Steinways Strategic Orientation

Group 5
Team Members: Selene Sabrina R48021053 Liz Lee

Background
About150 years old

A piano division Steinway Sons

First piano maker

Public in 1996

Taken private In 1985

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

Pianos 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 Company Steinways primary U.S. competitor

Offer a full line of pianos High-volume with upright pianos Also 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 Through continuous improvement to produce consistent piano quality Yamaha has been able to compare and compete with Steinway.

Yamaha

Internal situationThe Steinway Organization

Steinway (High value)

Boston (Less expensive)

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 situationSteinways 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 performers name for publicity purposes.

Internal situationChallenge

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

Opposed:

Wood drying, parts making , piano making