Topics: Microwave oven, Marketing, Cost-of-production theory of value Pages: 13 (3123 words) Published: October 7, 2011

To Lianf Zhaoxian, CEO of Galanz Enterprises Group Co. Ltd.

This report evaluates past and present perfomance of Galanz with its strategies and gives insights as to what decisions should be made to make the company more successful in future.

Since 1991 Galanz has evolved and become a dominant player in the global manufacturing market for microvawe ovens. The company has understood its strategic strength and used its resources as its strategy. Galanz has used its cheap land and cheap labour to get to where it is now, its dominant position in China and Globally. The technology has played a crucial role in company development too. Four years after its incorporation Galanz has established Research Institute of Household Electrical Appliances in China and two years later Galanz American Research Center in the US. Technolgy has payed off quickly, Galanz has developed its own magnetron in 2000 and added many new features in its products becoming more high tech in its industry and winning additional market share.

Not only Galanz identified the technology as a key factor the company also developed operations strategies that made it so successful domestically and globally. Through its operations strategy the company was able to cut its production costs to the minimum therefore attracting OEM orders and eliminating competition domestically. In 2000 Galanz domestic market share have become 76% and international market share 40% in 2002.

Galanz was making huge progress in manufacturing as a OEM and ODM, however when company went into overseas market as a OBM the conflict started to arise with its OEM and ODM orders. Galanz has a great price strategy and very skilled manufacturing production therefore the company should use this advantage to launch a whole new product overseas instead of competing in the OBM and conflicting with its OEM orders and customers.

1. What were the order winners/ order qualifiers for Galanz in the microwave oven business during the early stage of its development?

Galanz was incorporated in 1992, three years later Galanz had 25.1% market share in the domestic market and in 1997, five years later 47.6% of domestic market share. Four years after its incorporation Galanz has received its first OEM contract. What made Galanz business so successful? To answer this question we will need to go back to 1991 when the company was started.

First benefit that Liang Qingde saw in 1990 was the absence of domestic manufacturers of microwaves and the weak presence of international manufacturers who were selling microwave ovens at prices average household could not afford to pay. With the idea of manufacturing microwaves to Chinese households at affordable price Liang started Glanz in 1991 when he bought blueprints and production lines from Toshiba for $300,000 USD. The same year Liang found engineers who were familiar with the technology and hired them to work for him. Because during that time the economy of China was in transition from state controlled to private owned Liang could only incorporate a company jointly owned by him and the government. This actually allowed him to use government funds for company growth and expansion and use government support to grow domestically. In 1994 when a flood struck factory Liang bough all shares and become the sole owner of the company.

While all components were in place, production line blueprints, engineers, cheap land and labor, Galanz could start manufacturing microwaves at affordable prices. Figures show us that five years later Galanz had 47.6% market share and sold 2,000,000 units compare to just 10,000 in 1993. In 1995 Galanz become the leading manufacturer replacing Shell Electric, the same year Galanz established Research Institute of Household Electrical Appliances in China.

So what made Galanz a winner in securing its first OEM order? In China Galanz was the leading manufacturer, producing microwaves at prices lower than its...
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