ASAHI BREWERIES EXPANSION PLAN

A Case Study by Group 7:

Yogesh Rajadhyax
Dinesh Patel

B.P. Sharma
Kosuru Ramesh
Sajesh T.V

Ganesh. R
20th October 2012

CASE FACTS
ASAHI BREWERIES had a very conservative market, depended too much on
personal relationships, malfunctioning of their management control system,
retrenchments and distrust among employees. All these changed when Mr. Murai
and his successor, Mr. Higuchi came in as President.
Mr. Murai has Administrative style followed more of the corporate strategy. He

formulated an explicit company credo and created functional task forces, which are
Corporate Identity Introduction Team and Total Quality Control Introduction Team.
During his tenure, the company was able to think of a new image and a new taste
Asahi draft.
Mr.Higuchi has Entrepreneur style followed more of the economic strategy. Sales
was his responsibility. He involved in the launching of the Asahi draft and the super
dry with Focussed cost leadership ( i.e. Innovation & volume )

CASE FACTS
ASAHI BREWERIES, 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 only 7.6%. Asahi cannot supply further the

requirements of its distributors resulting in shortages.

In order to expand its production capacity, the company should invest more on
manufacturing equipment and systems to maintain its quality, construct buildings,
hire more employees and provide them with training programs depending on the
companys market research.
The characteristics of the beer industry were divided into 2 kinds lager beer & 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.
Asahis dry beer was classified under draft beer.

Growth Strategies - 3 options

First, to maintain the present capacity at 880,000 kilolitres.

Second, to expand from 880,000 kilolitres to 2,100,000 kilolitres.

Third, to expand from 880,000 kilolitres to less than 2,100,000 kilolitres depending
on the market.
It is recommended that the company expand its production capacity from
880,000 to 2,100,000 kilolitres

FINANCIAL RATIOS
Current Ratio

25

1.4
1.2

20

Return On Equity
15

0.8

Return On
Capital Employed

0.6
0.4

Current Ratio

10

0.2

Gross Profit
Margin Ratio

0
Asahi

9
8
7
6
5
4
3
2
1
0

Kirin

Sapporo Suntory

Price Earnings Ratio

Total Assets
Turn Over
Fixed Asset
Turn Over

45
40
35
30
25
20
15
10
5
0

Price Earnings
Ratio

Asahi

Kirin

Sapporo Suntory

Page 5

MARKETING STRATEGY
Value based marking
Business to Consumer (B2C)

Understanding
Value of
Customer

1. Tapping the
untapped area
2 Strengthening all
distributions channels /
suppliers
3 Launching new
innovative products

Creating Value

1 Changing corporate
image
2 Promotions and
focus on
advertisements (11%)
3 Improvement in
efficiency of dealers &
supply chain.

Delivering Value

1 Introduction of new
taste - SUPER DRY
2 Reputation.
3Continous qyality
improvement to fulfill
customers need.

ATTRIBUTE MAPPING
6

Asahi

Kirin
1

0
Availability

Price

Quality

Reputation

Location

Service

Taste

SWOT Analysis
Strength

Weakness

Dominant Market Position

Poor Liquidity Position

Wide Product Portfolio

Limited Geographical Location

Opportunities

Threats

Partnerships & Acquisitions

Trends in Control of Alcoholic

Beverages

Growth in Global Spirits

Market

Stringent Govt. Regulations

NARROW OR LOCAL MIND

BASE

BROAD MIND BASE

Positioning

COST BASED LEADERSHIP

FOCUSED COST
DIFFERENTIATED
LEADERSHIP

COST BASED

FEATURE BASED
LEADERSHIP

FEATURE BASED
DIFFERENTIATED
LEADERSHIP

FEATURE BASED

THREAT FROM COMPETITORS

1 KIRIN called board meeting to decide to launch of new beer
to retain the leadership in the market
2 To strengthen the Distribution and retailer channels
3 Sapporo launched new draft beer FUYU MONOGATARI
with new sensational taste

CASH FLOW ANALYSIS

1987

1988

1989

1990

Fixed Assets

89.324

150.924

238.924

353.324

Net Working Capital

12.346

20.746

32.746

48.346

Revenues

345.1

545

780

1000

Depreciation

15

30

Profit before tax

tax

Profit after tax

2.5

4.8

Initial outlay

101.67

70

100

130

Operating cash flow

7.5

12.8

21

37

10

terminal cash flow

11

net cash flow

94.17

57.2

79

93

12

Share holder equity

79.85

103.18

136.52

179.85

9.4

Page 11

NET PRESENT VALUE

Cash
Flow

Year

Discount Present Investme

Factor Value
nt
Equity

Debt

8.0%

5.2%

1987

-94.17

1.00

-94.17

103.55

79.85

23.7

1988

-151.37

0.94

-142.62

70

23.33

46.67

1989

-230.37

0.89

-204.51

100

33.33

66.67

1990

-323.37

0.84

-270.49

130

43.33

86.67

DEBT EQUITY RATIO Considered as 2:1, since 100bn

taken as equity from market.
Page 12

FINANCIAL RATIO

Year

Cash Flow

Return on
Equity

Return on Capital
Employed

1987

-94.17

3.1

0.9

1988

-151.37

4.7

2.8

1989

-230.37

4.4

2.2

1990

-323.37

3.9

2.1

Page 13

FUTURE SUGGESTED STRATEGIES & COUNTER PLAN

1. Product Punch
2. Sufficient stock availability to be maintained and make
more solid supply & distribution chain
3. Reduction in overhead and contingencies
4. Add new flavors to the market taste The Super Dry within
6 months
5. Different sizes of packings of same brand
6. Shopping Happy Hours
7. Appointment of semi dealer chain who will work on
commission basis. (Till product stabilization)
8. Min stock balance status ( at central godown ) to supply to
shortage zone.

Thank You.