Steinway and sons - Case analysis
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Transcript of Steinway and sons - Case analysis
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CASE ANALYSIS
STEINWAY AND SONS : buying a legend
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COMPANY BACKGROUND
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For 140 years, Steinway & Sons has been recognized as a leader in the market for high-qualitygrand pianos. Established in New York City in 1853 by Henry Engelhard Steinway, a Germanimmigrant, the firm quickly prospered because of its technical excellence.
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STEINWAY ARTISTS
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Timeline of Steinway & Sons
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After 120-years of family control, it was decided that Steinway could no longer survive as a closely-held family operation. THE OWNERSHIP OF THE COMPANY WAS SPREAD AMONG MANY FAMILY MEMBERS UNWILLING TO INVEST IN CAPITAL leading up to the sale of Steinway in 1972 , REASONS BEING PRIMARILY FINANCIAL
Steinway & Sons :1853-1972
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The CBS Years :1972 - 1985Company was sold to the CBS Musical Instruments Divisionin 1972 for about $21 million in CBS stock.CBS’s management of Steinway came to a close in 1985. In November 1984, despite beingmoderately profitable, CBS announced plans to sell its Musical Instruments companies and to focusits efforts on broadcasting
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The Birmingham Years : 1985 - 1995
Company was sold to the Birmingham Brothers in 1985 for about $50 million.Birmingham's did something that Steinway & Sons had resisted throughout its history. They introduced a mid-priced piano The Boston Piano
Finally, in late-1994, the Birmingham's decided to sell the company.
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The company was again sold on April 18, 1995 to Dana Messina and Kyle .Kirkland,
Messina & Kirkland : April 18, 1995
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On April 18, 1995, the Selmer Company agreed to purchase Steinway & Sons for $101.5 million . At the time of the purchase, Selmer was the leading manufacturer of band and orchestral instruments in the United States.
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Selmer financial information prior to acquisition by steinway
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Following the purchase of Steinway & Sons, Kirkland and Messina formed Steinway Musical
Instruments, Inc., with Steinway & Sons and Selmer as wholly-owned subsidiaries. Within this
newly formed company, Kirkland was named Chairman of the Board and Messina was named
Chief Executive Officer.
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HOW JUSTIFIED WAS THE DECISION OF
PURCHASING STEINWAY FOR
$100 MILLION
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PROBLEMS FACED
NO EXTANT SYNERGY BETWEEN STEINWAY AND SONS AND SELMER COMPANY
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PROBLEMS FACED
The company has changed hands several times and product quality has been a problem. Dealers and workers were losing faith in Steinway & Sons.
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PROBLEMS FACED
There are a few piano manufacturers that are Steinway’s potential competitor Competition •Yamaha •Baldwin •Kawai •Faziloi
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PROBLEMS FACED
The piano industry saw a down turn in current years with global sales falling by 40 %
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PROBLEMS FACED
STEINWAY’S RECENT INTRODUCTION OF BOSTON PIANOS WAS A QUESTIONABLE STRATEGY
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FUTURE PROSPECTS AND EXCITING POSSIBILITIES
STEINWAY WAS A PRE EMINENT BRAND NAME IN THE MUSIC INDUSTRY AS THE PRODUCER OF THE FINEST PIANOS
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FUTURE PROSPECTS AND EXCITING POSSIBILITIES
STEINWAY WAS THE LEADING PRODUCER OF GRAND AND VERTICAL PIANO
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FUTURE PROSPECTS AND EXCITING POSSIBILITIES
ECONOMIC CONDITIONS WERE IMPROVING IN US AND EUROPE
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FUTURE PROSPECTS AND EXCITING POSSIBILITIES
STEINWAY HAD YET TO TAKE THE ADVANTAGE OF THE GROWING ASIAN MARKET
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FUTURE PROSPECTS AND EXCITING POSSIBILITIES
STEINWAY WAS THE LEADING PRODUCER OF GRAND AND VERTICAL PIANO
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FUTURE PROSPECTS AND EXCITING POSSIBILITIES
INCREASE IN SALES OF VERTICAL PIANO – BOSTON PIANOS
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Role of Messina & Kirkland
As both Messina and Kirkland lack experience in the piano industry, they should hire a professional team from the piano industry and they itself have gain lot of experience from financial sector from salmon so they handle financial activities.
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These slides were created by MAULSHRI PATHAK, as part of an internship done under the guidance of Prof. Sameer Mathur (www.IIMInternship.com