Analysis of GLs successful strategies 1. Analysis of GLs overall strategy: specialized strategy.

In the growth period, GL took concentration on one point as the core of its overall strategy. That is to say, it transferred all its resources of its original business to its new project microwave oven, retreated from its original business, concentrated all its resources on this new point, and carved out a specialized road. To set up an entrance barrier is a key in such a strategy. GLGroup performances remarkably on this aspect. First of all, it ceaselessly develops new products and proprietary technologies on the premise that the total cost is not changed or is lowered; second, it launches high quality and low price products to enlarge its market share by making use of its advantage in total cost; thirdly, it begins to develop key components and parts by applying its own technology on the above-mentioned basis, and puts them into production to further reduce the total cost of manufacture. Internationalized strategy: Internationalized strategy implies that GL Group has not only introduced and integrated the advanced production equipment and technologies from all parts of the world, but has also internationalized its market, its R&D and its talents. Regarding the market internationalization, GL allocates its resources from the perspective of global market and launches its products with its own brand or by means of OEM; as for R&D internationalization, GLs Chinese R&D institutions cooperate with those in the USA to develop its proprietary technologies and new products. With regard to the internationalization of talents, GL recruits many foreign experts and management talents to adapt itself to the internationalized operation. Scale strategy: GL group adopts the strategy of small profits but quick turnover to maximize its scale and centralize it production. In this way, it could enhance its competitive power in markets and reduce its risks. Then, the positive effect of scale maximization could be used to promote the strategy of small profits but quick turnover. Both of them have promoted the enterprise to develop smoothly. It s no doubt that it is quite a correct sales strategy for GL. 2. Cost leadership strategy, scale economy strategy and core competitiveness are summarized by GL into two words scale manufacture. After GL steps into the industry of microwave oven, it insists on the cost leadership strategy at all times. The reason why it could reduce its prices so frequently is that its cost is much lower than its antagonists, and it has a sufficient space for making profits. On one hand, it has enhanced its production capacity fast and realized the scale economy; on the other hand, it has increased its sales volume and raised its market share through price reduction and powerful promotion, and then it has enhanced its strength rapidly within a short period accordingly. GL implements the scale strategy with the basis aim at expanding its market rapidly, reducing its operation cost, increasing investment in technical development, and enhancing its competitive power in the international market by relying on the positive scale effect, so as to make the enterprise to step onto the road of positive development. GLs scale economy is first of all revealed on the aspect of production scale, and then on marketing, scientific research and management. Furthermore, GL Group has also stepped into and carved out the market of electric cooker and electric fan by relying on its resources and capacity it has accumulated from the operation of microwave oven.

Under the direction of cost leadership strategy, GL has defeated many corporations in price wars. Upon expansion of its scale, it would reduce its price by a large margin. There are two features in GLs reduction of its price. First of all, it has a definite aim, e.g. it would locate its ex-factory price below the cost price of the enterprises with a production scale of 0.8million sets when its production scale reaches 1.25million sets. At that time, GL can still make a profit, but the enterprises with a production scale of less than 0.8million sets will lose money upon every set they produce. In this way, the antagonists of GL will be eliminated gradually. The other feature is that GL used to reduce its price by a large margin. GL either doesnt reduce its price, or reduce it to the level 30% lower than the others. Strictly speaking, GL is a manufacturing enterprise. The greater its manufacturing scale is, the lower its average cost will be. GL reduced its price by about 40% in August 1996 and October 1997 respectively. Both of them were resulted from the scale manufacture. However, since 1998, GL has no longer reduced its price by such a great margin. The reason for this phenomenon is that the greater the manufacturing scale is, the more limited the space for cost reduction will be. GLs potential advantage in price reduction has faded away. Furthermore, GL has made great efforts to reduce its purchase cost, administration cost, marketing cost and circulation cost ceaselessly. When low labor force cost is taken into consideration, GL has already taken a great advantage in the competition of composite cost.