Asahi Case
INTRODUCTION
Asahi Breweries, after its successful introduction of “Super Dry” to the Japanese beer market, has established itself as a profitable national player. To meet its growing demand, Asahi is considering an investment proposal to expand capacity. Firm-specific analysis, industry analysis, and a critical assessment of alternative strategies will be discussed to evaluate the proposal. A recommendation and implementation schedule will be presented based on the quantitative and qualitative factors examined in the analyses.
FIRM DESCRIPTION
Brief History & Basic Description Asahi was a direct result of the Dai Nippon split in 1949 by the occupation forces in Japan. Since Dai Nippon had been divided geographically, Asahi and Sapporo began as regional players, which quickly gave way for Kirin to reap the national market. Consequently, Asahi’s growth was hindered by lack of brand recognition and loss of distribution networks and relationships. Later, under accomplished leaders Murai and Higuchi, Asahi was able to improve distributor relationships and enhance its brand image. Asahi’s production consists of two primary products: draft beer and dry beer. Asahi used about 20% of its production capacity to produce draft beer while it used the remaining 80% of its capacity for Super Dry beer (1988). In addition to the beer business, Asahi is diversified through investments in real estate, and production of food items and pharmaceuticals, which accounts for 21.4% of total corporate sales.
Financial Situation With the tax ratio of 67%, Asahi’s ROA increased from 1.093% in 1986 to 1.384% 1987, indicating increased efficiency in asset use. As for liquidity, Asahi improved its current ratio from 0.892 in 1985 to 1.076 in 1987 Asahi would not easily go bankrupt due to short-term payments (at least in the short run).
Strategy & Structure of Ownership Innovation is Asahi’s primary competency. Its most notable innovation is the Super Dry beer, which became a
Asahi Breweries, after its successful introduction of “Super Dry” to the Japanese beer market, has established itself as a profitable national player. To meet its growing demand, Asahi is considering an investment proposal to expand capacity. Firm-specific analysis, industry analysis, and a critical assessment of alternative strategies will be discussed to evaluate the proposal. A recommendation and implementation schedule will be presented based on the quantitative and qualitative factors examined in the analyses.
FIRM DESCRIPTION
Brief History & Basic Description Asahi was a direct result of the Dai Nippon split in 1949 by the occupation forces in Japan. Since Dai Nippon had been divided geographically, Asahi and Sapporo began as regional players, which quickly gave way for Kirin to reap the national market. Consequently, Asahi’s growth was hindered by lack of brand recognition and loss of distribution networks and relationships. Later, under accomplished leaders Murai and Higuchi, Asahi was able to improve distributor relationships and enhance its brand image. Asahi’s production consists of two primary products: draft beer and dry beer. Asahi used about 20% of its production capacity to produce draft beer while it used the remaining 80% of its capacity for Super Dry beer (1988). In addition to the beer business, Asahi is diversified through investments in real estate, and production of food items and pharmaceuticals, which accounts for 21.4% of total corporate sales.
Financial Situation With the tax ratio of 67%, Asahi’s ROA increased from 1.093% in 1986 to 1.384% 1987, indicating increased efficiency in asset use. As for liquidity, Asahi improved its current ratio from 0.892 in 1985 to 1.076 in 1987 Asahi would not easily go bankrupt due to short-term payments (at least in the short run).
Strategy & Structure of Ownership Innovation is Asahi’s primary competency. Its most notable innovation is the Super Dry beer, which became a