Galanz

Q4. What should Mr. Liang do to lead his company to greater success?
Should it change its overall cost leadership strategy? How should the company change the priorities and utilize resources and capabilities to gain competitive advantage in market place? In the new era of global operations, collaboration and partnership can help broaden Galanzs business and drive it to greater success. Galanz needs an even better understanding of differences in culture and of the way business is handled in different countries. Improved understanding and customized products can help in meeting cultural needs in foreign markets. Understanding market requirement can lead to diversification of customer base and smooth the business cycle. Galanz may use different strategy and product line in different countries by segregating the developed and developing countries market segment. Based on our research, Galanz has actually started tackling this issue. A recent check showed that Galanz is supported by global strategic partners and 1000 overseas distributors. Galanz sells its products to nearly 200 countries and regions in the world and its sales and service network spreads over the world. Also, in the emerging and competitive marketplace, Galanz could not depend on a single product (e.g. microwave oven) business. Galanz need to diversify its product options to gain market share. Realizing the importance of this, we found out that since early 2000s, Galanz has actually ventured into producing other product line like air conditioner, household appliances and relevant industries. In fact, household appliances are the third pillar industry of Galanz after microwave oven and air conditioners.
Strategic Options It is now time for Galanz to pursuit in international dimension. The best strategy it can use is the Transnational Strategy where this strategy has high local responsiveness and high cost advantage. This strategy exploits the economies of scale and learning, as well as pressure for responsiveness, by recognizing that core competence does not reside in just the home country but can exist anywhere in the organization. Transnational describes a condition in which material, people, and ideas cross national boundaries. Through this, Galanz will have the potential to pursue all three operations strategies (i.e., differentiation, low cost, and response). In order to explore this opportunity, Galanz must embark upon its weaknesses like unpopular brand. An aggressive branding and advertisement work need to be carried out before Galanz could capture global market. At the same time, Galanz must ensure a smooth supply chain management in the
organization. Based on the case study, Galanz has used Vertical Integration strategy in its supply chain management. This is where Galanz vertically integrate its supply chain by manufacturing about 90% of its components. But, due to capacity constraint, Galanz has outsourced part of the production of Galanzs designed and branded magnetrons to a Japanese manufacturer. In order to ensure continuity in supplies, Galanz can adopt a joint venture with its suppliers. However, Galanz must continuously monitor and control the outsourced vendor so that there will be no drop in quality of the product. Also, Galanz must provide support, knowledge and training to the vendor to ensure the sufficient understanding about the product. Most importantly, Galanz must ensure that outsourcing does not increase the cost and affect its status as low cost leader. But, the positive aspect is that Galanz can gain outside expertise (Japan is well-known of its technology advancement). At the same time, Galanz can focus more on its operations and core competencies by introducing new products and services. We believe through some of the proposed strategy, Galanz can achieve greater success persisting to the business concept of Greatness originates from creativity and the business tenet of Working hard to move customers, Galanz is speeding its step towards a global brand and a world-class enterprise.
We feel that Galanz has a good mission and strategy in place. On top of that, Liang should introduce a unique strategy in production and global perspective in order to lead his company to greater success. Apart from Cost leadership strategy, Differentiation & Response strategy should also be incorporated to further catapult the company. Strategic approaches to Galanzs competitive advantage: a) Cost leadership In respect with this, cost leadership strategy remains a good strategy because the savings can be invested in improved products and retraining of existing workers. A low cost strategy does not imply low value or low quality. This has been greatly portrayed by Galanz in achieving outstanding achievement in their business. Looking at the current state of their business, Galanz can still use this strategy for their OEM & ODM business to cater for the local demand.
b) Differentiation
At the same time, differentiation by focus on R&D and innovation can drive Galanz to greater heights. For example, Galanz can invent on electricity saving products. New technologies, new design, new manufacturing processes & commitment to customers can help in Galanzs success. Galanz, in recent years, has invested over RMB1billion into the R&D in total, and the investment on technology is always more than 3% of the annual turnover. In 1995 and 1997, Galanz Group established the Research Institute of Household Electrical Appliance and Galanz American Research Center in the headquarters of China and in America respectively. Over these years, Galanz has gained more than 600 R&D achievements, e.g. sphere microwave technology, microwave enhanced compensation technology, multiplex technologies of microwave leakage prevention, light-wave technology and so on. Besides, Galanz can differentiate the company from the competitors by providing a better service to customers. In regards to this, Galanz has taken a good effort in setting up sales office and branches where they are doing business. This will help them stay closer and connected with the customer. Galanz could also adopt internet technology in enhancing their business to virtual customer. This can help them increase their market share at a global level. At the same time, this will provide a platform to communicate with customers regarding product enquiry, warranty, service and so on.
c) Response Galanz should be more flexible in competing in response to the market demand. They have to provide a more reliable and quick response in terms of product development and delivery. In respect with this, Galanz is lack in terms of its ability to match changes in a marketplace where design innovations and volume fluctuates substantially especially in the OBM business. They have to pay more attention in this aspect if they want to build a sustainable competitive advantage. At the same time, Galanz should not compromise on the speed in product development, speed in production and speed in delivering.
Setting priorities and utilizing its resources and capabilities to gain competitive advantages in the marketplace
Strengths Low cost producer
Weakness Unpopular brand Limited production capacity Less response time
Opportunities Market developments Innovation & technology development Global influences
Threats Competitive market Sustaining internal capabilities & low cost player Innovation in technology & idea
Because no firm does everything exceptionally well, a successful strategy requires determining the firms critical success factors and core competencies. In this case, Galanz key success factor is their low cost strategy. On the other hand, low labor cost and low land cost are the core competencies that allow Galanz to develop a competitive advantage. Galanz should allocate its resources and capability to solidify its strengths and opportunities and at the same time address its weaknesses and threats. Analysis and understanding of both the external and internal factors can help Galanz find the optimum use of its resources. SWOT analysis can help set priorities and utilize its resources and capabilities to gain competitive advantages in the marketplace.

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Q4. What should Mr. Liang do to lead his company to greater success?

Strengths Low cost producer

Weakness Unpopular brand Limited production capacity Less response time

Opportunities Market developments Innovation & technology development Global influences

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