Galanz Enterprise Group Case Study

Galanz Enterprise Group Co. Ltd. is a major Chinese operation today, producing microwave ovens. But Galanz did not always operate at such a large scale! Interestingly, it started out in 1978 as a small township enterprise producing down feather products. In the late 1980’s the global garment industry faced dramatic changes and risks. Therefore, in 1991 Liang senior, founder of Galanz, made a strategic decision to try to find new business opportunities with more potential for growth for the company. After analyzing the Chinese market, he settled on introducing the microwave to the electrical appliance market. Liang realized that if he could sell microwave ovens at affordable price, there would be a huge demand for them. The risk was low at that time, as the competition was small and the technology was already introduced and stable in America. In 1994 a flood in Guangdong led to Liang becoming a major shareholder of a lot of land at a low price. In 1999 he officially closed his down factory, and Galanz remained solely in the microwave industry.

Because Galanz had an abundant supply of cheap labor and land, it was able to compete in the market by offering a low price (Operations Management textbook, McGraw Hill. Page 436). This was the Galanz “order winner” factor: the low cost. The “order qualifier” factors included: high turnover rate, cost of production and increased capacity; they also effectively transferred their business from one type of product to making a different product.

Galanz continued to grow at an exponential rate. Liang used two tactics, he used a free production line transfer and he attracted component suppliers who set up component production facilities in Galanz. This allowed him to continually launch price wars. These pricing strategies led many large industries to withdraw from the market (OPERATIONS STRATEGY AT GALANZ - Google Groups). As Liang commented, “The main objective of the price war was to destroy our