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Galanz: From Price Killer to Consumer Brand Innovator?

By Nirmalya Kumar, J B Steenkamp, Jiaxun He

2013

Chinese company Galanz was the world’s largest microwave oven manufacturer in 2013. It had sales of 20 million microwave ovens, group revenues of RMB46 billion (US$7.3 billion) and 46,000 employees. Founded in 1978, it started manufacturing microwaves in 1991. Since then it had grown its business rapidly; in the early 2000s, Galanz had become the largest microwave manufacturer in the global market in terms of units, a position it continued to hold in 2013. In addition, it had become the top seller of electric ovens in the world, and established significant presence in the air conditioning (AC), refrigerator, and dishwasher categories. The case outlines Galanz’s impressive achievements in just two decades, describing the reasons for its success: the unique market conditions on both supply and demand side, Galanz’s successful OEM model and pricing strategy, and its ability to transform the industry dynamics in the process. However, with increasing pressure of competitive threats, it could no longer rely on its business model to ensure continued growth and profitability. Galanz decided that it needed to move beyond its OEM business to become a consumer brand. The case investigates the way that Galanz is seeking to do this, investing in R&D to stimulate product innovation and changing the organisational design to get closer to its customers. It then looks at Galanz’s efforts to diversify into other categories. It also explores some of the global market dynamics at play in various white goods industries.

Learning objectives

  1. To explore the challenges faced by an emerging market company in moving from OEM to a branded goods company.
  2. To examine the issues involved when the consumer brand is strongly tied to a single category.
  3. To develop an understanding of the conditions, strengths and limitations of conquering markets through a price killer strategy (a strategy used by many emerging market companies).
  4. To understand why Western companies may benefit – and hurt – by moving technology to Chinese OEM companies.
  5. To examine the changing character of international business as new competitors from China begin dominating industries.

Details

Publication Date: August 2013
LBS Case Code: CS-13-020
Topic:
Subjects: , , , ,
Industry:
Geography: ,
Pages: 30
Format: pdf