Asahi Breweries

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Assignment 2

Asahi Breweries Case Analysis

Anonymous Student #2

Professor John Stockmyer

MKT517 WEB/Tuesdays 7:00-9:30

Asahi Breweries
(Dry Beer Implementation)
Introduction
Asahi Breweries, Ltd. has been in the Japanese beer market since its inception in 1949 where it originated through the post-war breakup of beer conglomerate Dai Nippon, which at the time had a 75% market share. The only other existing Japanese beer company prior to the post-war era was Kirin, holding the remaining 25% market share. Asahi is one of four main beer manufacturers along with its competitors; Kirin, Sapporo and Suntory companies. Kirin, being the oldest and largest company of beer producers has historically been the leader in production, sales, and market share at ~ 60%; primarily through its experience enabling the company to identify market trends and develop expansive distribution centers. The Asahi, Sapporo, and Suntory companies have generally remained competitive for the remaining 40% market share. Traditionally, lager beer as been the choice of Japanese beer drinkers and Kirin has capitalized on that tradition for decades by producing lager as its primary beer product. However, by the early 1980’s consumer tastes began to change and they desired more variety in beer choices. To meet the demand, the three smaller companies developed and marketed their own brands of draft beer which in turn enabled the market share for that specific product segment to even out. Karin reluctantly followed while maintaining its position that lager was still the beer of choice. In order to differentiate itself from its competitors and create a niche for itself, Asahi has created a new “dry beer” to offer consumers hoping to capitalize on the changing tastes of beer drinkers. Asahi’s president, Hirotaro Higuchi, has decided to invest in the implementation of the new product. The decision must be analyzed whether to support the investment in the strategic development, production, and marketing of Asahi’s new dry beer.

Asahi’s Recent Strategies
Asahi prides itself on its long history of beer production with continued quality and social commitment to its customers, employee relationships, business partners, stockholders, and local communities. Until 1982 change was almost 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, forced early retirements, and low morale. At that time, Tsutomu Murai became the president bringing a new horizontal communication philosophy to the company. He implemented cross functional teams to improve the company’s image both internally and externally as well as improve quality within the organization. It was determined from research that consumer beer taste was changing and Asahi needed to respond. Risking backlash from traditionalists, the Asahi trademark was changed in parallel with the release of the new Asahi Draft product, demonstrating management’s ability to identify and the willingness to respond to the changing market environment. This gave the company’s morale a sustained boost, but a short lived increase in market share and soon it declined.

In 1986, Hirotaro Higuchi became the new president with a top down management philosophy and very hands on style decision making with the sole mission to increase profit. Riding the wave of the new draft beer product release and improved organizational functionality, Higuchi was willing to spend money to ensure the new product was a success and he implemented three drastic policy changes at the risk of erasing the company’s 1985 net profit margin of 1.4 billion yen: • Remove all old products from circulation at a loss to show commitment to the new product. • Change raw material (malt) suppliers to German suppliers to improve quality at increased expense. •...
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