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Galanz Operation Strategy Case Analysis PDF Free

This case study analyzes the operations and competitive strategies of Galanz Enterprises Group Co. Ltd., a Chinese appliance manufacturer. It discusses how Galanz transformed from a small producer of down feathers into the world's largest microwave oven manufacturer. The company achieved this through strategic shifts from OEM to ODM to OBM models. It also implemented cost leadership strategies like economies of scale and utilizing excess production capacity. Galanz was able to gain competitive advantages in China and globally through low prices, innovation, and building multiple capabilities over time. The case examines both Galanz's successes and challenges in managing operations, supply chains, and expanding into international markets.

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0% found this document useful (0 votes)
86 views

Galanz Operation Strategy Case Analysis PDF Free

This case study analyzes the operations and competitive strategies of Galanz Enterprises Group Co. Ltd., a Chinese appliance manufacturer. It discusses how Galanz transformed from a small producer of down feathers into the world's largest microwave oven manufacturer. The company achieved this through strategic shifts from OEM to ODM to OBM models. It also implemented cost leadership strategies like economies of scale and utilizing excess production capacity. Galanz was able to gain competitive advantages in China and globally through low prices, innovation, and building multiple capabilities over time. The case examines both Galanz's successes and challenges in managing operations, supply chains, and expanding into international markets.

Uploaded by

raksha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Operations Management, Case Study

Galanz Case Analysis


EMBA, Fall 2012,
Ace Institute of Management ,
Kathmandu

Submitted By:
MG Singh
Prakash Bhatta
Sharad Chandra Pyakurel
Sujesh Shakya
Umesh Agrawal

Submitted To: Mr. Rabindra Silwal


11/28/2013
Case Analysis: Operation Strategy at Galanz Prep. By: Group 4

Table of Contents
1. EXECUTIVE SUMMARY: ...................................................................................................................2

2. BACKGROUND INFORMATION: .......................................................................................................2

3. OBJECTIVES:.....................................................................................................................................2

4. PROBLEM STATEMENT: ...................................................................................................................3

5. ANALYSIS: ........................................................................................................................................3

5.1 Importance of Galanz’s operations objectives of cost, quality, flexibility, delivery, service
and innovations:..................................................................................................................................3

5.2 Stage 4: During the 2000s – Branding and Self development: ................................................5

5.3 Stage 5: Future of the Company: .............................................................................................6

6. GALANZ’S COMPETITIVE AND OPERATIONS STRATEGIES ITS SUPPORT TO COMPETITIVE


STRATEGY: ...............................................................................................................................................6

7. GALANZ'S OBM BUSINESS IN THE INTERNATIONAL MARKET:........................................................7

7.1 Comparison of OEM & ODM v. OBM business ........................................................................7

7.2 Expand its OBM business. ........................................................................................................8

7.3 Continue developing its OEM and ODM business as well. ......................................................9

8. DETAILED RECOMMENDATION: ......................................................................................................9

9. SETTING PRIORITIES AND UTILIZING ITS RESOURCES AND CAPABILITIES TO GAIN COMPETITIVE
ADVANTAGES IN THE MARKETPLACE: ..................................................................................................10

10. CONCLUSION ..............................................................................................................................11

Ace EMBA, Fall 2012: Submitted to: Mr. Rabindra Silwal Page 1
Case Analysis: Operation Strategy at Galanz Prep. By: Group 4

1. EXECUTIVE SUMMARY:
Starting from a humble beginning of being a manufacturer of down feather products owned by
Shunde Township, Galanz Enterprises Group Co. Ltd. (Galanz) had transformed itself into a world
class manufacturer of microwave ovens producing about 50 per cent of the global output in 2003.
This case describes the competitive and operational strategies that Galanz used to achieve such a
meteoric growth. The company started out with a clear competitive strategy based on cost leadership.
It designed and implemented operations system to help achieve lower cost through economy of scale,
the transfer of production capacity from developed countries and full utilization of the available
production capacity.

2. BACKGROUND INFORMATION:
Galanz is a Chinese company founded in 1978 by Liang Quingde, its headquarters is located in
Shunde Guandong and initially started with few number of workers producing feather product and
rely on foreign exchange in exporting its product. Several factors including high competition and
market changes, restriction of trading tariffs, institutional environmental changes as well as natural
disaster influenced the firm to shift its activity to electrical market.

Galanz’s decision to initiate the first price war in August 1996 was not an easy one. Senior executives
at Galanz had long and heated debates on the risks and benefits of a price war and contemplated all
scenarios. The majority of senior managers at the time opposed the price war strategy and preferred a
safer strategy of maintaining the current high profit margins. In the end, the CEO made the call,
siding with the minority, to get ready for war.

There were also other factors that played a major role in making Liang shift to microwave ovens
production. First, although there were foreign competitors in the market, they do not know much
about the environmental changes in Chinese market. Second, microwave price was high and
unaffordable for the Chinese consumers. Third, rapid economic development in China opened up
potential growth opportunities in this segment. Forth, changes in Chinese lifestyle and rising
affordability. Fifth, ease of manufacturing microwave oven that as it was invented in the 50s. When
Liang junior became major shareholder of Galanz he entered the microwave market successfully
because he knew the Chinese market better than the competitors, so he took the initiative and started
producing Galanz microwave by buying the blueprint of the microwave from Toshiba for USD
300,000 and finding group of engineers from Shanghai which helped him to start Galanz microwave
manufacturer.

Galanz rapidly grew through its strategies and tactics starting from the stage of original equipment
manufacturing (OEM) to original design manufacturing (ODM) and subsequently ventured into
original brand manufacturing (OBM). Galanz utilized the resources well thus it gained the advantage
to compete with lower price. Innovation and research and development played a major role in second
and third stages of the company’s expansion.

3. OBJECTIVES:
Major objective of this is to:
Ace EMBA, Fall 2012: Submitted to: Mr. Rabindra Silwal Page 2
Case Analysis: Operation Strategy at Galanz Prep. By: Group 4

- Introduce the concepts of order winner, order qualifiers, operations priorities/objectives.


- Show how operations priorities should reflect customer requirements and affect the way a
company wants to compete.
- Demonstrate how a company can gain competitive advantages through low cost strategy and
how to support business strategy using operations strategy and capabilities.
- Show students how a company can build multiple capabilities over time and how a
company’s strategy and operational capabilities can change over time.
- Provide students with the opportunity to analyze trade-offs involved in making strategic,
operational and marketing decisions as a business expands from the domestic to the global
market and from OEM to ODM and OBM.
- Help understand the tremendous opportunities and challenges of managing operations and
supply chain activities in China.

4. PROBLEM STATEMENT:
 OBM versus ODM/OEM prioritization
 Magnetron supply still falling short of demand
 Management structure overly centralized
 Not much investment has been made towards brand management. Also lacks effecting public
relationship management
 Decline in production efficiency
 Lack of efficient customized production capability and lack of strong international B2C sales
 Reliance on low-cost labor versus technical and management skilled
 Poor sales forecasting and production planning
 Lack of synchronization of production with R&D
 Inefficient international Sales and support infrastructure

5. ANALYSIS:
5.1 Importance of Galanz’s operations objectives of cost, quality, flexibility,
delivery, service and innovations:
With this high competitive era, organization should analyze their strength over the weakness of their
competitor. It will add values to their image and help them to grow. In this Article, Galaz’s got
competitive advantages by strengthening Differentiation, Low cost Leadership and Responsive
image to their customers.

Every product goes through different stage of development and operation managers need to
understand and strategizes accordingly. Product life cycle stages can be described as following:

Ace EMBA, Fall 2012: Submitted to: Mr. Rabindra Silwal Page 3
Case Analysis: Operation Strategy at Galanz Prep. By: Group 4

Galanz’s operations objective was to grab every opportunity and continue to grow their business. On
various stages of business life cycles they adopted distinct business objectives and set priorities such
that they can acquire distinct competitive advantage by capturing business environment according to
their customer needs.

Common operations at early introductory stages for Galan’z were cost leadership. By leading their
cost effective solution they were able to wipe-out their competitors during the early years. This
strategy helps them to increase market share in the Chinese domestic market and overseas over the
time period.

They expanded on their growth stages by developing flexibility in their strategies from various
Original Equipment Manufacturing (“OEM”) agreements with customers and suppliers to Original
Brand Manufacturing (“OBM‟) and Original Design Manufacturing (“ODM “).

By seeking shortages of the main component of the microwave oven i.e. magnetron, Galanz
transform to ODM as well by developing their own magnetron and venture actively into Research &
Development (R&D). They were into product innovation to have an edge over their competitor’s and
continued innovation not only to microwave functionality but also into other products as well.

Glanz’s Business operation can be analyzed with different stages of product development life cycle:

 Stage 1, 2 and 3: Development, Introduction & Growth period in early start up & success in
early 90’s.
 Stage 4: Maturity Period where branding and self development was strategized as main
objective in 2000s.
 Stage 5: Declining stage where future goal of company need to be described.

Ace EMBA, Fall 2012: Submitted to: Mr. Rabindra Silwal Page 4
Case Analysis: Operation Strategy at Galanz Prep. By: Group 4

 Stage 1,2 and 3: During the 90s – Early Start-up & Success :
High competitive environment and rapid market changes, restriction of trading tariffs, as well as
natural disaster influenced Glalanz find difficulty on their feather product. They saw huge potential
market of electronic products by considering many factors:

There were only foreign competitors in market without much knowledge of environmental changes in
Chinese market; price was unaffordable for the Chinese consumers; rapid economic development in
China and changes in Chinese lifestyle and rising affordability; ease of manufacturing microwave
oven that as it was invented in the 50s. So, they plan development of microwave product. Their main
object was to deliver low cost microwave affordable to most of Chinese households.

During the initial implementation stage, Galanz they were dependent only on supply of cheap labor
and land. Thus, Liang Senior imported equipment and technology from overseas and purchased the
microwave open blue print for USD$300,000 from Toshiba who was then the market leader for
microwave oven. He got help from local professional experienced engineers.

From 1996, obtaining cost leadership was most important operational objective to be the market
leader, increase market share and remove competition. Galanz aggressive pricing strategy has led
many competitors withdraw from the market.

Also, important operational objective was to ensure timely delivery. In 1997, Galanz occupied 47.6%
of the domestic market with sales reaching 1.25 million units, which were five times sales in 1996.
By the end of 2002, its domestic sales were 4 million units, occupying 70% of the market share. By
ensuring their product availability delivery of products they were able to grab market share.

Galanz had tough time to compete with scarce of key component of Microwave i.e. magnetron as
their suppliers such as General Electric, Toshiba and others, reduced the magnetron supplies. So,
Liang Senior embarked into research and development (R&D) activities to develop their own
magnetron to remain cost competitive and ensure continuous supply.

Innovation, Quality, Flexibility and other major operation area were given importance on operation
plan to retain competitive advantage on cost leadership and capture the market share.

5.2 Stage 4: During the 2000s – Branding and Self development:


Galanz could not sustain market with low cost strategy thus they changed “World Factory” to “World
Brand” thus they need to be innovative and create their brand. Production planning is crucial because
Galanz has been strengthening its sales network in all parts of the world including China during the
recent years. During this period, Galanz were developing a full range of low to high end products
with more complicated configurations, thus the Company needs to be able to forecast accurately to
produce the right products timely. Galanz was also actively involved in OEM and Original Brand
Manufacturing (“OBM”) business which requires different perspective of production planning. Thus,
delivery will be the most important operations strategy during this period as accuracy of the forecast
and responsiveness plays key roles in company’s business. In addition, they have also expanded their
business to the overseas market and have acquired strategic partnership with multinational companies
such as K-Mart and Wall-Mart for OEM deals.
Ace EMBA, Fall 2012: Submitted to: Mr. Rabindra Silwal Page 5
Case Analysis: Operation Strategy at Galanz Prep. By: Group 4

Changing image from low quality product with low price Galanz need to penetrate into the overseas
market, thus have to produce product with brand and good quality. For this they continued their effort
to increase quality and also integrate its supply chain by manufacturing more of its components. To
be international player and deliver their microwave into K-Mart and Wall Mart, quality is also
important during this period.

During this period, they have also expanded their business to the overseas market and have acquired
strategic partnership with multinational companies such as K-Mart and Wall-Mart for OEM deals.
They were flexible and made OBM and OEM product versions, which were sold in the US,
European, South America and African market. Ability to be flexible is the 3rd most important
operations objective.

Next Strategy was providing services to customer thus expended their sales support with 52 offices in
China and also in major exporting countries also. Fifth important operation objective was Cost, for
which important to maintain cost to ensure continuous sustainability.

Innovation was another step to strength their operation management which was slowly picking up
during this period and become apparent during the later period of the year.

5.3 Stage 5: Future of the Company:


For the future of the company, Galanz have to priorities their operation, R&D must be the first
operation objective because to compete and sustain in the international market they must be
innovative. For this they have collaborated with different technical university to find the innovation
through colleges and also developed research centers. Second objective is to promote the flexible
business which includes OEM, OBM, and ODM.

Other two operation objective would be delivery and services, delivery must be priorities because to
support the product bust be sold which can be achieved with proper delivery. And final objective is
cost or pricing.

6. GALANZ’S COMPETITIVE AND OPERATIONS STRATEGIES ITS


SUPPORT TO COMPETITIVE STRATEGY:
The market for ovens was donned with high level of competition and Galanz had to compete with
not just the local p r o d u c e r s but also with international b r a n d s v i z . LG, Panasonic and
Samsung. Hence it had to markup by having a competitive strategy for gaining both visibility and
sustain in the segment.

Initially, products were imported, in china, making it costly for the people to use it. This is the sector
where galanz workded out a business plan to venture into producing local microwave oven and sell it
at affordable price, due to the reduced cost, as it was not importing. Galanz focused on volume and
low variety strategy which would result in a similar blueprint of microwave oven, thus making it
more affordable to its local customers. Understanding the market and the opportunity it provides
is of utmost importance to gain an upperhand among the competetors, in business. Galanz used the
market advantage in understanding the market and was able to offer better products at lower prices
and with a better growth opportunity and to remain relevant in its market.
Ace EMBA, Fall 2012: Submitted to: Mr. Rabindra Silwal Page 6
Case Analysis: Operation Strategy at Galanz Prep. By: Group 4

Furthermore, Galanz, by having its own technology and able to reduce the total cost of
manufacturing, was successfully in penetrating the market. Implementing its strategic international
alliance, a good strategy, Galanz integrated its production equipment and technology as an
advantage. This enabled the company to be a major player in the market. Ultimately the strategic
advantage by creating a niche in the market, and having cost leadership, Galanz set a foot at the top
of its market.

This w a s e v i d e n c e , i n 1 9 9 6 , o n c e Galanz implemented a low-price strategy in the


production capacity expansion. It was successful in increasing sales volume coupled with price
cutting, and reduction in operation cost. This put galanz at a position and was known for making
low price high margin production. It was possible by applying supply- chain strategy, whereby the
company obtains partnering relationship with international supplier and provides cheaper production.
This mechanism implemented by Galanz, was its killer strategy and the mantra for its success i.e.
using vertical integration in purchasing. Vertical integration refers to the ability to produce goods
previously purchased or actually buying a supplier or a distributor. Many of galanz’s western
counterparts began to outsource the production to them due to low price and also high volume
production. Efficiency played an important role when Galanz expanded its production capacity and
maximize its operation hours to 24hours a day,365 days a year. This was the reason production
capacity soared up.

Besides operation strategies being its key to success, the management with a vivid vision, under the
leadership of Liang Senior and Liang Senior, coupled with strategic relationship with its
partners contributed to its success. In the globalization age, Galanz have envisaged potential market
within China and also outside its country. As a result, Galanz has become the dominant player in its
industry. It has successfully transformed its direction to become as known brand next to its
competitors such as LG, Panasonic and Samsung.

Galanz designed and developed its own magnetrons and created a sense among its consumers from
“Made in China” to “Created in China”, whereby removing the tag of non-quality product. This was
possible by innovation by Galanz itself. Innovation differentiated Galanz and gain advantage
in its global business. This was a result of an enhanced internal R&D structure to facilitate
new product design and development. With its new technology structure, Galanz c o u l d focus on
producing new features and technologies in their products.

7. GALANZ'S OBM BUSINESS IN THE INTERNATIONAL MARKET:


7.1 Comparison of OEM & ODM v. OBM business
OEM & ODM OBM
Development Based on manufacturing Based on own product‟s
rules and product specification technical and design specifications.
provided by the client Specifications are done by the R&D
department. R&D capacity is vital.

Ace EMBA, Fall 2012: Submitted to: Mr. Rabindra Silwal Page 7
Case Analysis: Operation Strategy at Galanz Prep. By: Group 4

Design ODM design is provided by Design is solely based on


client internal R&D team. The internal R&D team or sometimes
design is patented. The acquired from another player. Target
Intellectual Property is the market and scope is assessed before
client‟s competitive advantage. design is conducted.
OEM is also based on the
client‟s specifications.

Marketing The OEM and ODM client Galanz will need to create
conduct their on sales own brand to market the product.
forecasting, cost control and Galanz also has to develop sales
production planning. Branding is forecasting and production planning
done by their own marketing capability to ensure that supply and
department. Clients formulate demand are matched. The company will
marketing strategies based their need to strengthen its brand image and
target market. ODM and OEM awareness to position and compete
producer does not engage in against other players. Substantial capital
marketing and brand promotion will need to be pumped in initially to
capture the market and woo customers.

Distribution Clients have an established Distribution will be based on


distribution network in which the Galanz‟s own distribution network
products are distributed through or through partnerships with other
their own chain or through value- player.
added distributors.
Customer Clients have their own after Galanz will need to establish
Service sales support centres. its own cost efficient sales network or
outsourced this function. After sales
service is crucial to promote brand
loyalty.
Production OEM and ODM producer Production planning and
will produce product on a large sales forecasting is done internally.
scale basis for a few clients Products need to have a distinctive
depending on its capacity. OEM element to differentiate from the rest of
and ODM clients reduce the products in the market hence
manufacturing costs due to low products are highly varied with
cost environment (low labour different specifications.
cost) of the producer and also the
economies of scale achieved by
this producers.

7.2 Expand its OBM business.


Galanz should develop and expand its OBM business in the international market as returns higher
profit margins. As this could strategize for diversification of its project offerings, manage risks and
exploit opportunities.
Ace EMBA, Fall 2012: Submitted to: Mr. Rabindra Silwal Page 8
Case Analysis: Operation Strategy at Galanz Prep. By: Group 4

Risks that are associated with the OBM business are:

• Difficulties in forecasting demand and supply


• High variety designs and models with lower volume production runs
• High overheads
• Risks of being labeled as a competitor to existing OEM and ODM customers

Galanz with its strong commitment to R&D, expertise in manufacturing, logistics and quality
control, and brand recognition has transformed itself into the largest microwave manufacturer in the
world in the international market. These aspects are in true sense the strengths of Galanz and
converted it into having a competitive advantage to take a leap ahead and develop the OBM market.
Increased investments in innovation and branding could help overcome the risks associated with the
OBM business and ensure the competitive advantage is fortified. Through innovation, efficiency and
profitability could be gradually increased. The ratio of OBM to OEM/ODM business is constantly in
check to ensure business harmony between the two products.

7.3 Continue developing its OEM and ODM business as well.


Galanz should continue the OEM/ODM business as the company has gained vast experience and
increased efficiency in this segment and provides an attractive low risk environment. Galanz‟s
advantage of being able to provide low cost overheads will continue to position the company to
be an industry leader in this high volume and low variety segment. Also it may not need to
manage supply and demand forecasting as it is done by the customers.

Global business environment is ever changing. The OEM/ODM customers will be be in constant
look for cheaper vendors. As such, it is vital for Galanz to be involved in both the OEM/ODM and
OBM business to cushion any impact on changes in the business environment and be increase agility.
The Electric and Electronics is scale-intensive industry, OEM/ODM businesses are crucial to
fully utilize Galanz‟s existing production capacity. ODM adds value with its patented intellectual
property a n d c o u l d b e a n additional competitive advantage against other. Hence scale
efficiency should be its forte due to low cost overheads and to solidify its relationship with its OEM
customers. At the same time, the company should continue to grow its ODM business to stay ahead
of the curve and provide additional offering to customers and also consolidate its OEM/ODM
business. The OBM business could provide an additional avenue to use and enhance its present
expertise to tap into potential opportunities in the emerging markets.

8. DETAILED RECOMMENDATION:
This is the era of globalization, cultural composition and workforce diversity, so collaboration and
partnership can help Galanz’s business and lead it to greater success. Galanz needs better
Understanding of business in cross cultural and multi cultural environment and effective
communication. Improved understanding and customized products can help in meeting cultural needs
in composite markets. Understanding market requirement can lead to diversification of customer base
Ace EMBA, Fall 2012: Submitted to: Mr. Rabindra Silwal Page 9
Case Analysis: Operation Strategy at Galanz Prep. By: Group 4

and smooth the business cycle. Galanz may use different strategy and product line in different
countries by segregating the developed and developing countries market segment.

Because of competition, Galenz should not depend only on the business of single product (e.g.
microwave oven), it should diversify its product options to gain market share. Galanz has ventured
into producing other product line like air conditioner, household appliances and relevant industries
since early 2000s to respond towards its product diversification strategy. In fact, a household
appliance is the third major industry of Galanz after microwave oven and air conditioners.

Self realization is the mission and Grow stronger the strategy of Galanz, Where “Self” is generalized
and includes the enterprises, departments, all processes and individuals, and Grow stronger indicates
more professional and more diversified rapidly in fields involved and builds No. 1 enterprise in the
world. If we look at core mission and strategy of Galanz, Liang should introduce an unique strategy
in production and global perspective in order to lead his company to greater success. Apart from Cost
leadership strategy, Differentiation & Response strategy should also be incorporated to further
catapult the company. Strategic approaches to Galanz for gaining competitive advantage are:

1. Cost Leadership: because the savings can be invested in innovative products and retraining of
existing workers, cost leadership strategy is good. When we look at the current state of their
business, Galanz can still use this strategy for their OEM & ODM business to cater for the
local demand because they are able to provide high quality products in lower price and
obtained an outstanding achievement in business.
2. Differentiation: Innovation on production with the focus on R&D can drive Galanz to greater
success. New technologies, new design, new manufacturing processes, commitment to
customers, and less electricity consuming products can help in Galanz’s success. Sphere
microwave technology, microwave enhanced compensation technology, multiplex
technologies of microwave leakage prevention, light-wave technology and so on are examples
of Galanz’s success in product differentiation. In competitive stand Galanz can gain
competitive advantage by focusing on better customer service, expansion of branches and
sales centers, customer communication, etc.
3. Response: Galanz have to provide a more reliable and quick response in terms of product
development and delivery. Galanz is lack in terms of its ability to match changes in a
marketplace where design innovations and volume fluctuates substantially especially in the
OBM business. They have to pay more attention in this aspect if they want to build a
sustainable competitive advantage. At the same time, Galanz should not compromise on the
speed in product development, speed in production and speed in delivering.

9. SETTING PRIORITIES AND UTILIZING ITS RESOURCES AND


CAPABILITIES TO GAIN COMPETITIVE ADVANTAGES IN THE
MARKETPLACE:
SWOT analysis can help set priorities and utilize its resources and capabilities to gain competitive
advantages in the marketplace. A SWOT analysis is a formal review of the internal Strengths and
Ace EMBA, Fall 2012: Submitted to: Mr. Rabindra Silwal Page 10
Case Analysis: Operation Strategy at Galanz Prep. By: Group 4

Weakness and the external Opportunity and Threats. With SWOT analysis, Galanz can position itself,
through its strategy, to further develop its competitive advantage. A successful strategy requires
determining the firm’s critical success factors and core competencies. Key success factors (KSF) are
those activities that are necessary for a firm to achieve its goals. In this case, Galanz KSF is their low
cost strategy. On the other hand, low labor cost and low land cost are the core competencies that
allow Galanz to develop a competitive advantage. Galanz should allocate its resources and capability
to solidify its strengths and opportunities and at the same time address its weaknesses and threats.
Following are strategic options Galanz can apply:

- Use of Transactional Strategy: This strategy has high local responsiveness and high cost
advantage. It exploits the economies of scale and learning, as well as pressure for
responsiveness, by recognizing that core competence does not reside in just the home country
but can exist anywhere in the organization. Transnational describes a condition in which
material, people, and ideas cross national boundaries. Through this, Galanz will have the
potential to pursue all three operations strategies (i.e., differentiation, low cost, and response).
- Weakness Resolution: The brand of Galanz is not popular so an aggressive branding and
advertisement work need to be carried out before Galanz could capture global market. At the
same time, Galanz must ensure a smooth supply chain management in the organization. Due
to capacity constraint, Galanz has outsourced part of the production of Galanz's designed and
branded magnetrons to a Japanese manufacturer. In order to ensure continuity in supplies,
Galanz can adopt a joint venture with its suppliers.
- Galanz can focus more on its operations and core competencies by introducing new products
and services. Galanz must continuously monitor and control the outsourced vendor so that
there will be no drop in quality of the product. Also, Galanz must provide support, knowledge
and training to the vendor to ensure the sufficient understanding about the product.

10. CONCLUSION
Some major factors for the success of Galanz are:

- They followed a through total cost leading strategy; "the cost" consciousness is reflected in
every implementation.
- It carries out a correlative diversification strategy on the precondition that it had gained
absolute competitive advantages in the original field.
- However, the main disadvantage of Galanz’s strategy is the lack of clear brand strategy,
although Galanz has already obtained a huge success in microwave oven market, but there is
no value description and plan for its brand.

Following are summary recommendation to overcome current challenges faced by Galanz and
develop strategy to continue its future business growth:

Ace EMBA, Fall 2012: Submitted to: Mr. Rabindra Silwal Page 11
Case Analysis: Operation Strategy at Galanz Prep. By: Group 4

- Galanz should continue diversification of business to OBM, OEM and ODM. It should
develop its OBM business in the international market because of the competition among the
MNC’s i.e. increasing demand for the branded products.
- Recognize differences in business models, and develop new capabilities: Galanz should
develop customized production/assembly in developed markets and for developed markets
and Develop strong PR, legal and marketing functions.
- Invest resources in customer resources planning. Implement efficient production planning
systems by maintaining inventory level regarding to demand forecasting.
- Galanz must invest on brand management to develop itself as an international brand and
Develop strong service networks.
- Galanz must continue major investments in innovation in technology and production and
should develop customized production/assembly in developed markets.
- Should implement efficient production planning systems.

References:

1. http://iveybusinessjournal.com/topics/global-business/in-china-the-importance-of-managing-
relationships-dynamically#.UpYZ4cRgcTM

2. http://www.studymode.com/essays/Operation-Strategy-At-Galanz-1590492.html

3. http://onlinebusinessresearchproposal.blogspot.com/2012/12/galanz-case-operations-
management.html

4. https://www.google.com.np/url?sa=t&rct=j&q=&esrc=s&source=web&cd=40&ved=0CHIQF
jAJOB4&url=https%3A%2F%2Fptop.only.wip.la%3A443%2Fhttps%2Fmarketing.wharton.upenn.edu%2Ffiles%2F%3Fwhdmsactio
n%3Dpublic%3Amain.file%26fileID%3D1878&ei=vBmWUrfxMMiPrQfV3YGgDw&usg=
AFQjCNE4JDd4zU2DlwalzNQd9guaDMNrsA

Ace EMBA, Fall 2012: Submitted to: Mr. Rabindra Silwal Page 12

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