Galanz OEM and ODM businesses were permitted for investing predominantly in their production operations without investing in distribution networks as well as customer service. As the business model was as OEM/ODM to major brands, the end consumer marketing as redundant as the sales was under customer’s brand. On the other hand, they could depute their resources focusing on product design and production as these domains held prominence with respect to OEM/ODM customers. A thriving OBM business to co function with existing OEM/ODM would necessarily possess certain operational challenges like:
• The risk of being perceived as competition to OEM customers
• Challenges related to respective sales and forecasting
• Production lines need to be tuned to handle product variation and low volume batches which may contain small batches required high variety.
• Company needed to invest in developing the customer service capabilities
• Required to established new distribution channels and networks
• Low brand awareness relating to overseas markets
4. According to the disruptive innovation theory of Bower and Christensen, would Galanz be considered a disruptor? If yes, what is the disruptive innovation? In your discussion, consider Galanz’s market entry strategy and its progression as a company. (2 points)
As per the disruptive innovation theory Galanz can be considered as such the disruptor. The low-end disruptive strategy that was followed by the company using low-cost Chinese labor, land, maximize capacity utilization through production planning, proper maintained as a part of operation strategy for manufacturing appliances for export also triggered the non-microwave owners pertaining to middle class in China to purchase the product. As the business model garnered market-enabling price points pertaining to domestic Chinese market, it was expanded globally. Galanz debuted from a low-end level, gained an equal status with transnational enterprises in a few years by focusing on the innovation, new product line, R&D and transformed as one of the major participants in global market rubbing shoulders with the giants. After the few years Galanz’s market share in domestic market increased to 76% in 2000 and captured a 40% of the world microwave oven market by 2001.