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OPERATIONS STRATEGY AT GALANZ
CASE STUDY
MBA 729

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TABLE OF CONTENTS

I
...


………………………………………………
...


4

Company Background
Case Background

III
...


6

IV
...


7

V
...


8-10

A
...

VII
...

IX
...


Operations/ Manufacturing

C
...


HR

E
...


10-12

………………………………………
...


17-18

………………………………………
...


COMPANY BACKGROUND

Guangdong Galanz Group Co
...
is a Chinese manufacturer of electronic home appliances
which is headquartered in Shunde, Guangdong province
...

The company’s original name was GuizhouDown Product Factory
...
The company continued to be
profitable despite increasing competition and was also one of the best performers in Shunde
...
Also, the profit growth of the company had
become stagnant which made Liang Qingde realized that his business could not go any further
because of its projected weak future
...
After analyzing the
Chinese consumer market for a year, he made the decision to enter the electrical appliance
market with the introduction of microwave oven
...
Then, it became the dominant player in the
world microwave oven market
...


II
...
To make the plan into reality they
started by purchasing the blueprint of the microwave oven production from Toshiba which is
the leading in the microwave oven production
...
Through their strength and low cost strategy, they
were able to maintain their market dominating position in the market
...
Thus, they opt to outsource the
magnetron production
...
Thus, it
helped improve their production with the help of their extensive labor and facilities
...
This forced their competitors to withdraw from the
market
...
As a result,
they made and design their own magnetrons through their collaboration with various
universities and advance technologies
...
Also, they used vertical integration for their supplies so they could produce
most of the components for the microwave oven
...
They decided to go global
...
They were also accused by foreign government due to
dominating some markets because of their low price strategy
...

Therefore, they were having difficulties accommodating the increasing demand of customers
...
Cost arbitrage (of land and
labor) was the chief competitive strategy employed by Galanz to capture the Chinese
microwave market
...
Thus, after the
superlative domestic success, Galanz focused on building a world brand by maintaining its

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low cost, abundant supply and stressed on important aspects such as customer relation
management and after sales support
...
This strategy was supported by an abundance of cheap land and labor
...
The rapidly increasing demand, which rose to almost 25 million units in 2003, for
these low-cost microwaves prompted Galanz to expand its production capabilities
...
Furthermore, deals with customers like Fillony to transfer
entire production lines made sure that the ever growing demand for the ovens was met
successfully
...


III
...
Their annual production
capacity was not able to meet their annual production requirement
...

However, even though the problem is slightly resolved, the following issues concern the
company:

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1
...
How can Galanz make sure that they could provide more efficient production to sustain
the customers’ demands of high variety products so that they could expand or maintain its
success despite of the competition in the domestic and global market?

IV
...


•

The company innovation focused only for one product
...
(3) The company has also alloted more that 3 percent of their annual
revenue for its investment in the Research and Development
...


SWOT ANALYSIS
STRENGHTS

WEAKNESS

•

Low cost products

•

Inefficient Market Structure

•

Efficient R&D

•

Low

brand

recognition

for

international markets

•

OPPORTUNITIES
Development of product line

•

Company expansion

•

THREATS
Accusations from government of
importing countries

•

Conflict of interest for the OEM
clients

•

Inefficiency in production
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STRENGTHS
•

The company provides low cost products – this instance made the company dominate its
domestic market
...


•

Research and Development – the company’s R&D has been strongly built that helped the
company to have its competitive advantage over its competitors
...


WEAKNESSES
•

Inefficient market structure – the information flow and communication were slow and
unclear and thus, resulted to strategies being difficult to implement
...
Without further studies and modification of the management
structure, it becomes weaker up to the point that it may cause the company to foreclose
...


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OPPORTUNITIES
•

Development of product line – because the company is known for its microwave ovens,
the company can increase its product line into electrical appliance market
...


THREATS
•

Galanz was facing accusations from the government of importing countries – one
accusation was that Galanz was trying to monopolize the market by dumping products
that are priced unreasonably low
...


•

The customers of its OEM products might be their competitor – Galanz decided to
provide their OBM products in the international market
...


•

Inefficiency in production – the company implements mass production scheme to achieve
low-cost efficiency, and in the past, most of the products were with less variety
...


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VII
...
Expansion of
machineries
and labor
2
...
Outsourcing
4
...
Conduct
Production
planning

EFFICIENCY
(TIME)

ECONOMY
(COST)

EFFECTIVITY

TOTAL

3

1

4

8

2

4

1

7

3

3

2

8

3

2

2

7

4

3

3

10

1
...
Through addition of
machine and labor, the company may able to improve its mass production as well as meet
the insufficient demand of the needed component
...
Training and Development Programs for Employees
Training presents a prime opportunity to expand the knowledge base of all employees,
but many employers find the development opportunities expensive
...


Make a time schedule
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for

the

production

1 week

Managers

process

Collaborate with the top
executives

Implement the change

2 month

Managers

Guide

the

production

staffs about the changes to
be made in the production
Monitor and revise if

1 month

necessary

Managers

Monitor
production

if

the

new

plan

is

effective and revise if
necessary
...


CONCLUSION/RECOMMENDATIONS
Galanz has encountered a lot of success and difficulties
...
However, these advantages led them to a cost leadership
strategy where they dominated the domestic market through price cutting or low cost
goods
...
As they grow, they faced global
market difficulties like lack of brand recognition and poor sales performance
...


Various areas were taken into consideration including Marketing, Operations, Finance,
HR, MIS/ IT/ R&D/ Business Development to solve the problem of Galanz
...
After evaluation, we, then concluded that
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to resolve the problem of Galanz in terms of the 100% availability of the magnetrons to
make up for the 9M gap in the demand, and for them to provide more efficient production
to sustain the customers’ demands of high variety products for the benefit of
competitiveness in the global market, we opt to conducting an efficient and effective
production planning whereby if Galanz would be able to apply it would increase their
production capacity that could fill in the gap of their annual production and even improve
the quality of their products that could be easier to market in other foreign countries
...
Through the product line extension, it
would allow Galanz to sell more to existing customers, and even acquire additional
customers
...
This
could be possible since Galanz would then come up with a more efficient and effective
production planning
...
It should be prioritized since the global market has full of potentials
...
They could do it so by having a global market strategy

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to ensure that their penetration to foreign markets will be effective and could bring a
good sales performance
...


3)

Conduct extensive marketing efforts

-

For both launching of new products and OBM business, we recommend Galanz to

conduct extensive marketing efforts to keep their products on track and globally
competitive

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