Galanz’s Competitive Strategy
Galanz is a company that is based in China. Its main business is the manufacture and sale of microwaves. The company faces a lot of competition from other established companies, such as LG, Panasonic, Toshiba, and Samsung, among others. The company has had a long way en route establishing itself as a competitive organization considering the major players in the industry are few, but well established organizations.
Initially, the company was only producing microwave ovens for sale in the domestic market. It used to purchase key components and production technology from Japan. The company then started its own Original Equipment Manufacturing (OEM) business. This attracted foreign brand owners to outsource their production to Galanz. The company then transformed into an Original Design Manufacturing firm.
The combination of OEM and ODM facilitated its brand being recognized in the overseas market. The other competitive strategy that the company applied is low cost production. It had cheap labour and land, both of which facilitated in lowering the production cost.
This was the major strategy that led to a large volume of sales as the company is able to offer its products at a relatively low price compared to the competitors (Thompson and Frank 552). In addition, the company had an R&D department that had undisputed capabilities of developing highly competitive and innovative products. Finally, the company has a brand name that is well recognised, both in China and abroad.
The competitive strategies of Galanz are successful for a number of reasons. First, the low cost production enables the company to sell its products at a low cost. Second, the R&D facilitates quality production. Third, its strong brand has won the loyalty of customers across the globe. The three aspects combined have contributed to a successful competitive strategy for Galanz.
Galanz’s Operation Strategies
The company also worked towards changing and improving its operational strategies in its bid to succeed in the global market. The aim was to make the operations more effective and efficient and lower the cost of operation. This would be effective in boosting the competitiveness of the company.
The operations manager was responsible for following up the company’s operation strategy. The operations manager makes decisions to manage the transformation process that converts inputs into finished goods or services that are ready for consumption. The manager also oversees the supply chain, which is also effective in ensuring a successful operation strategy. Initially, the company was buying magnetrons from its competitors.
However, the competitors cut their supply of magnetrons to Galanz as its growth continued to escalate, prompting Galanz to start its own manufacture of magnetrons. This was one of its operational strategies that propelled the company to succeed. The company then started its own OEM and later transformed it to an ODM. It could, therefore, be able to produce Galanz microwave ovens with its own brand, rather than purchasing some components from competitors.
The company had operations in the Original Brand Manufacturing firm in the domestic market. The company was able to develop and produce its own magnetrons with the Original Design Manufacturing. This ensured that the company was able to deal with the previous shortage of magnetrons. It also ensured constant supply of microwave ovens.
The operational strategy of Galanz was successful because the company was able to meet the market demand that was increasing as the company’s growth continued. Galanz was able to produce sufficient magnetrons enough for its microwave oven production. At home, the Original Brand Manufacturing (OBM) facilitated brand recognition in the domestic market. The operational strategy further helped in the production of quality microwave ovens.
The company’s operations manager has control over the quality of magnetrons. He or she is able to ensure the magnetrons are of the desired quality. Therefore, the end product is of desired quality as the whole production line is managed by the organization’s operations manager.
How Galanz operation strategies support its competitive strategies
For an organization to be successful in the market, the operation strategy should be able to support the competitive strategy. At Galanz, the operation strategy has been successful in supporting the competitive strategy of the company.
First, it is important to note that the major competitive strategy of the company is low cost production, which enables it to sell products at highly competitive prices compared to those of its close competitors. Secondly, its R&D has also been instrumental in increasing the competitiveness of the company by facilitating innovation.
Its operation strategy, on the other hand, has seen the formation of the OEM business and then transformation into the ODM. This has boosted the company’s production of magnetrons. The company also has its own OBM in China, which has helped in domestic brand recognition.
The ODM and the OBM have helped in further reduction of the production costs for Galanz. Producing its own magnetrons is much cheaper compared to purchasing them from other companies. Further, the production development of ODM has also facilitated R&D and innovation, consequently supporting its competitive strategy. OBM, on the other hand, helps in increasing brand recognition as a competitive strategy.
“How the company should set priorities and utilize its resources and capabilities to gain competitive advantages in the marketplace”
The company has achieved breakthrough in the market by selling its products at low prices. This has led to some of its competitors withdrawing from the market following the stiff competition it provided them. It claimed that price wars were a defence of the company and the objective was to destroy its competitors. Galanz had succeeded in this strategy. However, the business world is said to be dynamic. An organization only survives in the long run following its ability to cope with the changes that occur daily.
The company started to experience challenges for its future growth and development after years of market domination by Galanz, both in China, as well as in the overseas countries. There are worries on whether its current low cost strategy will still be successful in the future. It is clear that there are some changes that have to be implemented to keep the company in the competition.
Galanz is supposed to take a competitive position in the market by setting its priorities right. First, the world is trending towards technology and most products over the past few years are produced based on technology. The future of business organizations is highly dependent on their ability to embrace technology and utilize it effectively. Galanz should prioritize its resources by investing in technology. In doing so, the company should also be keen not to deviate from its low cost strategy.
The differences between OEM/ODM versus OBM in terms of production, design, marketing, distribution, and customer service
The OEM and the ODM firms were the two business strategies that Galanz turned to after its supply of magnetrons was cut by its previous suppliers, who also happened to be the company’s major competitors. Therefore, the OEM and the ODM production were aimed at producing magnetrons for the manufacture of microwave ovens for sale in the overseas market (Bonaglia 38). The two production modes produce and design the magnetrons, but the branding and distribution is done by another company.
The two modes helped the company to produce magnetrons at a low cost that facilitated its low cost strategy in the global market. In terms of design, the OEM and ODM helped the company design its own brand that helps it switch to a business direction of, “Created in China”, rather than “made in China.” The OEM and ODM further marketed and distributed the company’s products in the international market.
The OBM model was targeted to the domestic market. It produced and designed its own brand, instead of outsourcing to the competitor companies. The OBM further marketed and distributed its products in China. The customer services it offered were all meant for the domestic market. The aim of OBM was to strengthen the brand in the domestic market. Galanz was successful in using the models in that each of them specialized in its market targets, thus they produced efficiently to satisfy the market needs.
Galanz’s strategy of introducing OBM in international market
Currently, the OBM is purely targeted at the domestic market. It is aimed at strengthening the company’s brand in the domestic market and winning its competitive advantage in China. An original brand manufacturer refers to a company that sells a product that has been produced by another company or that includes a component of another company as its own brand.
This is a strategy that is seen as able to add an extrinsic value to the product (Bonaglia 39). In the case of Galanz, the brand has already established itself in the international market. Therefore, the company does not need to introduce its OBM in the international market.
Galanz should continue with its OEM and ODM business strategies. The two businesses have proven to be successful in the international market. They have facilitated the growth and development of Galanz and its competitiveness. It should be noted that business strategy is a factor that facilities the success of the organization. Facility strategy, on the other hand, considers the amount of capacity, among other factors.
Facility strategy would, therefore, consider the capacity of Galanz to manufacture microwave ovens. The company manufactures microwave ovens and then sells them to the international market through the brand name of another company (Bonaglia 38). However, the selling company always refers to the manufacturing company, which is Galanz in this case.
The ODM mode allows a firm to make products, but the products are branded and sold by a different firm. With any of the two models, the original manufacturing company will always get credit for the manufacture. Therefore, the brand name for Galanz under ODM or OEM will be maintained and there is no need to change the models.
Advantages and disadvantages of technology in Galanz’s success
Galanz started to invest in R&D in the year 1995 with the aim of facilitating new design and development in the organization. It focused on new technologies to improve and boost its marketability. Galanz realised a number of advantages out of the technology. New technology helped Galanz cut down the cost of production.
This was beneficial in that it helped the company produce at lower costs. Secondly, the new technology helped Galanz produce more differentiated products. This added to the quality of its products, as well as the marketability and competitiveness of the organization. Quality control systems should be put in place to ensure quality production.
The systems should be developed on technological knowledge. The products that a company makes should satisfy customer needs fully. Factors that add up to constitute quality include availability, field service, quality of design, and quality of conformance. Third, the company started to receive more orders for its products as a result of the new technologies (Panneerselvam 60).
However, the technology did not come without any disadvantages. For instance, the company had to spend a significant amount of its fortunes to invest in the R&D. It was approximated that the company spent about 3% of its annual revenues to invest in the new technologies. This reduced its income in the short-run.
How technology affected Galanz
Technology affected Galanz in that the total sales in the long-run increased following an increase in demand for its products. The technology also helped Galanz localize the design of its products to suit its target market. Technology played the role of increasing and improving the quality of its production and lowering the cost of production, leading to the success of Galanz.
The challenges that faced Galanz and how it overcame the challenges
The road to success for Galanz was not an easy one. Galanz encountered several challenges on its way to its current position. First, the company was initially not producing its own magnetrons. Instead, it was buying them directly from its competitors, such as LG and Panasonic. The supplier companies cut the supply of magnetrons because of fearing the threat that Galanz was setting in terms of competition. In dealing with this challenge, Galanz established an OEM with the aim of manufacturing its own magnetrons.
Galanz was initially named as Guizhou down Product Factory and it was in the business of producing down leather products and selling them to abroad markets. On joining the microwave market, the company faced a challenge in that there were already established companies in the market. The microwaves at the moment were expensive and unaffordable to many people.
In addition, the technology for producing microwave ovens, as well as the technical expertise was not available in China. This presented a big obstacle for the company in its bid to start the microwave business. Liang Senior went a step further to ensure that the production of microwaves took place in China, instead of importing the microwaves by bringing in the technology and expertise needed for the job. This saw enabled him set up a factory in China.
Mr. Liang’s achievements that lead his company to greater success
The current success by Galanz can be traced to the contributions of Liang Senior, who is the Vice Chairman and CEO of the company. In fact, the credit for the company’s success can be given to him. He made a number of achievements in securing this success. The first achievement by Mr. Liang was to start up the microwave ovens manufacturing company in China. Initially, there was no technology and technical expertise in China to manufacture microwaves.
Mr. Liang purchased the equipment for this manufacture and brought in people who had the expertise to carry out the manufacture. This was the first and the most important achievement. Mr Liang carried out the initial project planning and scheduling. He did all the necessary controls to ensure that the equipment was installed successfully. Among the scheduling activities he carried out were bringing in experts and assigning them tasks, as well as developing a work breakdown structure for them.
Another achievement by Mr. Liang was his successful efforts to sign a contract with overseas companies to outsource the designing and branding of magnetrons. There was no technology for such production in China at the time the company was entering the microwave ovens market.
Mr. Liang outsourced this production, a step that was very successful in starting up the growth of Galanz. He also created an Original Equipment Manufacturing model whereby the company would be manufacturing its own magnetrons, instead of outsourcing the production.
Suggestions
Galanz can be considered a successful company since the entry of Mr Liang Senior. The company has been able to establish a low cost strategy that has seen it edge out most of its rivals, even forcing some to leave the market completely. However, there is a chance that the organization can still improve and achieve greater success in the future. However, the company has to be in a good position to face the future market challenges, some of which it is already encountering.
In terms of strategy, the organization should hold on to its low cost strategy. However, it should adopt a differentiation strategy and market focus strategy at the same time. Under differentiation, Galanz should be producing microwaves that have improved features compared to those of its competitors.
On market focus strategy, the company should be focusing on different markets and their requirements. In turn, Galanz should produce microwave ovens that meet the market demands of the different focus markets to be able to penetrate more markets (Christensen, Antony, and Roth 218).
In terms of management, the Mr Liang should ensure that the operations managers have the full control of the company’s production activities. This will enable them to track and realise any default that may compromise the quality of the microwave ovens in time. The managers should also be highly skilled and have the relevant knowledge to enable them cope with the market conditions now and in the future. The management structure should be flat to facilitate communication across the organization.
Capacity planning should also be considered by Mr Liang in his bid to achieve greater success for the organization. The organization should position itself such that it will be able to produce enough microwaves to meet the increasing demand (Christensen, Antony, and Roth 218).
This will be important in preventing the customers from walking away to rival companies. The operational diagram should be made as effective as possible and less hierarchical to increase production efficiency. The customer service at the organization is good. However, it can still be improved to enhance customer satisfaction further. To do this, Mr Liang can increase the number of customer representatives in the organization and ensure that they have sufficient knowledge to address all the issues raised by the customers.
Works Cited
Bonaglia, Federico. Meeting the Challenge of Private Sector Development: Evidence from the Mekong Sub-Region. Paris: OECD, 2006. Print.
Christensen, Clayton M, Scott D. Anthony, and Erik A. Roth. Seeing What’s Next: Using the Theories of Innovation to Predict Industry Change. Boston, MA: Harvard Business School Publishing Corporation, 2004. Print.
Panneerselvam, Ranganathan. Production and Operations Management. New Delhi: PHI Learning Pvt. Limited, 2012. Print
Thompson, John L, and Frank Martin. Strategic Management: Awareness & Change. Hampshire, UK: Cengage Learning EMEA, 2010. Print.