The early success of Galanz can be prescribed to its ability to deploy its resources in an effective manner and establish itself as a recognized brand in its domestic market through a consistent competitive strategy of Cost Leadership (Porter ). Their competitive edge was initially their low land and labour cost, while knowledge in production technology was yet lacking, but utilizing this competitive edge allowed them to serve their domestic (heavily growing) market at a cheaper consumer price than their competitors.
Their operations strategy underpinned their competitive strategy and allowed them to successfully keep their cost leadership. They exploited their cheap resources by offering OEM to overseas customers, and thereby maximized benefits of scale production – allowing them to further reduce production costs. They offered transfer of production lines both to their customers and suppliers against being trained in these areas, thus additionally developing their skills and capabilities within the production technology itself. The second part of the tactics used to underpin their competitive strategy was the use of price wars in their domestic market. As they scaled up production and there through gained lower production costs than their competitors, they were able to cut prices. Finally, in 2002, they were market leaders in their domestic market.
2.What should Mr. Leung do to lead his company to greater success? How should the company set priorities and utilize its resources and capabilities to gain competitive advantages in the market place?
As Mr. Leung has decided to transform Galanz from being the “World Manufacturer” to the “World Brand”, Mr. Leung should prioritize accordingly. This means that Galanz might loose orders from OEM customers, but if these orders just shift directly to Galanz’ OBM...