Galanz Case. Operations Management Analysis

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Assessment 1
galanz

paper: Operations management

September 19, 2011

TABLE OF CONTENT

ORDER QUALIFYING FACTORS4

ORDER WINNING FACTORS4

PRIORITISED VOB & VOC OF GALANZ:5

THE ROLE OF TECHNOLOGY6

COMPETITIVE AND OPERATION STRATEGIES6

DIFFERENCES BETWEEN OEM/ODM AND OBM7

GALANZ’S STRATEGY OF INTRODUCING OBM IN INTERNATIONAL MARKET8

SUGGESTIONS FOR MR. LIANG TO LEAD THE COMPANY TO GREAT SUCCESS9

ORDER QUALIFYING FACTORS

✓ Familiarity with Chinese market

In 1991, Liang Senior analysed the Chinese consumer market for a year and sensed that the rapid growth of the Chinese economy will encourage the demand and purchasing power for a wider range of modern products where the competitors could not see the market potential yet.

✓ Less risky to invest in the technology side

The microwave oven was invented by Americans in 1950s, so that Galanz could take the advantage of having less risky to invest in the microwave oven market due to its stable and mature technology.

ORDER WINNING FACTORS

✓ Abundant supply of cheap land and labour (low-price strategy) enabled:

• Increase its production capacity

Galanz optimised its labour resources and production facilities by operating the factory fully 24/7 and 365 days a year.

• Highest volume of the sales in both the domestic and global markets

The company achieved the leading position by cutting prices by 30 – 40% and the lowest price was less than RMB 300 when the range of offered prices were from RMB 1,000 to RMB 3,000 from its competitors.

• Free production line in OEM achieved by a low cost of production

Galanz could expand its production scale and raise the product quality quickly by achieving OEM agreement with Fillony where Galanz gained a free production line as well as the right to use the surplus capacity of it for its own production after delivering the Fillony’s production quota, and this agreement continued with other big appliance companies.

• Component production facilities set up by its suppliers

Its suppliers transferred their production facilities to Galanz after they were offered with a very low unit cost by Galanz and the company gained the right to use the excess capacity for its own production after satisfying the orders.

PRIORITISED VOB & VOC OF GALANZ:

|Voice of Business (VOB) |Voice of Customer (VOC) | |Captured the market by adopting low cost strategy combined with | | |enhanced R&D ability. |Launched high quality and low price products to enlarge their market| |Reduced the total cost of manufacturing by developing key components|share by making use of its advantage in total cost. | |and parts by applying its own technology and put them into |Invested in R&D which represents more than three percentages of | |production |annual revenue, helped them to make innovative products. | |Developed new products and proprietary technologies on the premise | | |that the total cost is not changed or is lowered. | | |Vertically integrated the supply chain by manufacturing more of its | | |products. | |

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