What has contributed to the success of Galanz?

Should Galanz continue to expand its capacity

through outsourcing arrangements?
How does the pursuit of outsourcing align with its
operations strategy?

Galanz has remarkably grew from a small township enterprise to a determined company
in the global electrical appliance market competing with Panasonic, Toshiba and LG.
Many factors have contributed to its tremendous success, namely:
1. Forecasting
Galanz had a sharp insight and forecasted that the demand for microwave ovens will
increase in China. While other competitors who are not familiar with China market could
not sense its evolving potentials Galanz seize the opportunity, produced and sale at an
affordable price.
2. Low Price Strategy:
Galanz implemented cycles of price cutting and production capacity expansion
(Schroeder, 2013: 463) which was the main reason to compete, however, as much this
strategy helped, Galanz has eventually faced monopoly accusation from some of the
importing countries for its unreasonable prices.
3. Flexibility/Creativity/Innovation:
Even that the technology side was stable, Galanz realized the importance of innovation
and aimed to localize their design to suit each target market. They developed and
mastered new features/technologies to its products, mainly the manufacturing
technologies of its core components (i.e.: magnetron technology).
4. Outsourcing:
Galanz excel in outsourcing in which allowed it to increase production scale, cut
production costs and enhance quality rapidly. However, expanding through outsourcing
arrangements can be harmful, where Managers may manage costs by outsourcing or
setting up a supply chain but they could end up having to manage damage that is far
more than bargained for when they made their initial assessment of the value
proposition of an outsourcing or supply chain partner. (Clegg et al., 2011: 579). I see
that the outsourcing tactic that is aligned with its low-cost strategy is at the edge of
being revised as far Galanz is realizing the need for adjusting to meet the overseas
challenges and strengthen its OBM business. Galanz should start investing on its
workers technical and management skills to enhance its customer service capabilities
and overcome the low awareness rather than relying solely on low-cost strategy.
For
doing that the challenge then, is how to balance maintaining the interests of OEM while
expanding OBM sale? Any views/suggestions?
References:
Clegg, S. and Kornberger, M and Pitsis, T (2011) Managing and Organizations: An Introduction to
Theory and Practice, 3rd Edition. UK: Sage Publications. Online via Vitalsource Bookshelf.
[Accessed: 20 February 2016].

Schroeder et al. (2013). Operations Management in the Supply Chain: Decisions and
Cases, 6th Edition. McGraw-Hill Create. Online via the Vitalsource Bookshelf. [Accessed: 4
May 2016].