steinway_s strategic orientation

Steinway’s Strategic Orientation

Group 5Team Members:

Selene

Sabrina R48021053

Liz

Lee

Background

A pianodivision

Public in 1996

Taken private In 1985

First piano maker

About150 yearsold

Steinway εSons

Financial performance

Since going public

Revenues have grown a compounded 6-7% a year

EPS have grown a compounded 11% on average

Market situation

In 2002 Porduced more than 3500 pianos Sales $169 Million ↓7.6% compare to prior year

Because of General economic downturn

Diagnosing

The external Environment

The internal Situation

Piano’s segment

Grands pianos– Smaller– Higher-priced– 50,000 grand pianos were sold in 1995

Upright pianos– inexpensive– 550,000 upright pianos were sold in 1995

Piano Customers’ segment

Professional artists

Amateur pianists

Institutions, such as:– Concert halls– Universities – Music schools

Market situation and New opportunity

Upright piano sales about 90% to private (home) market

Grand piano sales about 80% to institutional customers

New markets in Asia is become important of the growth opportunities.

Competitor-Baldwin Piano and Organ CompanySteinway’s primary U.S. competitor

Offer a full line of pianosHigh-volume with upright pianosAlso makes handcrafted grand pianos

Good brand

over 700 dealers

Annual sales are about 100 Million

Asian

Several Asian companies have emerged as important competitors.– Young Chang and Samick ( in 1995)

Have 35% upright pianos market & 80% grand piano market (units)

Have 75% of global sales in 1995

– Yamaha Through continuous improvement to produce consistent

piano quality Yamaha has been able to compare and compete with St

einway.

Internal situation- The Steinway Organization

Boston (Less expensive)

Steinway

(High value)

Over 85% pianos are sold through their independent dealers

more than 200 dealers, and half are in North and South America

Have 7 Retails outlet America , England and German

Internal situation- Steinway’s important strategy

Play an important role in the “Concert band”– Provide over 300 pianos in more than 160 cities.– Invite the professor artists to become part of their

elite group.– The member of elite group could try any different

pianos and pick one for use in the concert hall but just need to pay for the bringing cost.

– Use the performer’s name for publicity purposes.

Internal situation- Challenge

Creating a Steinway concert grand piano– Art: more than 12,000 mostly handcrafted parts – Intricate: 120 technical patens, each instruments

is unique– Time consuming: about 2 years– Costing high: reject about 50% of the lumber

Opposed: – Takes only about 20 days to produce a piano– Only 3 major steps in the production process

Wood drying, parts making , piano making