From the perspective of competitive strategy, first Mr. Liang took the overall cost leadership strategy. As he well understood the competitive edge of his company was offering cheap labor and cheap land, he offered a very low price to the customers. By doing that, Galanz beat the competitors away as they could not make big profit and Galanz gained a big market share within a short period of time. At the same time, Galanz escalated its production capacity through free production line transfer and provided necessary training to the operators by its clients. The most important thing was Galanz had the right to use the excessive capacity for producing its own product. By doing this, Galanz fully utilized the production facilities and resources and produced the products in a lower cost with better quality. Ultimate, Galanz could further lower the product price and attract more clients and gain more market shares. This price cutting cycle helped Galanz building a strong financial and operation foundation. The most important achievement was Galanz became the overall cost leadership. Once Mr. Liang had the solid foundation, he tried to differentiate his product from others. He tried to develop his OBM business with cheaper and better quality as the brand image focusing domestic market. Meanwhile, he kept his OEM business focusing foreign market
From the operations strategy perspectives, Mr. Liang understood he had no technology and technical experts at the very beginning. So Galanz focused only on OEM business at a very low price. As mentioned above, Galanz had the right to use the excessive capacity for producing its own product in the client’s production line. Then the capacities could be fully utilized and also helped integrate the process with its key clients. Through the OEM manufacturing, Galanz and its staff started learning from the production process and started setting up their own production line. Galanz then put more and more resources and investment on R&D and innovation project to facilitate not only new product design and development but also manufacturing processes. Once Galanz got enough technical knowledge, it started its ODM business. Additionally, Galanz started to integrate the suppliers to ensure the low cost and high quality. Finally, it started its OBM business in domestic market while keeping the OEM and ODM business in foreign markets. By using this operation strategy, Galanz gained the technology, technical knowledge, financial foundation gradually and finally gained the market shares and built its own brand. Moreover, Galanz integrated the client and supplier process that helped achieving better supplier chain and aligning company operation.
2. To lead Galanz to a greater success, there are a lot of challenges needed to be overcome.
- Highly centralized decision making
- Information flow and communication slow and unclear
- Strategy difficult to implement
- Irresponsive to the rapid changing competitive environment
- Group similar function (e.g. General admin. Office and Admin. Manager) in order to build up hierocracy and delicate the different level of authority for decision making on routine operation
- For special project, forma project team to handle to make sure fast response and implementation
- Setup regular meeting for executives, individual department to make sure information flow
- Increasing demand of customization
- Components outsource
- New facilities and system come online
- Decline production efficiency
- Ensure high quality
- Lack of well-trained technical and management staff
- Launch production efficiency and quality project (like lean, six sigma,...