- Pages: 3
- Word count: 618
- Category: Globalisation
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Galanz has built highly its industrial “Threshold” based on its cost advantage.
In China, there is not any field other than the field of microwave-ovens that is featured by a “Highly Concentrated Brand” which even can be deemed as having entered the “Oligopoly” of the industry: The first corp of Galanz itself holds the market share of about 60%, the second corp of LG accounts for about 25% and the corps ranked third of Panasonic and fourth of Samsung only about 5%. Because of such a particularity, the microwave-oven industry has its “Cost Barrier” standing advanced of “Technical barrier”. Galanz’s annual production capacity of 15 million units has built highly the industrial “Threshold” based on Galanz’s total cost as its leading advantage.
Guangdong Galanz Enterprise (Group) Co., Ltd. has been renamed officially from its predecessor which was Guangdong Shunde Guizhou Feather Products Factory since June 1992. In 1992, Galanz introduced a production line of Toshiba microwave-ovens, which was the most advanced one then and completed for starting its production in six months. During the latter 10 years, Galanz has increasingly developed its scale of production with an output from the first yearly capacity of 10,000 units to o.6 million units in 1996. In 1997, it surged to nearly 2 million units and now it has the world’s largest microwave-oven production base whose annual production capacity reaches 15 million units. Since 1996, Galanz has repeatedly set off “Price Storm”, a large number of small-scale manufacturers were forced to withdraw from the market. Furthermore, passing a few years, the Korean LG is the only one remaining a second position on the market, which can compete with Galanz. Galanz has become the “King of Microwave-ovens” of China and even the world, holding respectively the current monopoly of market shares of 60% of China and 35% of the global market.
Strategic Analysis of the Successful Way of Galanz
1. Galanz’s overall strategy may be analyzed to have an analysis of its strategy of specialization. In the growth period, Galanz’s overall strategy aimed at “Focus on One Point” as the core, i.e., its resources for the original business sector were transferred in a large-scale to the new chosen project of “Microwave-ovens” through a withdrawal from the original industry so as to concentrate all resources to operate the new “Focus on One Point” by taking the road of professionalism. The important part of such strategy of “Focus on One Point” is the establishment of barrier for an entry. Galanz Group’s performance in this area is very prominent, including: Firstly, in the premise when the same or lower total cost is remained, new products and proprietary technologies have been constantly developed. Secondly, using the total cost leading in the field as its advantage, quality and low-price products have been introduced to the market to expand market share. Thirdly, on the basis of the above conditions, Galanz has utilized its own technological personnel to develop key components which have been used in production to further reduce the total manufacturing cost.
Galanz’s strategy of globalization: It means that Galanz is not only represented by its introduction and integration of different advanced production equipments and technologies from other countries in the world, but also the international market aiming at an allocation of resources from the point of view against the global market where its products could be introduced by using its own brand or OEM, research and development could be conducted internationally through a cooperation between R & D institutions of U.S. and China to develop Galanz-own technologies and new products, and international talent of foreign experts and management personnel could be hired to meet the needs of international business operations.