Galanz Case Study
Introduction
Galanz Enterprises Group Co. Ltd, which is headquartered at Guangdong, China is in the
business of manufacturing microwave ovens. In China microwave ovens were quite expensive
and that was the point where Galanz’s founder Liang Qingde, realized the potential of selling
domestic microwave ovens. From 1993-2003, Toshiba, Panasonic and LG were the market
leaders but, still being new to the microwave industry, Galanz became the largest supplier and
manufacturer of microwave ovens because of its competitive and aggressive operation strategies,
even reaching 70% of the market share worldwide. Galanz had a huge advantage against larger
foreign companies in terms of cheap land and labor. The company decided to penetrate the
market by offering low prices to their Chinese customers. Galanz started to manufacture
microwaves as an original brand manufacture where they bought microwave components from
other companies, and distributed only domestically. Galanz slowly became the original
equipment manufacturer for many foreign companies due to cheap price and this hugely boosted
its sales. Research and Development were added to the company which made it an original
design manufacturer for other overseas companies. Galanz was able to dominate the market in
terms of price wars, and microwaves slowly became a commodity product.
Identifying Galanz Issues
Brands like Toshiba, and Panasonic were more popular internationally because Galanz
sold predominantly as an original equipment manufacturer. Expanding as an international
original brand manufacture caused many new complications for Galanz and they started to fear
that cannibalization would come into picture and their original brand manufacture products
would compete with their original equipment manufacture products and sooner would affect
Galanz Case Study
them in such a way that they would start losing the edge on their product prices. There were
problems that started to arise due to their old operations strategy as well. Galanz was a company
of only 20 employees in 1993 and even with its rapid growth it still had all the strategies
applicable for small-scale industries; they had grown too fast and their strategies had become
outdated. For example, simple management structures and simple sales forecasting were not
applicable anymore. If there were no changes made to the operations strategy of Galanz, and
soon, they would lose the chance to grow into the international market as well. Galanz was poor
at handling customer complaints and because of this they could face a lot of problems in
customer retention especially when there are so many competitors present in the market.
