Operations Assignment.

Introduction-
In late 1994, Steinway and Sons was yet again a company on the market to be sold. For their own

personal reasoning, the Birmingham brothers decided to sell the piano manufacturer. On April 18, 1995 Kyle

Kirkland and Dana Messina, already controlling multiple firms, decided to make the purchase. The investment

bankers purchased the New York piano manufacturer for an incredible $100 million.

Summary-

Steinway pianos have long been well received by knowledgeable musicians, an estimated 90% of all

classical music concerts featuring a piano soloist in a year is said to have been performed on a Steinway

concert grand piano. In institutions such as Juilliard, Oberlin and other renowned music schools own in

more than 100 Steinways and an addition to the professional and institutional markets, Steinway also

sold to affluent individuals for private use.

The reason for this immense popularity is because throughout history, little has changed in the process
of how a Steinway piano is assembled. Skilled labour is emphasised with all products being assembled
by craft methods, with limited use of assembly line techniques. On average, many of the craftsmen
employed by Steinway have worked with the company for about 15 years; some even second or third
generation employees. In fact, the total time spent on preparing the lumber for production and
physically assembling the more than 12,000 individual parts would take almost two years. As a result,
production volumes always remained small, with both their factories producing only around 3000 pianos
per year, unlike their competitors such as Baldwin who focused on high-volume strategies produced on
a large scale in highly automated production facilities but still made use of craftsmen on their concert
grand pianos and Yamaha whose products were all produced using assembly-line techniques. With
technology and information readily available to improve the efficiency of their production line and
increase productivity, Steinway chose not to erode the quality and value of its pianos by switching to
automated production lines. Technical excellence played a far greater emphasis with the firm taking out
over 120 patents in piano making over the years.
Steinway believes in building the best piano possible and maintaining the quality of its product. The
material used to produce their pianos are of the highest grade, the company sourced and uses over seven
species of lumber and nine exotic veneers. Very high quality control is enforced in the selection criteria
of the lumber. Every Steinway was made the same way, by the same people, with the same process. Yet
every Steinway still ended up being a little different from every other Steinway. Each one had a unique
sound signature. The signature was in the nuances of the tone, the coloration of the notes, and the
strength of the voice. The sound and touch gave each Steinway its own personality. The immense
attention to detail has also contributed to the legendary sound and durability of a Steinway, becoming
one of its most iconic features. These are some of the key features that make Steinway stand out from
their competitors.

They chose to position themselves in the niche, affluent market and a typical buyer of a Steinway piano
was over 45 years old, had an annual income in excess of $100,000 and had a serious interest in music.
The typical buyer of a Boston was five to 10 years younger and was slight less affluent. Their strict
adherence to quality is to best suit their target market are informed and discerning individuals with taste
and class.

The Piano Industry

There are only a few companies that can compete with Steinway & Sons in the piano industry. These
companies include: Yamaha, Kawai, Baldwin, Fazioli, and Bosendorfer.

Yamaha is a producer in Japan. They manufacture not only piano's, but also boats, motorcycles, and est.
Yamaha had $1 billion in piano sales, 35% of the world's piano market, making it the world's largest
manufacturer of pianos. In the past, along with some smaller grand pianos, they have preferred to place
their emphasis on vertical pianos.Instead of their mass manufacturing, they had never really been
recognized for their quality, but they came out with their piano named the Yamaha Conservatory CF
Concert Grand in 1967. Their main aim of producing this piano was to attempt to compete with the
well-known grand pianos of Steinway. They advertised it as the "finest concert grand piano in the
world." To attempt to compete with Steinway, they used benchmarking. In order to allow their engineers
to separate and reassemble their pianos to try to copy their renowned standard, they bought Steinway
pianos. In the manufacturing process of the CF Concert Grand, they used stronger materials as
well.Yamaha claimed that the same materials used in the Steinway were used by them. Another tactic
they used to try to compete with Steinway was to start an artist programme such as the one that involves
Steinway. They gave some well-known musicians their pianos to use in performances around the world.
In the high-end piano market, Yamaha is making leaps and bounds to catch up with Steinway.

Kawai is another Japanese business which offers us competition. They manufacture about half as many
pianos as Yamaha, but they still provide competition from Steinway. They are known for making
vertical and tiny grand pianos of decent quality. Kawai tried to do the same thing Yamaha did and enter
the market for concert grand piano, but people questioned their product's consistency. It had a strong
base but lacked depth, they said.

Baldwin Piano and Organ Company is the United States' largest large-scale manufacturer of vertical and
grand pianos. They were founded in 1862 and are still the only company in America that produces high-
quality grand pianos.

The last two rivals are Italian-based companies which concentrate on high-quality grand pianos. Instead
of mass manufacturing like the Asian rivals Bosendorfer and Fazioli, they make their pianos handcrafted
and of high quality, just like Steinway. Together, in 1994, they sold fewer than 500 hundred pianos. For
Bosendorfer and Fazioli, which are regarded as the highest quality pianos on the market, this emphasis
has performed extremely well.

SWOT Analysis-

Strengths

 Steinway and Sons have an established brand reputation of quality and durability
 There are minute differences between the sound of each crafted piano which allows for
differentiation and customization of the product
 The Steinway Concert and Artist program has around 850 artists whom choose the Steinway and
Sons piano
Weaknesses

 The durability and quality of their products limits the concept of repeat buyers and brand loyalty
 The average customer is over 45 years old and earns in excess of $100,000/year
 With the introduction of the Boston piano line, Steinway and Sons’ image took a step away from
tradition
 Growing technology and innovation has taken toll on traditional pianos; they have been replaced by
keyboards and other computer technology
Opportunities

 Establish a larger customer base in Asia to increase market share

 Steinway and Sons could increase their industrial market by offering discounts to universities or
concert halls and/or being more customer service oriented
 Using innovative technology, Steinway and Sons could potentially increase markets by appealing to
lower and middle class purchasers with low to mid-priced products
Threats

 With the expansion of Asian manufacturers, global market share is no longer being controlled by
American manufacturers
 There are levels of inexperience of the current younger owners/CEOs

Problem Statement-

There are only a few companies that can compete with Steinway & Sons in the piano industry. These
companies include: Yamaha, Kawai, Baldwin, Fazioli, and Bosendorfer.

Yamaha is a producer in Japan. They manufacture not only piano's, but also boats, motorcycles, and est.
Yamaha had $1 billion in piano sales, 35% of the world's piano market, making it the world's largest
manufacturer of pianos. In the past, along with some smaller grand pianos, they have preferred to place
their emphasis on vertical pianos.Instead of their mass manufacturing, they had never really been
recognized for their quality, but they came out with their piano named the Yamaha Conservatory CF
Concert Grand in 1967. Their main aim of producing this piano was to attempt to compete with the
well-known grand pianos of Steinway. They advertised it as the "finest concert grand piano in the
world." To attempt to compete with Steinway, they used benchmarking. In order to allow their engineers
to separate and reassemble their pianos to try to copy their renowned standard, they bought Steinway
pianos. In the manufacturing process of the CF Concert Grand, they used stronger materials as
well.Yamaha claimed that the same materials used in the Steinway were used by them. Another tactic
they used to try to compete with Steinway was to start an artist programme such as the one that involves
Steinway. They gave some well-known musicians their pianos to use in performances around the world.
In the high-end piano market, Yamaha is making leaps and bounds to catch up with Steinway.

Kawai is another Japanese business which offers us competition. They manufacture about half as many
pianos as Yamaha, but they still provide competition from Steinway. They are known for making
vertical and tiny grand pianos of decent quality. Kawai tried to do the same thing Yamaha did and enter
the market for concert grand piano, but people questioned their product's consistency. It had a strong
base but lacked depth, they said.

Baldwin Piano and Organ Company is the United States' largest large-scale manufacturer of vertical and
grand pianos. They were founded in 1862 and are still the only company in America that produces high-
quality grand pianos.

The last two rivals are Italian-based companies which concentrate on high-quality grand pianos. Instead
of mass manufacturing like the Asian rivals Bosendorfer and Fazioli, they make their pianos handcrafted
and of high quality, just like Steinway. Together, in 1994, they sold fewer than 500 hundred pianos. For
Bosendorfer and Fazioli, which are regarded as the highest quality pianos on the market, this emphasis
has performed extremely well.

Conclusion

As a result of their decline in sales due to the rapid change of the piano industry, technology,
expansion of new markets and foreign competitors, Steinway and Sons will need to make some drastic
changes to utilize these industry trends. In order to expand market share and gain profits, Steinway and
Sons need to take steps towards using technology to enhance their products while maintaining their
traditional brand reputation. While continuing with their high-end products as well as introducing a
mid-priced line, Steinway and Sons will be able to reach more of the markets demand. Concentrations
should also be made towards reaching new customers all over the world. Their products remain of high
quality and durability which allows for less company loyalty. Establishing a customer base is vital for
their success. In order to restore their historical success while implementing changes and preparing for
growth, Steinway and Sons will have to use this declination of the piano industry to their advantage.