OPERATIONS STRATEGY AT GALANZ www.ePowerPoint.com

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 a low-price strategy an abundant supply of cheap labor and land. What were the order winners/order qualifiers for Galanz in the microwave oven business during the early stage of its development? a low-price strategy an abundant supply of cheap labor and land. Attract component suppliers setting up facilities in Galanz Free production line transfer 1. Galanz fully utilized its production facilities and labor resources to the extreme by operating three shifts per day, seven days a week and 365 days a year. Compared with many Western companies that operated production only 30 to 40 hours per week, Galanz’s non-stop production had expanded its production capacity to at least fourtimes that of its Western counterparts. 2.For example, when Galanz produced microwave ovens for Fillony, its French customer, it proposed to supply Fillony with the necessary quantity of microwave ovens at cost if Fillony agreed to transfer, for free, its entire production line as well as the assembly technology to Galanz, and to provide the necessary training to Galanz’s operators. More importantly, Galanz gained the right to use the excess capacity of the production line for its own products after satisfying Fillony’s production quota.

famous and big foreign manufacturers Flexibility & Delivery 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? Cost low-price strategy Quality famous and big foreign manufacturers Flexibility & Delivery OEM,OBM,DOM Service & innovation R&D efforts Cost---At the initial stage when Galanz entered into the electrical appliance market from the garment industry, it relied on the low price of magnetron production and benefited from the low cost of labor when competing with other companies already existing in the market. Quality---They also focused on quality because it is one of the most important requirements to assure a long-term relationship with foreign manufacturers. Flexibility & Delivery---The further expansion of business through OEM, OBM, and ODM enabled Galanz to be flexible in microwave production and more fast to delivery the production. Service & innovation---Service and innovation are the part that Galanz initially concentrated less on until 1995. The exponential growth of the microwave oven business threatened the major magnetron supplier and reduced the supply for Galanz. Therefore, Galanz started to initiate its own R&D efforts in 1995 in order to prevent the supply crisis. After 1997, Galanz further collaborated with scientific institutes in order to improve mechanical design and reduce cost. 

technology has had an influence in the following ways: 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. 资料下载：www.1ppt.com/ziliao/ PPT课件下载：www.1ppt.com/kejian/ 范文下载：www.1ppt.com/fanwen/ 试卷下载：www.1ppt.com/shiti/ Word教程： www.1ppt.com/word/ Excel教程：www.1ppt.com/excel/ 优秀PPT下载：www.1ppt.com/xiazai/ PPT教程： www.1ppt.com/powerpoint/ 节日PPT模板：www.1ppt.com/jieri/ PPT素材下载：www.1ppt.com/sucai/ PPT背景图片：www.1ppt.com/beijing/ PPT图表下载：www.1ppt.com/tubiao/ PPT模板下载：www.1ppt.com/moban/ 行业PPT模板：www.1ppt.com/hangye/ 教案下载：www.1ppt.com/jiaoan/ 3、The ability to provide more products with different features. 4、The mastering of the magnetron technology has enabled the business to produce on-masse. 资料下载：www.1ppt.com/ziliao/ PPT课件下载：www.1ppt.com/kejian/ 范文下载：www.1ppt.com/fanwen/ 试卷下载：www.1ppt.com/shiti/ Word教程： www.1ppt.com/word/ Excel教程：www.1ppt.com/excel/ 优秀PPT下载：www.1ppt.com/xiazai/ PPT教程： www.1ppt.com/powerpoint/ 节日PPT模板：www.1ppt.com/jieri/ PPT素材下载：www.1ppt.com/sucai/ PPT背景图片：www.1ppt.com/beijing/ PPT图表下载：www.1ppt.com/tubiao/ PPT模板下载：www.1ppt.com/moban/ 行业PPT模板：www.1ppt.com/hangye/ 教案下载：www.1ppt.com/jiaoan/ On the technology side, it was less risky to invest in the technology associated with microwave ovens because this technology had been mature and stable since Americans first invented the microwave oven in the 1950s. Though Japan, a new player in microwave ovens, later advanced the production of the magnetron tube and power supply in the subsequent decade, resulting in a tremendous cost reduction, the overall technology of microwave ovens did not differ much from that of its original design.   Despite the technical ease of producing microwave ovens, starting a microwave oven production business in China was not without obstacles due to the lack of associated technology and technical expertise at home. While many Chinese entrepreneurs at the time saw the market opportunity in microwave oven production in China, only Liang Senior had the determination to work to overcome the business challenges. Liang Senior understood that Galanz had to import equipment and technology from overseas. Thus, in the early 1990s, he purchased the microwave oven production blueprint for USD$300,000 from Toshiba(东芝), then the world leader in microwave oven production equipment and technology. He also searched for engineering professionals throughout the country to set up the factory. At last, he found a group of engineers from Shanghai No. 8 Radio Factory who were knowledgeable of microwave oven technologies to help him. These engineers were still working with Galanz after 25 years, serving in senior positions in the technical supervision of microwave oven production.

technology has had an influence in the following ways: 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. Technology has played a great role in the success of the business. With little to no production design early years, a number of technology initiatives including have ensured the business has moved forward . 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? 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 Q6: Should Galanz develop its OBM business in the international market? Should Galanz continue its OEM and ODM business? OEM & ODM Prevent shortage of components Catch up with the most advanced technologies from OEM orders Low risk of investing in R&D Ensure continuous growth OBM Improve brand recognition to end consumers in overseas market Grasp the demand of the market by reaching consumers directly help to penetrate in other countries Promote transformation ✔ ✔

Q7： What should Mr. Liang do to lead its company to greater success 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? Overall cost leadership strategy rise of labor cost foreign customers value brand more than cost help OBM products reach end-user market Put more effort on innovation Set higher priority on consumer service Forecast demand accurately Make a balance between OEM and OBM Flexibility of products