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OPERATIONS STRATEGY AT GALANZ
op yo Dr. Stephen Ng and Barbara Li wrote this case under the supervision of Professors Xiande Zhao, Xuejun Xu and Yang Lei solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.
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Version: (A) 2010-08-05
On January 4, 2004, Liang Zhaoxian, the vice-chairman and chief executive officer (CEO) of Galanz
Enterprises Group Co. Ltd. (Galanz), had just returned to his office after signing a contract to outsource part of the production of Galanz’s designed and branded magnetrons1 to a Japanese manufacturer. Galanz had previously relied on the magnetrons designed and branded by its suppliers during its earlier years of development as a microwave oven manufacturer for many foreign brands.
In the past, Galanz had purchased all its magnetrons (a core component of the microwave oven) from foreign suppliers such as Toshiba and Panasonic. But the rapid growth of Galanz’s microwave oven business had threatened these magnetron suppliers, who were also in the microwave oven market. In an effort to restrain their competition, these suppliers decided to reduce the magnetron supply to Galanz. This