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Suntory
A Case Analysis
Pursuant to the requirements of the Course MM201 (Fundamentals of
Management), this Case Study entitled Suntory is presented to the
Faculty of the Institute of Management, College of Social Sciences,
University of the Philippines Baguio on November, 2017 by Nina Dee
Bartolo, June Dominique Catalan, Allen Ferras, Daisy Longdahon,
and Greece Palasigue.

MM201
Institute of Management
University of the Philippines Baguio
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SUNTORY

I. OVERVIEW OF THE CASE

Suntory is a wine company located in Japan. One of its products is branded as

Royal 60 Whiskey that targets the urban, upper-middle-class Japanese manager. Part
of Royal 60s distinctive product image was its packaging, which included a ribbon-
fastening-cap to bottle. It was a distinctive feature not found on most domestic or
imported brands of whiskey. This ribbon was perceived to make the whiskey more
European by implying an association with European brandies and cognac which was
similarly packaged.

The Marketing department forecasted that there will be a dramatic growth of the
product line in the next two years. With this, Mr. Tanaka, Production Manager, knows
that they need to prepare as early as now to ensure that they will meet the demand.

Production of the whisky was fairly standardized as it undergoes through a series

of semi-automated to automated steps. The only manual process that they are doing
is the ribbon-tying - the most labor intensive step in the entire production process.
While there is no major problem right now, scrutinizing the product deeply shows
various executions of the ribbons, which weakens the overall bottle appearance. The
knot variation was the result of workers inexperience, fatigue, and occasional
workers inattention. Automate the ribbon tying process and additional workforce
was suggested by the production research department but this entails quite a huge
budget to fund this.

On the other hand, Quality Control recommended the use of pre-glued ribbons;
however, quality was not also guaranteed. New concerns such as excessive glue on
the ribbons, workers complain on the dried glue on their hands, carelessness during
product transfers, and even the ribbon material used.

II. IDENTIFICATION AND EVALUATION OF PROBLEMS

Based on the case of Suntory presented, several problems were identified which
affected the quantity, quality, and actions in the workplace of Suntory. The problems
identified are presented as follows:
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1. Production Quantity

a. Limited Production Capacity that Led to Inefficiency

With the rapid increase of demand, Suntory needs to gear up and implement a
more efficient process. It is found that the tying process delays the speed to market.
This questions the efficiency for Royal 60 Whiskey. With this, the company must
immediately do something about the existing process in the most efficient manner to
deliver and respond to demand.

According to Goh (2013), to be efficient is by performing or functioning in the

best possible manner with the least waste of time and effort. With the current run
rate of production, it is clearly seen that theres a need to simplify the process.

b. Budget Limitation

Budgeting can contribute significantly to greater efficiency, effectiveness, and

accountability in the overall management of an organization's financial resources.
(Steiss and Nwagwu, n.d.).

As the demand increases, higher productivity is required. This can be achieved

easily if fully supported with tools and resources needed. However, the senior
management of Suntory is not inclined to release additional budget to fund the
automation of the ribbon-tying process. With this, it resulted to disappointment and
erosion of the supply demanded.

2. Production Quality

a. Lack of Total Quality Management (TQM)

Total Quality Management (TQM) is a method by which management and

employees can become involved in the continuous improvement of the production of
goods and services. (Hashmi, 2017). This ensures that the product will be in the best
level of quality possible as it reaches the consumer.

Upon unraveling the case of Suntory, it was seen that the whiskey company did
practice a sense of quality management- they made sure that the whiskey would be
at a certain quality and that the processes should be followed. However, theres no
standard ribbon configuration. Despite of the established tying procedure, there are
still differences in knot sizes.
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b. Lack of Monitoring and Control

The whisky bottles with different ribbon ties produced is a clear sign that there
was a lack in the monitoring and controlling stage. Packaging is recognized as an
integral part of modern marketing operation, which embraces all phases of activities
involved in the transfer of goods and services from the manufacturer to the
consumer, (Cavusgil, 1993). Apart from making the product stand out, the packaging
should also be able to withstand damages during shipment from the manufacturer to
the stores. During the survey of line workers, an identified problem was on the ribbon
quality, workers also complained about the appearance of the ribbons which seemed
to have been crushed during transportation.

3. Actions in the Workplace

a. Poor Employee Staffing

Staffing is about putting the right people with the right abilities in the right place
at the right time. This would mean that choosing the best people for a certain task
can lead to the best possible results and create a positive impact on the effectiveness
of the organization. Having said that, staffing will help in improving the quality and
quantity of the overall output of the product.

In the case of Suntory, however, productivity varied from employee to employee

due to inexperience, fatigue, and workers inattention:
Inexperience Suntory deployed unprepared workers to
facilitate the tying process
Fatigue Manpower is stretched to meet the target and cope up with
the demand
Workers Inattention Caused by lax environment and lack of standard
procedure

b. Inadaptability to Change

Changes are inevitable and not always controllable. What can be controlled is
how you manage, react to and work through the change process. (Kelly Morgan)

As stated earlier, the senior management is not inclined to provide additional

budget to fund the new machines and add manpower. It can be assumed that the
senior management would want the traditional way to maintain its brand image.
However, with the changing market, management should accept the fact that they
need to find new ways to increase productivity and one of the possible solutions is
by doing adjustments to the current process.
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c. No Extensive Research and Specification Regarding the Forecasted Demand

The main advantage of any research conducted in the business is to help in the
decision making process, which is important for business growth, its associates and its
customers.

With no concrete data or formal research about the growth of Royal 60, Mr.
Tanaka will not be able to plan successfully. The lack of data will hinder proper
decision making since he has limited information to support the claims from the
marketing department. According to Akram (2015), The main advantage of any
research conducted in the business is to help in the decision making process, which is
important for business growth, its associates and its customers. With proper
research, Mr. Tanaka will be able to decide on what will be best for Suntory.

d. No Continuous Planning in Meeting the Forecasted Increase of Demand

The number of workers is enough as of the moment but with the increasing level
of demand, the level of output will not be sufficient in the long run. Management
would need to create another plan or strategy in order to meet the forecasted
demand.

With this, a need for continuous planning is necessary. According to Lahiri (2016),
Planning is a never ending process. When forecasts are available and premises
established, a number of alternative courses of action are taken for consideration.

III. IDENTIFICATION OF THE MAIN PROBLEM/ISSUE

With all of the problems raised above, it is apparent that the lack of Quality
assurance and Growth strategy is the main issue.

The growth of Royal 60 must not be undervalued since its productivity determines
the organizations profit and survival. Planning is needed to set and establish standard
processes and get people to achieve productivity then realize results. Control is
important to monitor performance, to be able to detect irregularities and errors then
take corrective action as needed, increase productivity, and facilitate teamwork. TQM is
essential for continuous quality improvement, training and customer satisfaction.
Principles of people orientation and improvement orientation are truly beneficial.

In this particular case, planning, controlling, and TQM are vital. Meticulous
scrutiny should not be forgotten. As such, the ribbon tying may be the last process before
shipping but this does not mean that minimal attention should be given. Note that this is
the bottle's distinct feature. While there are several ways presented to improve the
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ribbons, the following must be addressed immediately to ensure that the company can
successfully adapt to drastic growth:

a. Establishment of standard ribbon configuration and process. This must be

cascaded downlines and ensure proper training and adherence to process;
b. Control mechanisms should be undertaken before product dispatch to ensure
overall product quality;
c. Create an open line of communication to get immediate feedback from all
stakeholders. Involving employees can bring validity to the process and enhance
employee morale.

IV. ALTERNATIVE COURSES OF ACTION

The following alternative courses of action is also suggested to arrest the current
hurdle and prevent the bigger problem in the future:

1. Production Quantity

a. Establish standards and quotas and other types of incentive plans to ensure
motivation and productivity

Meeting the demand of the consumers leads to compromising of their time

and health. Positive employee engagement leads to a psychological climate,
cultural attitude, and set of employee behaviors that positively impact an
organization from top to bottom (Kataria, Rastogi & Garg, 2013). By establishing
standards and quotas, employees will be pushed to work harder in order for them
to reach or exceed their quota and maintain the specified standard set. With this,
there will be an increase in productivity since these employees will be driven to
reach or even exceed the quotas and standard set for Royal 60.

For manufacturing and mechanical jobs, the inclusions of benefits such as

health benefits and incentives for employees who cross certain performance
thresholds motivate them to work harder. Meanwhile, the management should
also set appropriate and realistic goals but at the same time provide them with
necessary training and tools to enable them to reach the quota.
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b. Acquisition of a new machine for the ribbon tying process

Since the ribbon tying process is deemed as the most labor intensive stage of
the production of the Royal 60 whiskey, it is suggested that a new machine may
be purchased to make the production process faster and the end product
consistent. It may entail necessary budget in the beginning but this would
provide savings for the company in the long run since Suntory doesnt have to pay
for monthly wages/and salaries of the employees and at the same time producing
more goods.

c. Increase the price of the product

With the plan for redesigning of the package, new expenses may be incurred
for future plans to be implemented. It is necessary to increase the cost of the
product to provide funding if these plans will be started. It will generate more
income and will suffice the expenses allocated for the newly acquired employees
or for the newly acquired machineries. The price increase may be done in stages
that will be tolerable for the consumers. Since there is a forecasted high demand
in the upcoming years this may cause buyers to be willing to pay for a price to get
the product.

This could lessen the number of buyers because customers will be

discouraged to buy. The law of demand and supply states that If a price for a
particular product goes up and the customer is aware of all relevant information,
demand will be reduced for that product.

2. Production Quality

a. Redesign the packaging

By changing the packaging of Royal 60, Suntory may find a more attractive,
cheaper, and faster packaging that will still be able to be patronized by its
customers. This will allow the company to also rebrand their product and offer
it to more market segments. It may also include biodegradable packaging and at
the same time have effective marketing promotions that would help push in
brand awareness.

It is the packaging of Royal 60, particularly the tying of the ribbon distinctive
which separates Royal 60 from other variety of whiskey. Therefore by changing
the packaging, it may create confusion with their market since they have grown
accustomed with the original packaging.
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b. Reorganize the production line in a more efficient manner

As mentioned in the case, the differences in the ribbons are due to

inexperience, fatigue, and worker inattention. It can be inferred that this is would
mean that the employees are not organized in the most efficient or effective
manner.

In order to increase productivity, reorganizing the production line may have

to take place. By properly assigning employees on areas based on their strengths
and capabilities allows them to work to the best of their ability, thus increasing
productivity.

c. Conduct intensive performance evaluation to correct the employees output

One of the major thrusts of TQM is continuous improvement of the process.

By means of learning from past experiences, improving delivery, planning, and
allocation of resources is part of the accountability to stakeholders. Although
feedback from external customers have not been established, monitoring and
tracking of the previous output made by the employees through final inspection
of the product prior to shipment should also be looked into. A quality
improvement team may be made. This is to ensure that quality of goods and
efficiency is maintained- at par with standards prescribed by the senior
management.

Although this may require money and time consuming since regular
meetings/ focus group discussions need to be held regularly, this is necessary to
attain zero-defects on the final product.

3. Actions in the Workplace

a. Conduct of training and development for the employees.

As previously mentioned, the Violets (which consisted of eight workers on the

ribbon-tying line ranging from 19-56 years, with an average age of about 37 years
and discuss ways to discuss productivity and the quality of the final product) are
able to participate and communicate challenges that are encountered in the
ribbon-tying process and are encouraged to come up with steps that to make the
process seamless and at par with standards.

Since they are hands on, their feedback and insight is valuable in creating a
training design for the employees who are inexperienced, fatigued, and lack
attention. Their individual experiences provide an opportunity to collaborate and
communicate bottlenecks that they have encountered and may be incorporated
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during their training. The conduct of training will give the employees direction,
thus motivating them and giving them a goal to attain.

V. Recommended Courses of Action

To ensure overall product quality, the following courses of action is

recommended:

a. Establish standards and quotas and other types of incentive plans to ensure
motivation and productivity;
b. Conduct Intensive performance evaluation to correct the employees output;
c. Conduct of training and development for the employees.

In order for proper implementation of the solution provided, an overview of the

processes and discussion on the steps to be taken is presented as follows:

1. Spearhead a Focus Group Discussion that tackles various ways and strategies to
simplify the ribbon-tying process. Involve key employees from Marketing,
Production, QA, Finance, and Management. The objective of the meeting is to
enlighten every department regarding the needs of the process. Every change of
plan involves budget and the participation of the marketing department for their
opinion is highly needed and an assessment if the production team can work with
the changes to be identified and agreed for its effectivity.

2. Agree and establish a Standard Operating Procedure, ensure cascading, and

training of workers. To ensure the uniformity, and quality of the product, we
suggest that instead of eight steps, marketing will strategize to make the steps to
four.

3. Frequently revisit the business plan and create a road map for the next stage of
the business.

4. Set up a specific standard for the processes but must finish the required quality
and quantity within the time allotted. Intensive performance evaluation to correct
the employee who doesnt perform very well and send them to a training
program and a reward for those who meet the standards set by the organization.

5. Set up a meeting with the marketing, production, QA, Finance, and management
wherein the discussion will be the changing of ribbon into a customized wine
bottle neck bow tie. Aside from being simpler, the work pressure is minimized and
the product still maintains its sophistication. Acquire some sewing machines and
train the production team.
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VI. Plan of Action

The following steps shall be done focusing on 4S approach: Strategic planning,

Standardization of process, Stimulation of innovation through training and development, and
Staffing and recruitment. The table showing a detailed procedure is presented as follows:

Goal Objective Activity Responsible Duration

External Resource
Review current environment, identify
To understand the current / Functional
the needs and provide tools to adapt 1 week
SWOT of the organization Management
to change
Strategic Team
organizational Target setting:
Quarterly
planning - Target based on trend Management team
& Annualy
Provide business direction - Stretched and Operating target
Regularly check the business plan and As
Management team
create a road map required
Involve key
To have a consistent and Spearhead a Focus Group Discussion employees from
formal way of doing that tackles various ways and Marketing,
1 week
business; Clarification of strategies to simplify the ribbon-tying Production, QA,
Standardization of
the ways of working process. Finance and
Process
Management.
Key personnel;
To ensure alignment Regularized alignment and check As
immediate work
amongst stakeholders point meetings required
group
To align the employees Conduct a product orientation and
Stimulate
with the company's Brand skill training
innovation,
positioning and strategies Human Resource
Promote Training Ensure the effective learning between
Department & Quarterly
& Development the manager and subordinate through
To encourage employee Functional Teams
Programs in the various internal training/development
participation during
Organization sessions (e.g. one-on-one coaching,
brainstorming
group discussions)
To ensure that they hire Attract job-seekers through various As
Staffing/ Human Resource
the best-fit talent possible hiring platform; required
Recruitment and Department &
and identify high potential
selection Consistent monitoring of employee's Management
employees Quarterly
productivty
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I. REFERENCES

Akram, Hamza. (2015). Function of Business and Management Research. Retrieved

from: https://www.linkedin.com/pulse/function-business-management-
research-hamza-akram-msm-mba. Retrieved on: November 5, 2017

Casuvali, S.T., (1993), Preparing for export Marketing, International Forum, Vol. 2
pp. 16-19.

Goh, Gareth. (2013). The Difference Between Effectiveness and Efficiency Explained.
Retrieved from : http://www.insightsquared.com/2013/08/effectiveness-vs-
efficiency-whats-the-difference/. Retrieved on : November 5, 2017.

Hashmi, Khurram, (2017). Introduction and Implementation of Total Quality

Management. Retrieved from : https://www.isixsigma.com/methodology/total-
quality-management-tqm/introduction-and-implementation-total-quality-
management-tqm/. Retrieved on: November 1, 2017.

Kinicki, A., Williams, B. (2016), Management, A Practical Introduction, Seventh

Edition.

Lahiri, Prapanna. (2016). Importance of Planning as a Management Function.

Retrieved from:
https://conceptresearchfoundation.com/2016/01/08/importance-of-planning-
as-a-management-function/. Retrieved on: Novvember 5, 2017.

Steiss, Alan Walter and Nwagwu, Chukwuemeka. (n.d) Financial Planning and
Management in Public Organizations. Retrieved from: http://www-
personal.umich.edu/~steiss/page22.html. Retrieved on: November 5, 2017.