re: Regards

[Clarice Ma]

Dear all,

It has been a wonderful learning experience from the past two
semesters that was out of my imagination, and I have not only survived
but changed to become a better classmate and person, perhaps future
leader?

I am sorry to inform you that I will be changing group in the coming
semester. The 20 month program is short. I hope for the time we have
left, I can continue to get to know you.

Carrie, I heard a lot of good things about you from many others. I
look forward to working with you in any future projects if possible.

I have finished the Asahi case and came up with possible solutions to
share with you. I did a little research on Japanese business culture
and history and found it very interesting as well (file attached).

Best Regards,
Clarice

#1.
P.24 – Kirin effectively identified market trends
p.24 – Kirin leveraged on its quality image and consumers’ brand
loyalty to lock up its commanding position.
P. 24- Kirin developed extensive distribution network – targeted home
consumption market.
p. 25 – Kirin developed substantial economies of scale to the brewing process
p. 25 – aggressive expansion of production facilities
p. 25 – developed it pasteurized lager beer to become industry standard

#2.
2a) p. Although business people tended to choose Kirin since consumer
preferred to stick to one brand if they could, but extensive damage of
infrastructure might not have helped much on business travel.
2b) p. 24 Kirin market share was 25.3% in the total market share, with
merely 25% market share after the wall, Kirin might not have much
economy of scale advantages.
2c) p. 26-27 For Asahi, breakup of Dai Nippon was a destructive force.
Asahi inherited factories, brand, and distribution channels in Western
Japan (p.24). For example, Asahi brand was not sold in Tokyo and
Sapporo was in the same position. As a result, Asahi went into a long
period of decline. The task Asahi needed to create was the marketing
channel from scratch in eastern Japan to increase sales volume…

#3. Kirin’s competitive advantage includes Customer brand recognition,
industry standard, Quality, Channels (distribution networks),
Innovations and Finance (assets accumulated).
See page 223 ch. 8 - text book

#4. P.25 – Kirin thought they had secured their leadership through
lager sales, therefore unwise to commit nonlager product. P.33 - Kirin
ignored it stating that it was a niche and fad item.

5. p.40 – market share from 10.5% to 20.6% based on sales volume.
Introduction of superdry product after numerous market research – due
to better engineer team and new management/leadership. P. 30 Because
Asahi was at the edge and they could not continue to do nothing and
kept losing. Asahi could bet it all.

6. Pros – p. 33 1. Currently fail to live up distributor’s
expectation, full manufacturing capacity could secure market dominance
in dry beer market to further evidence dry beer can be a stable and
growing market segment. 2. Economy of scales
Cons – P.34 1. Growth problems internally, i.e. shortage of sales and
adm. staff. External problems with distributors, i.e. limitation on
physical capacity. 2. Huge commitment of investment in production
capacity, not a huge return on net profit (p.35) kirin has impressive
net profit based on its sales volume compared to Asahi.

7. Recommend to not go all the way to 2.1 M over two years, but a 3-5
year plan commitment. Given the Japanese culture, which banks and
companies are closely linked (zaibatsu), and stocks are preferred to
be issued within its current stockholders; should economy downturn
hits, firms would be hard hit when large shareholders do not hold
diversified investment portfolios. It would also be a huge financial
burden to keep thousands of additional employees they plan to hire
temporarily and permanently for this expansion. Combination of funding
would be a more preferred method, issued stocks through rights and
bonds over the proposed plan to raise new funds.

Note:
According to the US financial Crisis: Lessons From Japan published by CRS Report
for Congress...Japan's Nikkei stock market average peaked in 1989 at
40,000 and dropped by 50% in one year and more than 2/3 to about
12,000 by 2001. Although this info was not part of the case, but the
risk factor is so significant for the commitment of the production
capacity in terms of dollar amount of investment.

http://history.state.gov/milestones/1945-1952/JapanReconstruction

MacArthur also tried to break up the large Japanese business
conglomerates, or zaibatsu, as part of the effort to transform the
economy into a free market capitalist system.
By late 1947 and early 1948, the emergence of an economic crisis in
Japan alongside concerns about the spread of communism sparked a
reconsideration of occupation policies. This period is sometimes
called the "reverse course." In this stage of the occupation, which
lasted until 1950, the economic rehabilitation of Japan took center
stage.

http://www.gsid.nagoya-u.ac.jp/sotsubo/Postwar%20Development%20of%20the%20Japanese%20Economy%20(Prof.pdf

Priority Production Strategy
In 1946, high inflation persisted despite a contingent measure
restricting surplus purchasing power. To rapidly reconstruct the
economy despite shortages of commodities and investment funds, the
government in 1947 implemented a strategy to concentrate resources in
priority industrial sectors such as steel, coal mining, electricity,
shipbuilding, marine and railway transportation, and chemical
fertilizer. Industrial production rapidly recovered from 31% of the
pre-war level in January 1947 to 80% of that level, in April 1949.

Favorable External Conditions
The Korean War, which broke out in 1950, resulted in high military
demand and triggered rapid reconstruction of the Japanese economy. By
1952, Japan restored the
real GDP level to a level comparable with that of 1935. After the
Korean War ended (1950-53), the Japanese economy fully benefited from
the sustained development of the world economy…