Asahi Breweries

Assignment 2 Asahi Breweries Case compendium Anonymous Student 2 professor John Stockmyer MKT517 WEB/Tuesdays 700-930 Asahi Breweries (Dry Beer Implementation) Introduction Asahi Breweries, Ltd. has been in the Nipponese beer commercialize since its inception in 1949 where it originated by dint of the military position-war licentiousness of beer conglomerate Dai Nippon, which at the time had a 75% commercialise helping. The only early(a) existing Japanese beer smart set prior(prenominal) to the beam-war era was Kirin, holding the rebrinying 25% commercialize appropriate. Asahi is one of four main beer manu occurrenceurers on with its competitors Kirin, Sapporo and Suntory companies.Kirin, universe the oldest and largest bon ton of beer producers has historic whollyy been the leader in harvestion, gross revenue, and commercialise sh atomic number 18 at 60% primarily through its experience enabling the phoner to get word grocery trends and develop expansive scattering centers. The Asahi, Sapporo, and Suntory companies pee gener wholly in ally remained competitive for the be 40% mart share. Traditionally, laager beer as been the choice of Japanese beer drinkers and Kirin has capitalized on that customs for decades by producing laager as its direct beer harvesting.However, by the early 1980s consumer perceptivitys began to transmute and they desired more(prenominal) configuration in beer choices. To meet the demand, the three small companies substantial and marketed their own pocks of order of payment beer which in fold enabled the market share for that specific harvest segment to even out. Karin reluctantly followed piece maintaining its position that lager beer was still the beer of choice. In order to differentiate itself from its competitors and create a niche for itself, Asahi has created a parvenue ironical beer to offer consumers hoping to capitalize on the ever- changing tastes of beer drinkers.Asahis death c hair, Hirotaro Higuchi, has decided to invest in the follow upation of the newfound product. The dimensioncination mustiness be analyzed whether to support the investment silver in the strategic development, outturn, and marketing of Asahis new tee replete(p) beer. Asahis late Strategies Asahi prides itself on its long history of beer production with go on quality and social perpet proportionalityn to its customers, employee relationships, business partners, stockholders, and local communities.Until 1982 change was about nonexistent as the company continued to operate in the traditional modus of producing lager beer and was on the verge of becoming extinct in the market due to declining sales, labored early retirements, and low morale. At that time, Tsutomu Murai became the president bringing a new naiant communication philosophy to the company. He utilise cross functional teams to cleanse the companys image both internally and externally as well as improve quality within the organization. It was dogged from query that consumer beer taste was changing and Asahi need to respond.Risking backlash from traditionalists, the Asahi trademark was changed in repeat with the release of the new Asahi Draft product, demonstrating steerings ability to identify and the unforcedness to respond to the changing market environment. This gave the companys morale a sustained boost, and a short lived step-up in market share and soon it declined. In 1986, Hirotaro Higuchi became the new president with a outgo down instruction philosophy and precise hands on style decision making with the sole mission to join on workoutfulness.Riding the wave of the new draft beer product release and improved organizational functionality, Higuchi was leading to spend money to ensure the new product was a success and he implemented three drastic polity changes at the risk of erasing the companys 1985 net profit margin of 1. 4 million long Remove all old products from circulation at a difference game to show commitment to the new product. heighten raw material ( treat) suppliers to German suppliers to improve quality at amplifyd expense. spend as much money on advertising and promotion until operating profit equaled zero.As quality improved and the advertising and promotional blitz increased, distributors realized Asahi was salutary a contender and retailers started to push the draft product resulting in a 9. 7% increase in sales from the previous year. With the centering of its strong leadership and strategic vision, Asahis management and workers were giveing to follow and implement change by going against ceremonious wisdom and positioning the company in 1987 with an overall market share of 12% and project increase of 23% through 1990.Included in this projection, was the latest Asahi product development, introductory-rate Dry beer, which at first, Higuchi was reluctant to figure into the market so soon subsequently the relea se of Asahi Draft, but after appreciation the product himself he decided to market the product resulting in a 33% sales increase in 1987. Higuchi this instant proposes an investment plan to increase create from raw material and packaging message by 30% at a cost of 230 meg yen over two years, 1989 -1990. DemographicsLager beer has traditionally been the product of choice for most of the pre and post WWII era consumers, mainly competitor Kirins customer base, but that segment has pinched resulting in a younger genesis of beer drinkers preferring a variety of products including draft and run dry out out beers. This has been proven through consumer research and taste tasting trials. It should non to be presumed that lager beer is obsolete has demonstrated by Kirins dominance of that market segment from the 1988 bonny periodical market share info of 42. 2%.This does suggest, however, that Asahi has an opportunity to compound on the market trend and gain market share in the new dry beer segment and younger demographic by creating a dry beer niche for itself, as demonstrated by the kindred selective information indicating Asahi with a 15. 4% average monthly dry beer market share versus Kirin, the appressed competitor at 8. 0%. It should be noted that in January of that year, Asahis total beer market share was 11. 2 % and by November it had risen to 20. 5% a 9. 3 % upward trend. Kirins market share step-downd by 9. 8% during that identical period. Com appealAs stated in the introduction, Asahi has three competitors in the beer market, Karin, Sapporo, and Suntory Kirin One of the oldest, largest, and most diversified companies with an grand distribution network. Strength in the beer market is lager beer, of which it holds a dominate market share. Still believes that lager is the Japanese beer of choice. softened to respond to the trend of recent changing consumer preferences and promotes the stance that dry beer is a passing fad. in the end Kirin released its own dry brand and its moderate success is due to the companys size.Sapporo Formed at the same time as Asahi after the dissection of Dai Nippon post WWII. Strength in the beer market is draft beer of which it leads in market share. Sapporo is probably Asahis closest competitor for total market share at 18. 8 %. Eventually followed suit and released a dry beer to compete, although lag in the market. Suntory Focuses on draft and malt beer products, of which malt seems to be declining as predictd by 0. 7 % market share. Suntory released a dry beer as well with minimal success. At this time the company ranks last in the beer market with a 5. 5 % market share.Legal/Political Factors All three competitors released dry products without product or packaging eminence in hopes of capturing a percentage of the dry beer market and boosting sales. Asahi has challenged with intellectual property rights and the media solicitude has benefitted Asahi as the original dry beer noble a nd producer. This will help to secure Asahi has the leader in the dry beer market segment. The Japanese government monitors industries for potential monopolies, therefore Kirin cannot petition for increased market share at the risk of being divided into smaller companies. A new license is requisite to open new production plants. The Ministry of pay regulates licenses and may restrict them where there is a potential for industry excess capacity. This will not be a cistron has the competitors production will eventually decrease as Asahis production increases to tote up sales demand as indicted by market share trends. Distributors and retailers are demand to have licenses and new licenses are limited. This affects all companies. The retail price of beer and liquor task is also regulated by the Ministry of Finance.This affects all companies as well. Social Environment The Japanese beer consumer has been, for the most part, conservative when it comes to change. This is reflected in the lager beer market share data and the fact that it has taken 30 years to let on and accept a draft beer into the market. However, as the market has become global and consumers have been exposed to more options and variety, their tastes and preferences have changed more rapidly as indicated from recent consumer research and taste trials.This change in consumer mental attitude will benefit the company that offers new and innovative products to the beer market such as Asahi dry beer. Economics/Financials afoot(predicate)ly, Asahis relevant financials ratios are as follows Ratio count 1987 native 1988 Estimate 1989 communicate 1990 Projected Scale Operating meshwork gross sales COGS/Sales 3. 5 14. 0 16. 0 20. billion yen Net Profit Profits after Taxes/Sales 2. 5 4. 8 6. 0 7. 0 billion yen Current Ratio Current Assets/Current Liabilities 1. 6 NA NA NA ratio Working roof Current Assets-Current Liabilities 103553 NA NA NA million yen Debt to Assets Total Debt/Total A ssets 1. NA NA NA ratio Long-term Debt to Long-term Debt/Total Stockholders 0. 3 NA NA NA ratio Equity Equity At first glance, the proposed investments of 230 billion yen to increase capacity overwhelms the projected operating and net profits, although the projections of these are trending optimistic and are good indicators of a sound company. The current and capital ratios indicate that Asahi has the ability to pay its current liabilities by using assets and finance inventory enlargement and operations without having to barrow. However, the leverage ratios are stronger indicators of Asahi being able to take on excess debt.The debt to assets ratio reveals that the company has not ill-use debt to finance operations, and the long-term debt to equity ratio indicates Asahi has the capacity to barrow supernumerary funds when needed. Asahis Finance Director, Hiroshi Okada supports the data by stating that Asahi has undervalued assets worth approximately 700 billion yen and incr eased stock prices which secured an additional vitamin C billion yen enabling the company to invest with equity thereby reducing the investment risk such as excess inventory, excess capacity or chance of bankruptcy.Technology Technology has enabled Asahi to package and upgrade its product in novel ship canal to capture consumers attention along with the great test of the dry beer product. It is inscrutable from the analysis if technology would help with the increase of production and capacity, although it is reasonable to assume that expert advances would help with construction, manufacturing, and distribution infrastructures through the use of computers and automation. RecommendationIn review of the analysis I press the proposed investment to increase capacity. Asahis management has proven it makes the right strategic decisions when confront with adversity while regarding the potential risks involved. The Japanese beer market environment is ripe for a new product as attest by the changing demographics and social environment. The argument is lagging in response to oblation an alternative to beer consumers desire for product variety and the legal and political policies do not constrain Asahi relative to its competitors.Ultimately, Asahis sparing and financial position is found to be in agreement with absorbing additional debt to expand capacity. Combine the actual and projected upward trend in sales and market share, and the potential for a positive return is increased even further, whereas the risk factor for investment loss is reduced. What will be the likely competitive reaction, and how serious is the threat? Nice analysis. Overall agree 98/100