
does its operations strategy support its competitive strategy?
1. Competitive Strategies:
-
- Low price of Microwave Oven
- High quality
2. Operation Strategies:
- 24 hours a day/ week working production line
- Employees working 3 shifts in production line
3. Economies of Scale gained by having low cost and large number of available labour
helped Galanz to work for 24 hours a day .
Q number 5- What are the differences between OEM/ODM versus OBM in terms
of production, design, marketing, distribution and customer service?
OEM/ ODM
• Original Equipment Manufacturer/Original Design Manufacturer
• OEM, manufactures / design products or components that are purchased by another
components that are purchased by another company and retailed under that
purchasing company’s brand name.
• OEM/ODM take order from their purchaser / business customer
• Either OEM or their purchaser arrange distribution system
• OEM and their business customer work very closely, thus they don’t need to focus
much on customer service.
OBM
• Original Brand Manufacturer
• Selling the product of the second company under its own brand just adds a virtual
extrinsic value to the product.
• OBM forecast demand for end customers
• They need to manage distribution system to take competitive advantage among its
competitors
• OBM must keep themselves open to their customer so that customer can interact
them at any time.
OEM/ODM vs OBM in overseas market
• Overseas consumers were not familiar with Galanz as a brand of microwave
ovens.
• Strategic partnership with multinational companies such as K-Mart and Wal –
Mart were confined to OEM deals.
• Liang junior began to offer Galanz-branded microwave ovens to superstores.
• Technical support from Fillony to help Galanz set up R&D centers overseas
to showcase Galanz branded microwave ovens in the country.
• Ratio of Galanz OBM and OEM microwave ovens rose from 1:9 to 3:7 from
1997 to 2003 .
Q6: Should Galanz develop its OBM business in the international market? Should Galanz
continue its OEM and ODM business?
OEM & ODM
✔
OBM
✔
Prevent shortage of components
Improve brand recognition to end
consumers in overseas market
Catch up with the most advanced
technologies from OEM orders
Grasp the demand of the market
by reaching consumers directly
Low risk of investing in R&D
help to penetrate in other
countries
Ensure continuous growth
Promote transformation
Q7： What should Mr. Liang do to lead its company to greater success? Should the
company change its overall cost leadership strategy? How should the company set
priorities and utilize its resources and capabilities to gain competitive advantages in the
marketplace?
foreign
customers
value brand
more than cost
help OBM
products reach
end-user
market
rise of labor
cost
Put more effort
on innovation
Overall cost
leadership
strategy
 Set higher priority on consumer service
Forecast demand accurately
 Make a balance between OEM and OBM
Flexibility of products