Case Analysis: Asahi breweries, LTD. Executive Summary The problem of Asahi Breweries, Ltd. is whether to expand its production capacity from 880,000 kiloliters to 2,100,000 kiloliters. The company, being an innovator in the beer industry, has introduced and captured a very large segment of the „dry beer‟ market resulting in sales growth of 71.9% in 1988 while the industry grew only7.6%. Asahi cannot supply the requirements of its distributors resulting in shortages. It is recommended that the company expand its production capacity to 2,100,000 kiloliters.
Case Facts The characteristics of the beer industry were divided into 2 kinds: lager beer and draft beer. The lager beer is more traditional and richer in taste while the draft beer was gradually growing and lighter in taste. The two were quite simil ar in their production processes, except that lager beer was heat pasteurized pas teurized and draft was not. Asahi‟s dry dr y beer was classified under draft beer. Read more in Major Companies « 7-11: An Overview Ingvar Kamprad and Ikea » Asahi started when Dai Nippon Breweries split into Sapporo Breweries and Asahi breweries in 1949. From then on, Asahi started from scratch and the company started building their own name in the beer industry. Sapporo and Asahi focused their efforts in expanding sales in their traditional strength, the commercial market. But as the trends were changing, Asahi were slowly loosing against Kirin because of a number of factors. They had a very conservative market, depended too much on personal relationships, malfunctioning of their management control system, eliminating personnel and distrust among employees. These all changed when Murai and his successor, Higuchi came into the pi cture. But the two differed in their policies and behavior but contributed a lot to the company. Murai was more of the corporate strategy. strate gy. He formulated an explicit company credo and created functional task forces, which are the Corporate Identity Introduction Team and the Total Quality Control Introduction Team. In his time, the company was able t o think of a new image and a new taste “ Asahi draft”. draft ”. On the other hand, Higuchi was more of the economic strategy. He was more on numbers. Profit was his responsibility. But he became involved in the launching of the “Asahi draft” and the “super dry”. But as the company grew, they were faced with their major problem that is whether to expand its production capacity from 880,000 kiloliters to 2,100,000 kiloliters. The company, being an innovator in the beer industry, has introduced and captured a very large segment of the „dry beer‟ market resulting in sales growth of 71.9% in 1988 while the industry grew only7.6%. Asahi cannot supply the requirements of its distributors resulting in shortages.
1. Alternative Courses of Action
The group‟s alternative courses of action are the following: first, to maintain the present capacity at 880,000 kiloliters. The second is to expand from 880,000 kiloliters to 2,100,000 kiloliters. The third one is to expand from 880,000 kiloliters to lower than 2,100,000 kiloliters depending on the market.
2. Recommendation The company should expand its production capacit y to 2,100,000 kiloliters depending of the market.
3. Implementation In order to expand its production capacity, the company should invest more on manufacturing equipments and systems to maintain its qualit y, construct buildings, hire more employees and provide them with training programs depending on the company‟s market r esearch.
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