Part 1 Industry Analysis
Galanz successfully transformed its business from down feather products into microwave oven and enjoys a large proportion in the market share both at home and abroad. But why microwave oven industry? We’ll use five forces of competition model to analyze its decision.
Part 2 Value Chain Analysis
As illustrated above, at the beginning of 1990s, microwave oven is a good industry to enter. But there is a huge gap between down feather products and microwave oven products. So when Galanz changed its business, its value chain is weak compared with that of MNCs. Value Chain |Capital |Brand |Technology |R&D |Manufacturing |Distribution |Operation | |GALANZ | | | | | | | | |MNC | | | | | | | | | Red: weak Green: Strong Yellow: Adequate As illustrated above, compared with MNCs, Galanz is week in brand recognition and R&D. Also, its technology, distribution and operation needed improvement. However, Galanz is a great advantage in manufacturing thanks to the low labor cost in China. So, how did Galanz make use of its advantage in value chain to make up for its weaknesses? Part 3 Resource Analysis
When Galanz decided to enter microwave oven business, it can only use its financial and physical resources it had accumulated. But it managed to acquire the necessary resources through various strategies as below:
Part 4 Strategy Analysis
4.1 Cost-leadership Strategy
At the beginning of its microwave oven business, due to limited resources, as well as the product positioning from its competitors, Galanz used cost-leadership strategy to occupy the market share in the shortest possible time. Meanwhile, this strategy helped Galanz to enhance its internal competence by acquiring new resources.
4.2 Integrated cost-leadership differentiation Strategy
After the previous phase, Galanz gained enough competence for further development. While cost-leadership still serves as an important strategy for Galanz, it began to integrate differentiation strategy with cost-leadership for sustainable development. Galanz’s used the following 3 means to achieve its integrated cost-leadership differentiation:
Through making use of these two different strategies according to different development phases, Galanz succeeded in occupying a large market proportion. Part 5 Problems for Future Development and Solutions
Despite its current success, Galanz has come into bottle neck in further development. All these problems are caused by failure of building its own competitive advantages including these 4 aspects:
To solve the dilemma, we’d suggest the following solutions for Galanz to implement: • Adopt “Lean Production”
The best solution of inefficiency caused by increasing demands of customized products is “lean production”, which can be implemented by:
Also, lean production is especially useful in adapting Galanz’s mass production system to meet the needs of low volume and high variety products. • Change from “push” mode to “pull” mode
Galanz’s weak production planning caused inventory, which resulted in high operational cost. To solve this problem, Galanz should change from “push” mode production to “pull” mode, which means produce the required amount of required product in required time, • Develop diversified products
As long as the lean production enables Galanz to produce diversified products, Galanz can develop products with differentiated features for OEM and OBM to avoid cannibalization or conflict between these two lines. • Create innovative corporate culture
Last but most important, an innovative and quick-responding corporate culture should be created to ensure the above three solutions well implemented. It is also a premise to improve its marketing...