Galanz Case Study Report
►Company Background:
Galanz, a household name for microwave oven, air conditioners and household appliances in China and also a global well-known brand, moves from “the world’s plant” to “global brand” through tremendous effort on R&D and innovation. With the undoubtedly market leader position in China, Galanz gained over 50% market share in global market reported in 2007 and achieved around $3 billion revenue in 2006.
►Operation Problem:
With the exponential growth, Galanz’s senior management is facing a string of operation challenges. These issues include the 9 million magnetron requirement gap pushed the CEO to sign the outsourcing deal with a Japanese supplier; the combined model of OEM/ODM/OBM model in its overseas market puts challenge to the company; an organized operation strategy within the company to cope with the new market trend is missing and etc.
►Recommendations:
1. Set up an updated operation strategy to support Galanz’s future development:
In Galanz’s early expanding stage, it adopted extremely strong low-cost strategy to enter the market and secured its leadership within a few years. Their products at that time were “order qualifier” which met the basic needs of the customer. However, in the long run, it is becoming obvious that the customer are expecting multi-variety products. The operation strategy for Galanz should shift some focus on quality and flexibility. With high quality manufacturing, Galanz could save tons of time on providing repairing service. Galanz should also utilize comprehensive forecasting system to see the future trend. If certain type is no longer popular or provide very low profit contribution, Galanz should drop it to further streamline its production line for a max capacity. As its core competitive advantage, it is not suggested that Galanz should transfer itself as a medium to high-end home appliance manufacturer, the operation strategy of Galanz should always bear the cost reduce in mind while