Galanz Case Study

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Operations Strategy at Galanz

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Operations Management

Introduction

The aim of this case study is to analyze the operation strategy of Galanz and asses the potential growth opportunities for Galanz in the future in a global environment. Galanz Gorup based in China was established in 1978 to offer microwave oven, air conditioners and other household appliances (Galanz, 2011).

It is a multinational company operating in more than 100 countries and regions in the world resulting in a well-known brand by being the largest professional microwave producer (Galanz, 2011). As a result they are expanding rapidly with a growth rate more than 100% each year and thus increasing their global market share (Galanz, 2011). Through the years with the experience of manufacturing household products Galanz Group has also excelled in research of developing and improving the product features of their household appliances (Galanz, 2011).

They have through their achievements been awarded with numerous of honours on national as well on international level (Galanz, 2011).[1]

Q1.

Liang Senior saw a great business opportunity on a trip to Japan in 1991. He saw the potential increasing demand for microwaves in China. By that time microwaves was not affordable for most households in China but sooner or later the microwave will become popular in the modern cities for the Chinese households. Liang Senior exploited the business opportunity and after analyzing the Chinese market he decided to produce and sell microwaves at an affordable price. Liang Seniors vision of producing and selling microwaves at an affordable price became a reality in few years due to the changing lifestyle in modern cities in China and new ways of cooking and preparation of food. The low-cost strategy was the order winner for Galanz in the early stage of its development. Galanz used the low price to enter and compete in the Chinese market which was dominated by large international brands, as Panasonic, Toshiba and LG. Galanz gained a large market share in few years and became one of the biggest players.

Q2.
Cost
Cost is the most important objective for Galanz. The company out-competed the big players on the market by offering low price products. As Liang commented,
“The main objective of the price war was to destroy our competitor’s confidence to compete with us when they realized that the market bore little investment value. The price war has been a line of defense for us. Once at the top, Galanz began to adopt a new pricing strategy by pricing products based on the extent of market acceptance. Targets for product pricing and profit margins were determined by counting backwards[2].”

This is the key success factor for Galanz, they outcompeted the rivals and gain a large market share by having a low-cost competitive strategy. Galanz faced a lot of challenges due to the changing trends in the home appliance market, so over the years Galanz are aware of the fact that they can’t continue on focusing on the low-cost strategy alone but also need to have supporting objectives.

Quality
The quality objective became more important for Galanz during the years. In the beginning of the business Galanz experienced a lot of demand for their microwaves so the company focused on mass production and started a 24/7 production schedule and that necessitated frequent repairs of the high-output machinery. Galanz realized the effect of changing trends in the global environment and began to move focus from large scale mass production to small scale customized production with focus on quality.

Flexibility
Galanz made some major changes and therefore was required to be more flexible over the years, e.g. the challenge of being a “high volume – low variety” production to becoming a “low volume – high variety” producer requires a lot of flexibility in all parts of the company. Over the years Galanz are...
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