Galanz Case Study

Q.1 What were the order winners/qualifiers for Galanz in the microwave oven
business during the stage of its development?

Order Qualifiers: Order Winners:

 Quality  Low Cost
 Delivery  Low Price

Q.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?

 In the recent ten years, Galanz's core competitive power lies in one
point: its low price/cost.
 First of all, it constantly develops new products and proprietary
technologies(Flexibility);
 Second, it launches high quality and low-price products to enlarge its
market share by making use of its advantage in total cost (small profits
but quick turnover);
 Thirdly, it begins to develop key components and parts by applying its
own technology by investing more in R&D and puts them into
production to further reduce the total cost of manufacture. Thereby
Galanz set up an entrance barrier which is a key in such
strategy(Innovation).
 The equipment that Galanz has introduced through OEM, great-batch
production, low labor force cost, big span of control and monopoly on
the party of purchaser have made Galanz get an advantage in cost for a
long period: the reason why it could reduce its prices so frequently
much lower than its antagonists', and it has a sufficient space for
making profits.
 Fourthly, Galanz's scientific marketing strategy was a great competitive
power (Service and Delivery).
 Furthermore, it had developed new functions of microwave oven and
improved the consumption environment for its global customers. Then
Galanz has set up a strong marketing network not its own distribution
channel but in cooperation with commercial agents in different places. It
also consolidates its market by ceaselessly launching new and different
products and improving its service quality and service level (warranty,
trans-regional maintenance service)
Q.3 What is the role technology has played in the success of Galanz?

 Galanz is undergoing transference from production scale to high

technology, from professionalism to diversification, from manufacturing
to creativity and from a worldwide manufacturing facility to a global
brand.
 Galanz has invested heavily in key technologies and development of key
components. The uniqueness of Galanz is to control the key
technologies and key components lead them to “Made in China to
Created in China”
 Galanz believes that key technologies have great importance in its
development and high-end products will enable it to take the global
market.
 First mover advantage in technological innovation in Light wave ovens
in 2001.
 Galanz has increased its investment in product research and
development and has strengthened the innovations. Every year, Galanz
has invested 5% of its annual turnover in research and development and
has set up five research and development centers in Hong Kong, USA,
South Korea, Zhongshan and Shunde. It plans to set up the sixth
research and development center in Japan.
 By 2007, Galanz has made over 760 achievements related with
microwave ovens, to include spherical microwave technology,
microwave enhancing and compensation technology, microwave
leakage prevention technology, light wave technology, aerobic cooking
technology, etc. which have become a landmark for this industry.
Galanz has registered over 1000 patents, to include more than 10
international patents and over 700 authorized patents.

Q.4 What are Galanz competitive and operations strategies, and how does its
operations strategy support its competitive strategy?

 Competitive Strategies:
 Low price of Microwave Oven
 High quality
 Operation Strategies
 24/7 working production line
 Employees working 3 shifts in production line
 Economies of Scale gained by having low cost and large number of available
labour helped Galanz to work for 24/7 working production line by which they
can produce much lower price Microwave Oven with good quality.
 Q.5 What is the difference between OEM/ODM versus OBM in terms of production,
design, marketing, distribution and customer services?

OEM / ODM OBM

Original Equipment Manufacturer/ Original Brand Manufacturer
Original Design Manufacturer

OEM, manufactures / design products or Selling the product of the second

components that are purchased by company under its own brand just adds a
another company and retailed under the virtual extrinsic value to product.
that purchasing company’s brand name.

OEM / ODM take order from their OBM forecast demand for end customers
purchaser / business customer

Either OEM or their purchaser arrange They need to manage distribution system
distribution system to take competitive advantage among its
competitors

OEM and their business customer work OBM must keep themselves open to their
very closely, thus they don’t need to customer so that customer can interact
focus much on customer service. 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.
Q.6 Should Galanz develop its OBM business in the International market? Should
Galanz continue its OEM/ODM businesses?

 Yes, Galanz should develop its OBM business in the international

market.
 It help Galanz to get world recognized brand image.
 It help to penetrate in other countries where Galanz is currently not
present.
o Yes, Galanz should continue its OEM/ODM businesses
o These businesses help Galanz to get economies of scope.
o These businesses did not require Galanz to invest in brand building
thus high profit and Galanz can price Microwave oven at lower side.

Q.7 What should Liang do to lead his 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 advantage in
the market place?

- Effectiveness of low cost strategy- company can increase the price of new
products.
- Combination of OEM, OBM and ODM

a) should have a balance between OEM and ODM in the

b) overseas market.
c) foreign customer value brand more than cost.
d) focus should be more on OEM, but at the same time improve the OBM
business step by step.
e) Need to invest more resources in customer relationship management.