Asahi Glass Company: Diversification Strategy Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Asahi Glass Company: Diversification Strategy Case Solution

Introduction:

This case is about the diversification strategy of the Asahi Glass Company. The Asahi Glass Company was established by Toshiya Iwasaki. The company was committed to contributing to Japan’s industrial success. With the strong passion commitment, the company had started the manufacturing of sheet glass in 1912 and became the first Japanese sheet glass manufacturer. The company used skilled labor, technology, and raw material from Belgium. There, acquired a dominant position in the market. However, during World War-II the company faced many ups and downs but still coped up with all the problems and the challenges they faced. The company started producing TV glass bulbs in 1954, due to the increase in demand for glass in Japan. They built a leading position for themselves in both the markets.

asahi glass case solution

Asahi’s Joint Ventures:

Furthermore, the company entered in another glass business and formed a joint venture in 1956 with Owens- Corning Fiber Glass Corp. after which they, started the production of glass fiber in Japan. In addition, the company had entered in the construction material business and had made a strong position in this segment of the market as well. Asahi Glass has increased its concern in the electronic business, as it acquired expertise in this area of business. The company’s electronics business was established in 1982.

Furthermore, the company intended to increase its attention in the electronics business. Therefore, it formed a joint venture with Komag Inc., which was a manufacturer of thin-disks in California. Moreover, the company further expanded its business by entering in the optical lens business.

The company increased its globalization and formed joint venture internationally. It has built a local sheet glass plant in India. Furthermore, it established its joint venture in Thailand and Indonesia with local partners, and increased its focus in the Asian markets as well. In order to get the insights about the European market, Asahi Glass bought Belgian and Dutch glass subsidiaries.

The company got global recognition in the automobile safety glass and TV glass bulb operations in 1970s and 1980s due to the transfer of Japanese production facilities first to Asian countries, and then later to US and Europe. However, in order to retain its position in the market Asahi Glass established its global operations for TV glass bulbs in Singapore and Taiwan. Moreover, in America the company formed a joint venture with Corning Glass Works. Asahi Glass also pursued globalization strategy for it s chemical business; and started the chemical production in Thailand in 1965. Afterwards, they expanded to Indonesia. Lastly, the company formed a joint venture with Tenneco Minerals in US, which was also its first joint venture in Asia’s chemical industry.

Problem:

Despite the successful diversification strategy, the company faced some challenges. Asahi Glass’s performance began to decline due to the slow growth rate of Japanese economy. Therefore, the expected sales and profit of the company declined for three consecutive years. The company was facing difficulties in coordination with the international overseas business. There was a need for higher coordination and integration between the business practices due to large-scale global operations. The company realized that there is need for greater integration to enhance its technological expertise. The integration of the company’s expertise was also a difficult task due to the difference in culture and management of various partnered firms. The management believed that changing the climate of organization would be challenging for the company. There was a deliberate need to bring innovation in the technology that could meet the customers’ needs. The management also had to decide the direction of the company that whether it should go for the divestment or investment in its electronics business....................

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Asahi Glass Company: Diversification Strategy Harvard Case Solution & Analysis