steinway & sons

Submitted to :

Prof. KAPIL ARORA

Submitted by :

Nishant Parmar

“Build the best piano possible, sell it with the lowest price consistent with quality.”

- Henry Englehard Steinway

COMPANY BACKGROUND

• Established in new york city in 1853 by Henry Engelhard Steinway.

• The co. had long been recognized as the leader in the market for the high-quality pianos.

• The firm had prospered very fast largely because of its technical excellence.

• After a year co. won gold medal at Washington for its square pianos.

COMPANY BACKGROUNDcontd….

• After another year co. won another first prize at NY industrial exhibition.

• The larger factory was constructed on Forth avenue in new york.

• This promotion helpful in opening steinway hall in 1866 which helpful for NY city’s major concert for many years.

COMPANY BACKGROUNDcontd…

• Henry died in 1879 leaving the leadership of the firm to his son William.

• William meanwhile consolidating & expanding operations.

• A London sales branch was opened in 1875.

• A new factory was built in Hamburg in 1880.

• William embarked on his grandest venture by purchasing 400-acre farmland on long island in 1871 to serve as the company’s domestic headquarters and sole U.S manufacturing plant.

• Construction of specially designed 100000th Steinway piano, presented to the white house in 1903.

In April 1972, the company made its most dramatic shift….

• In April 1972 co. became the member of CBS Musical Instrument Division.

• Which included fender guitars & amplifiers, Leslie speakers, Rogers drums,etc.

• In 1977 CBS appointed non family president till late 1978.

• Than CBS appointed peter perez (mba from indiana uni.)

• Capital spending at Steinway did increase substantially after company was acquired by CBS, from pre-merger levels of $1 lac annually to $1-2 million per year.

• A Steinway remained as company chairman – first Henry Z Steinway, president at the time of merger and latter John H Steinway, although day to day operating responsibility shifted to a CBS appointed president.

• CBS then appointed Peter Perez, an executive with extensive experience in the music industry as Steinway president.

• Peter Perez was “people oriented”

• He hoped eventually to expand company’s output by improving existing operations.

THE STEINWAY TRADITION

• Steinway pianos had been received enthusiastically by Knowledgeable musicians.

• In the late 1970s 95% of all classical music concerts featuring a piano soloist were performed on a Steinway ground.

• The company had followed the same basic principle throughout its history.

THE STEINWAY TRADITIONcontd…• All Steinways were still assembled by craft

methods ,with little use of assembly-line technique

• The long island plant produces 3500 instruments in 1980 in which 2000 grand & pianos 1500 verticals.

• At Hamburg plant produces 2000 pianos in which 1400 grand & rest were verticals.

• Skilled labor was employed throughout the process.

• Only the finest material were used.• Steinway relied on its own wood

technologist. • They brings their aid in purchase of millions

of dollars including Rosewood from Brazil, Mahogany from Africa Sitka spruce from Alaska.

THE STEINWAY TRADITION (Research & Development)

• R&D were also important at Steinway new methods, material ,design features often originated with the firm.

• Steinway concert service maintained a “bank” of pianos in cities across the U.S for the use of Steinway.

• Steinway was far better represented in the market for grand pianos not for vertical pianos.

• the R & D group had a budget in 1980 of $250000 and employed 10 engineers.

• It is collaborated with scientist at CBS technology centre on several other projects.

• Concert grants were only one model in the company’s product line.

• In 1980, grand pianos were offered in 5 sizes and vertical in 3.

• 27 product types were available.

PROBLEMS :

• In 1980 less than 2% of all pianos sold in US were Steinway vertical pianos.

• Co.’s position as a manufacturer of vertical pianos was less established . It is because of

limited production volumes, backlogs (arrears of work) were common.

In 1980 co.’s revenues were $50million,compared with piano industry total sale of $424million .co.’s pretax profit was near by only 15%.

THE MARKET AND COMPETITION

• In 1909 the total units produced was 3,64,545 in US. Production remained high during the 1920s.

• The decline of the production of 34,305 units during the great depression in 1933.

• years no.of unit sold including imports 1940 1,36,332 1950 1,72,331 1960 1,98,200 1970 1,93,814 1980 2,23,000(approximately)

THE MARKET AND COMPETITIONcontd…

• In 1977 there were 16 establishments whose primary business was the production of pianos.

• Total employed 4700 people. Wages paid to them $32.9million.

ABOUT PIANOS• Two segments of pianos 1) Grand pianos 2) vertical pianos• Grand pianos were larger & more

expensive • It generally possessed a louder & more

resonant tone.• The market for Grand was much smaller

than for vertical.

DOMESTIC COMPETITION

• Main two competitors

1) Baldwin piano & Organ co.(subsidiary of Baldwin-united co)

2)Kimball international (Austrian subsidiary)

Approximately 800 dealers involved domestically (including 140 of Steinway)

FOREIGN COMPETITION

• Yamaha & Kawai were two Japanese firms.

• In 1980 23000 pianos imported in u.s.

• Out of these 21700 were Japanese

• Yamaha total sales in u.s.was $1.5billion

nearly produced 250,000 pianos in 1980 most of them were vertical & baby grands

FOREIGN COMPETITION

• Production Process was highly automated.• Yamaha was only one piano makers in the

world to cast its own metal frames • The price of Japanese piano was quite

low.• In 1980 it was range between $ 2155 to

$4485 in u.s. (grand begins at $4900)• In 1980 Yamaha medium grand sold for

$6300 while Steinway's price at $10500

FOREIGN COMPETITION

• Both Yamaha and Kawai hope to overcome Steinway's dominance by devoting special attention to there top of the line vertical pianos ,designing for musical school and other institutional buyers

STEINWAY’S PRODUCTION PROCESS.

• Manufacturing operation at Steinway's divided into two parts

1) traditional woodworking operation related to furniture making

2) manufacturing and assembly activity peculiar to piano making. All were carried out at the firm’s 440000 sq.ft factory.

Within the factory 40% of the direct labor and 50% of the floor space were allocated to furniture making operation.

• 2 years were required to manufacture a Steinway grand – 1 year to dry the lumber and 1 year to actual manufacturing.

STEINWAY’S PRODUCTION PROCESS.

• Furniture making operation. after drying the furniture making operation

begins this include cutting piano case and sounding board building the firm for grand piano, and the fabrication of piano actions.

• Piano making operations. 1) Bellying –so called because workers both

concentrated on the heart of the piano and also perform many of this task while learning their stomachs again the rim of the piano was generally considered to the first of the piano making operation.

STEINWAY’S PRODUCTION PROCESS.

2) Stringing : it was extremely tedious work, involving the attachment of strings to pins and the hammering down of those pins, and operation requiring approximately 2hrs per piano.3) Finishing : After stringing piano move to finishing stage where grand and vertical piano were physically separated for the first time

• After the finishing stage –roughly akin to final assembly the various component of the piano were assembled into working instruments and then keyboard were fitted individually

STEINWAY’S PRODUCTION PROCESS.

4) Polishing : Finally the instrument move to the polishing, tone regulating and rubbing department there woods were polished and signed and key were clean, and most important, pianos were voiced

THE MODEL “K”

• The original version of model K, 50inch vertical piano ,have been produced by Steinways in the U.S from 1903 until the late 1920s.

• There were differences of opinion within Steinway about why the original line have been phased out, for it have been extremely popular and many knowledgeable piano technicians considered the model K the best vertical piano the firm had ever built.

THE MODEL “K”

• Steinways interest in reintroducing a 50inch vertical pianos was triggered by the action of others.

• They begins to thinks seriously introducing the 50 inch of upright of their own and their thought turned immediately to the model K. but the thinks move slowly there at Steinways. The possibility of reintroducing the model K was kicked around for 10 or 15 yrs with little real progress.

THE MODEL “K”

• Occasional difficulties appear in working up the new model K, for certain production practices had changed since the model was first produced.

• Once the part specifications had been drawn up, a year was spent building prototypes. Twelve prototypes were built in all. Unanticipated problems were ironed out at this time, and once the sixth or seventh prototypes had been completed, Steinways engineers felt that few bugs remained.

THE MODEL “K”

• All prototypes were constructed on the shop floor, rather than in a separate pattern shop.

• At each of the piano making operations the best worker had been singled out, and that stage of the model K’s production had been assigned to him or her.

THE MODEL “K”

• Annual production of 200 to 250 units was anticipated for the model K. prices were expected to be between $ 7000 and $ 7700 depending on the wood employee.

COMPETING ON THE EIGHT DIMENSIONS OF QUALITY.

A survey in 1981 nearly 50% of U.S. consumer believe that quality of U.S product has dropped during the previous 5yrs.more recent survey have found that a quarters of consumers are “not at all “ confident that U.S industry can be dependent on to deliver reliable products

EIGHT DIMENSION OF QUALITY.

• 1 PERFOMANCE.• 2 FEATURES.• 3 RELIABILITY.• 4 CONFORMANCE.• 5 DURABILITY• 6 SERVICEABILITY• 7 AETHETICS.• 8 PERCEIVED QUALITY.

PERFORMANCE

• Performance refers to a products primary operating characteristics

• For e.g performance of automobile includes traits like acceleration, handling speed and comfort

• Another e.g performance of piano includes clarity and pitch of sound

FEATURES

• It is a second dimension of quality that is often a secondary aspect of performance.

• Features are the bells and whistles of product & services ,those characteristics that supplement their basic functions.

• Example- free drinks on a plane ,permanent press cycles on a washing machine.

• A good quality of string to be used for a good sound.

RELIABILITY

• It reflects the probability of a product malfunctioning or failing within a specified time period

• The common measures of reliability is the duration between the first time of repair required, the mean time between failures and the failure rate per unit time.

• For eg. The maintenance required in automobiles tells about the reliability of that vehicle.

CONFORMANCE

• IT is the degree to which a products design and operating characteristics meet established standards .

• These specifications are normally expressed as a target or center ,deviance from the center is permitted within a specified range.

DURABILITY

• A measure of product life durability has both economic and technical dimension .

• Technical durability can be defined as the amount of use one gets from a product before it detoriates .

• Economic dimension includes the monetary feasibility of the product with respect to the buyers and sellers.

SERVICEABILITY

• Serviceability includes the speed, courtesy, competence and ease of repair.

• Companies differ widely in their approaches to complain handling and in the importance they attach this elements of serviceability. Some do their best to solve the complain and other find excuses to avoid this kind of serviceability