Operations Strategy at Galanz

By
Group 3

Ankit Singh: 412

Ankur Swapnil: 413
Apeksha Salunke: 415
Apurva Rathi: 416
Arkaprobha Das: 417

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

Order winners and order qualifiers are criteria defined by managers within their operations
strategy plan to gain competitive advantage in the market. Order winners are issues that
directly and significantly help products win orders in the marketplace. People buying the
product or service regard such factors as key reasons for buying or using the product or
service.An Order qualifier is the characteristic of a company’s product or service which
are set in order for a customer to consider the product or service for either purchase or use.
Quality and Delivery are order qualifiers.

Quality is one of most important factors for order qualifiers because it provides reliability
for customers to use them. However, the low-price strategy was the order winner during
the early stage of development of Galanz. To win orders, Galanz adopted a low-price
strategy. Low product prices which can be afforded by the domestic market triggered more
demand. With this increased demand, Galanz achieved greater economies of scale, which
helped to lower costs and prices further.

2. Rank the importance of Galanz’s operations objectives of cost, quality, flexibility,

delivery, service and innovations. How has the importance changed over the years?

(1) Low Cost strategy: During the initial days, Galanz offered a low price MicroOven due
to cheap labour and land to compete in the market. Further they adopted price cutting
methodologies and production capacity enhancement to bring down cost. They
followed to tactic
 1. Escalate its production capacity through a free production line transfer and
operating in 3 shifts/day non stop production the company to increase its production
capacity and reduce the cost
2. Launch a price war such that it can dominate the market

From 1996, obtaining cost leadership was the most important operational objective to
be the market leader, increase market share and remove competition. Galanz aggressive
pricing strategy has led many competitors to withdraw from the market.

(2) Delivery: Also, an important operational objective was to ensure timely delivery. In
1997, Galanz occupied 47.6% of the domestic market with sales reaching 1.25 million
units, which was five times sales in 1996. By the end of 2002, its domestic sales were 4
million units, occupying 70% of the market share. By ensuring their product availability
and delivery of products they were able to grab market share.

(3) Flexibility: The supply crisis of Magnetrons motivated Galanx to develop its own
magnetron , which changed their business direction from “Made in China” to “ Create in
China”

(4) Service and innovation: In the 2000s the R7D team successfully launched its first
Galanz base magnetron with an improved mechanical design. The team also brought
technological breakthroughs in microwave capacity matching and micro switching.

(5) Quality: Changing image from low quality product with low price, Galanz needed to
penetrate into the overseas market, thus had to produce a product with brand and good
quality. For this they continued their effort to increase quality and also integrate its supply
chain by manufacturing more of its components. To be an international player and deliver
their microwave into K-Mart and Walmart, quality was also important during this period.

3. What is the role technology has played in the success of Galanz?

The role of technology has played a critical role in the success of Galanz. This is caused
by the enhanced technologies that make the management of large sets of information to
become much easier. In special case, the manufacturing of Magnetron used as equipment
in producing microwave ovens was the main proficiency and expertise of Galanz Company
as the time passed.
4. What are Galanz’s competitive and operations strategies and how does its operations
strategy support its competitive strategy?

Galanz started its business with a rich competitive strategy developed based on cost
control, economies of scale, and full utilization of operating resources and capacities. The
case of Galanz introduces new concepts of winning and shows how to reflect the needs of
customers based on priorities of operations that influence the competitive advantage of the
company.

The company gained the competitive advantage by cheap access to land and labour.
Further, the company has utilized raw materials with added value for manufacturing
products to be sold at high prices. As a result, the company has followed a low price
strategy as a main objective to gain market share and make money.

The most important operations objectives to the company during its early stages of
development were cost, quality, and timely delivery. Recently, the whole country has
transformed to modernize strategies. Therefore, the priorities of these important
operational objectives have evolved and changed over time by focusing on both low cost
and quality of innovation.

Galanz has achieved economies of scale through combining OEM, ODM, and OBM. It
also achieved 60%-70% of the local production in 2002, and 50% of the world-wide market
in 2007. The increasing production lines refer to many reasons: first, free production line
transfer; second, the obtained right of using additional capacities for production; third, the
encouraged component suppliers of Galanz’ manufacturing facilities.

The competitive strategy involves an effective sharing of value chain activities, effective
resource allocation for competitive advantage, and vertical relationship for product
management adoption.

In this case, the operational and competitive aspects of Galanz require us to trigger different
kinds of growing strategies. Many reasons stand beside the withdrawal of many industry
players from the market such as the adoption of penetration pricing leveraging economies
of scale, the expansion of production capability to exceed market demand, and the
aggressive pricing strategy.

5. What are the differences between OEM/ODM versus OBM in terms of production,
design, marketing, distribution and customer service?]
 OEM/ODM
OEM and ODM producers
produce on a large scale
basis for a few clients
Production according to its capacity.
OEM and ODM clients
attempt to reduce
manufacturing costs via
low cost environment (low
labour cost) of the producer
and also the economies of
scale achieved by them
ODM design is generally
provided by the client 's
internal R&D team. The
Design design is patented
to provide the client
competitive advantage.
OEM is also based on the
client‟s specifications.
OBM
Sales Forecasting and
Production Planning are
done internally. Products
need to have a unique
and distinctive element
to get differentiated from
the rest of the products in
the market. Thus,
products are highly
differentiated and
specialised.
OBM Design is solely
provided by an internal
R&D team or sometimes
acquired from another
player. Target market
and scope is assessed
before the designing
process begins.
 In the case of OEM and Here, Galanz will need to
ODM, the client is
create its own brand for
Marketing responsible for conducting marketing the product.
sales forecasting, cost Galanz will also have to
control and production
planning. develop sales forecasting
Branding is also done by theand production planning
client’s own marketing capability to ensure there is
department. They assist the no supply-demand gap.
Client formulate marketing Initially Galanz needs to
strategies based on their
invest a large amount of
target market.
capital on promotion and
ODM and OEM producer advertising to generate
does not directly engage in brand awareness for market
marketing and brand penetration
promotion

Clients have an established

Distribution distribution network at their Galanz's own distribution
disposal. Here the network or collaborations
distribution is achieved with other players will be
either through self used for distribution.
administered supply chain
or through delegation to 3rd
party distributors

Clients have their own Galanz will either have to

Customer Service customer service centres, build its own cost-effective
for providing pre and after sales network or outsource
sales services to its it
customers. These services
are quintessential for
development of Brand
Loyalty among its
customers
6. Should Galanz develop its OBM business in the international market? Should Galanz
continue its OEM and ODM businesses?
Galanz's OBM business should be developed and expanded in the foreign market because it
generates larger profit margins. This could help the company diversify its project offers,
manage risks, and capitalise on possibilities.
The following are some of the risks linked with the OBM business:
● Both Demand and supply projections are difficult to predict.
● A wide range of designs and models, with low-volume production runs
● Extremely high overhead
● Threats of being branded as a competitor by existing OEM and ODM customers

Galanz has grown to become the world's largest microwave manufacturer in the international
market, thanks to its strong dedication to R&D, production experience, logistics and quality control,
and brand awareness. These are Galanz's actual strengths, which have been turned into a
competitive advantage in order to advance and develop the OBM market. Increased investments in
innovation and branding may be able to mitigate the risks connected with the OBM business while
also bolstering the competitive advantage. Efficiency and profitability could be gradually raised
through innovation. To ensure commercial harmony between the two goods, the ratio of OBM to
OEM/ODM business is regularly monitored.

Galanz should keep its OEM/ODM business because it has accumulated a lot of experience and
efficiency in this area, and it also offers a low-risk environment. Galanz's ability to supply low-cost
overheads will continue to establish the company as an industry leader in this high-volume, low-
variety area. It may also not be required to manage supply and demand forecasting, as this is
handled by customers.

The global business climate is always shifting. OEM/ODM customers will be on the lookout for
lower-cost vendors at all times. As a result, Galanz needs to be active in both OEM/ODM and OBM
to mitigate the impact of changes in the business environment and boost agility. Because the electric
and electronic industries are scale-intensive, OEM/ODM businesses are critical for Galanz to fully
utilise its existing manufacturing capacity. ODM's patented intellectual property offers value and
may provide a competitive advantage over competitors. As a result of its low cost overheads and
desire to strengthen its relationship with its OEM clients, scale efficiency should be its strong suit.
Simultaneously, the corporation should expand its ODM business in order to stay ahead of the
curve and provide more services to customers, as well as consolidate its OEM/ODM business. The
OBM business could give an additional route for the company to leverage and develop its current
capabilities in order to capitalise on emerging market prospects.
7. What should Mr. Liang do to lead his company to greater success? Should the
company change its overall cost leadership strategy? How should the company set
priorities and utilize its resources and capabilities to gain competitive advantages in
the marketplace?

Collaboration and partnership can aid Galanz's business and lead it to greater success in
this era of globalisation, cultural composition, and worker diversity. Galanz requires
improved business understanding and efficient communication in a cross-cultural and
multi-cultural context. In composite markets, better understanding and customised
products can assist suit cultural needs. Understanding market needs can lead to a broader
client base and a more stable company cycle. Galanz may adopt a different strategy and
product line in different nations as a result of the market segmentation between developed
and developing countries.

Galenz should diversify its product possibilities to achieve market share, rather than relying
solely on the business of a particular product (e.g. microwave oven). Since the early 2000s,
Galanz has expanded into additional product lines such as air conditioners, household
appliances, and related industries in order to meet its product diversification goal.

Galanz's objective is self-realization, and its strategy is to grow stronger. "Self" is a broad
term that encompasses businesses, departments, all processes, and individuals. Grow
stronger denotes a rapid increase in professionalism and diversification in the sectors
covered, as well as the establishment of the world's No. 1 firm. Looking at Galanz's primary
mission and plan, Liang should implement a distinctive production strategy as well as a
worldwide viewpoint in order to lead his company to greater success. Aside from the cost
leadership plan, the organisation should also implement a Differentiation & Response
strategy to help it grow even faster. Galanz uses the following strategies to achieve a
competitive advantage:

1. Cost Leadership: Cost leadership is a solid technique because the savings may be used
toward new goods and re-training existing employees. Galanz can still apply this method
for their OEM & ODM business to cater for the current status of their firm.

2. Differentiation: Galanz can achieve more success by focusing on production innovation

and R&D. Galanz's success may be aided by new technology, fresh design, new
manufacturing techniques, customer commitment, and goods that use less electricity.
Galanz's achievement in product diversification may be seen in sphere microwave
technology, microwave enhanced compensation technology, multiplex microwave leakage
avoidance technologies, light-wave technology, and so on. Galanz can achieve a
competitive advantage by focusing on superior customer service, branch and sales centre
expansion, customer communication, and so on.

3. Response: Galanz needs to be more dependable and quick when it comes to product
development and delivery. Galanz's ability to adapt to changes in a market where design
innovations and volume fluctuate significantly, particularly in the OBM industry, is
lacking. If they wish to develop a long-term competitive advantage, they must pay more
attention to this issue.