Asahi Breweries
Summary
We recommend proceeding with proposed investment plan with some revision. Detail analyses and rationalities state in the following sections.
Industry Analysis
Japan 's beer industry is concentrated and highly regulated. The industry was projected to grow by approximate 7.6% for 1988 as 1987 realized growth. There were mainly four kinds of beers: Dry, Draft, Lager, & Melt. Consumer taste was graduating changing. Their preferences were switching from Lager beer to dry and draft beer. The government has tremendous power in this industry in terms of price and distribution (a distributor or retailer needs a license issued by the government to sell beers). Therefore, both the beer license and structure of distribution channels act as barriers to entry. Since price is regulated by the government, buyers (consumers) do not have much influence on the price in the market. Firms compete in a Cournot-like environment. Achieving economy of scale is important. However, if Asahi not only announces its capacity expansion plan, but also commits to the expansion, the environment would become more Sackelberg-like.
In addition, buyers are quite loyal to a specific brand. The following graphic is obtained by converting data in exhibit 8. Although the monthly demands are fluctuated for all brands, Kirin has the biggest fluctuation between high and low seasons. Sapporo and Suntory have the most stable monthly demands. The implication of stable monthly demands is that firms could utilize their capacities more efficiently than otherwise. Understanding the seasonality of demand is important to Asahi 's resource allocation, and expansion & investment plan.
Firm Analysis
Market position
In the period between 1986 and 1988, Asahi Beer exited the traditional lager segment and became the leading producer of Dry and Draft beer in Japan, by commanding estimated 33% of the non-lager beer market in 1988.
Competitive Advantages
Resource
Secure financial position.
We recommend proceeding with proposed investment plan with some revision. Detail analyses and rationalities state in the following sections.
Industry Analysis
Japan 's beer industry is concentrated and highly regulated. The industry was projected to grow by approximate 7.6% for 1988 as 1987 realized growth. There were mainly four kinds of beers: Dry, Draft, Lager, & Melt. Consumer taste was graduating changing. Their preferences were switching from Lager beer to dry and draft beer. The government has tremendous power in this industry in terms of price and distribution (a distributor or retailer needs a license issued by the government to sell beers). Therefore, both the beer license and structure of distribution channels act as barriers to entry. Since price is regulated by the government, buyers (consumers) do not have much influence on the price in the market. Firms compete in a Cournot-like environment. Achieving economy of scale is important. However, if Asahi not only announces its capacity expansion plan, but also commits to the expansion, the environment would become more Sackelberg-like.
In addition, buyers are quite loyal to a specific brand. The following graphic is obtained by converting data in exhibit 8. Although the monthly demands are fluctuated for all brands, Kirin has the biggest fluctuation between high and low seasons. Sapporo and Suntory have the most stable monthly demands. The implication of stable monthly demands is that firms could utilize their capacities more efficiently than otherwise. Understanding the seasonality of demand is important to Asahi 's resource allocation, and expansion & investment plan.
Firm Analysis
Market position
In the period between 1986 and 1988, Asahi Beer exited the traditional lager segment and became the leading producer of Dry and Draft beer in Japan, by commanding estimated 33% of the non-lager beer market in 1988.
Competitive Advantages
Resource
Secure financial position.