Asahi Breweries Limited Harvard Case Solution & Analysis

Asahi Breweries Limited  Case Study Solution

Recommendations:

Asahi Breweries Limited Company has received a very positive response from the customers for the company’s novel beer under the brand name “Dry Bear”, which is tastier and it was highly in demand in the market due to the differentiation and achieving first mover advantage under this category. The production capacity of the company requires a detailed investigation because the company was unable to meet the increasing demand of the customers in earlier years which affected the sales of the company.

It is recommended to the company to increase its production capacity by 1300 (000) KL of beer as compared to the capacity of year 1988 which will make the total capacity of the company to reach at around 2,358 (000) KL, so that it may be able to work effectively and efficiently in its operations.

The variable cost of the company would increase by 0.194 billion yenfor each additional capacity used, which will eventually result in the marginal cost of around 252 billion yen. The revenue will reach around 791.84 billion yen and the variable cost would be 76%, which will result in the contribution margin of around 190 billion yen.

Moreover, the company’s fixed cost is similar at around 189 billion yen, which will result in the operating profit of around 1.04 billion yens and it would result in the operating profit margin of 0.132% and this was converted into dollars with the exchange rate of 125 yen per dollar, which results in to the 8.34 million dollars.

However, the addition of 1220 in capacity would result in a loss of around 3.86 billion yens and therefore, this capacity would not be recommended because this will not be generating profits for the company.

Analysis:

Additionally, the forecast of the company was very optimistic because, the company had increased its capacity a lot, which would result in increased inventory cost for the company due to the higher holding cost. Moreover, the life of the beer is very short, which restricts the company to produce the beer in a quantity which does not result in the obsolete inventory because it is recommended to prefer more fresh beer by the customers.

 

Asahi Breweries Limited Harvard Case Solution & Analysis

 

Market Characteristics:

Furthermore, the market is very much fragmented but, the trend of the market is not changing with the passage of time, which results in the adaptation in the consumer’s preferences. Hence, they would love to prefer the novel brand of product, which shows more benefits and freshness and attract the customers more by creating a better brand positioning in the mind of its customers.

The purchase behaviour of the consumers is changing and moving to the latest products, which shows some differentiation and satisfies their needs. They would like to see the benefits and the show loyalty towards a brand, which keeps on improving its packaging and introducing innovative products with the passage of time...................

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