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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 similar in their production processes, except
that lager beer was heat pasteurized and draft was not. Asahi‟s dry beer was classified under
draft beer.

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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 picture.

But the two differed in their policies and behavior but contributed a lot to the company.
Murai was more of the corporate strategy. 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 to think of a new
image and a new taste “ Asahi 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 capacity 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 quality, construct buildings,
hire more employees and provide them with training programs depending on the
company‟s market research.

Read more: http://bizcovering.com/major-companies/a-case-study-on-asahi-


breweries/#ixzz1EUc1KAFM

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