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Operations Strategy at Galanz Case Solution

Solution Id Length Case Author Case Publisher
2466 1621 Words (7 Pages) Stephen Chi Hung Ng, Barbara Li, Xiande Zhao, Xuejun Xu, Yang Lei Ivey Publishing : 910D05
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Galanz, a leading microwave oven manufacturing company, started off as a humble firm. By the virtue of the efficient management of Mr. Liang Senior, the company was able to progress first by acquiring quotas for export, then venturing into the manufacturing of microwave ovens, ending up being the leading microwave oven manufacturer in the industry. Through the skillful leadership of the owner, it was able to not only transfer newer technology to the country but also outsmart its competitors and became the cost leader of the industry. During its lifetime, the firm faced a diverse set of adversities, however, under the able leadership of Mr. Liang was able to steer out a silver lining from under each of the clouds. for instance, when the company was washed out by the flood, Mr. Liang used that opportunity to repurchase all shares of the company from government organizations. Similarly, when their suppliers refused to sell Magnetrons to them, they set up their own Research and Development department to produce them. so much so that they ended up producing such low Magnetrons that the competitors had no voice but to buy from them. this shows the true entrepreneurial character of Mr. Liang, which is the reason that Galanz is tremendously successful.

Following questions are answered in this case study solution

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

  2. What are Galanz’s competitive and operations strategy, and how does its operations strategy support its competitive strategy?

  3. What are the differences between OEM/ODM versus OBM in terms of production, design, marketing, distribution and customer service?

  4. What should Mr. Liang do to lead the company to greater success? Should the company change its overall cost leadership strategy?

Case Analysis for Operations Strategy at Galanz Case Solution

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

Order winners are the unique set of characteristics of a firm that set it apart from the competitor firms, and provide a competitive advantage to this firm. Whereas order qualifiers are the bare minimum set of the characteristics a firm needs to possess in order to survive in an industry, without these the firm cannot run the business operations. 

The order winners for Galanz and any other firm in the industry consisted of High Quality products, Delivered in time, and After Sales Services. Food constitutes the most integral part of a person’s life, and people acquire microwave ovens to create ease and efficiency. Moreover, there are all sorts of health concerns related to microwave ovens that bother people. This is why if the product is not of high quality, does not reach the customer in time and after sales service is not efficient, the customer will likely switch to a competing brand and in the process will create a negative word of mouth as well. Hence these three characteristics are stapled at all stages, especially the early stage of the development of a brand.

The order Qualifiers for Galanz were, its access to low-cost labor, low-cost production facilities, the personal connections of the business owner in government, and access to ample funds and technology. The personal connections and partnership with governmental bodies enabled Galanz to acquire appropriate permits and quotas for exports. It also enabled the company to access public funds, which enabled it to buy the expensive blueprint for microwave oven production. The ability of the firm to transfer foreign technology in China also made it to be on good terms with the government. Other than that once acquired the foreign production line, Galanz by the virtue of cheap labor was able to keep the production plants running in three shifts throughout the year without a break. This enabled it to achieve production targets for its partners as well as to use the same production plants for its own production.

2. What are Galanz’s competitive and operations strategy, and how does its operations strategy support its competitive strategy?

Competitive Strategy of Galanz

Galanz, an organization competing against well-established brand names such as Toshiba and LG adopted the competitive strategy of “Cost Leadership”. When Galanz ventured into the microwave oven industry, it realized that it will have to compete for market share with such well-established companies. there was no way other than offering consumers with the lowest possible prices, and achieving economies of scale. These prices which the competitors would not be able to match at any cost. The competitive strategy of Galanz thus boiled down to Lowest cost, Highest Quality, and Extensive Research program to enable it to achieve both of these.

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