Case Study Description of Steinway & Sons: Buying a Legend (A)
It is 1995 and Steinway & Sons has just been purchased by two young entrepreneurs. For 140 years, Steinway has held the reputation for making the finest quality grand pianos in the world. The past 25 years have proven to be a challenge, however. First, the company has changed hands several times and product quality has become a concern. Second, the worldwide market for pianos has been in a steady decline, and competition for high-end grand pianos has increased. Finally in 1992, Steinway took the questionable steps of introducing a mid-priced line of grand pianos under the brand name "Boston." Designed by Steinway, but manufactured by a Japanese piano maker, the Boston line represented a major shift in strategy for the company. Within this context, what do two young entrepreneurs (with little or no experience in the piano industry) hope to accomplish in buying Steinway? In particular, what value do they bring to the company and what decisions should they make?
Swot Analysis of "Steinway & Sons: Buying a Legend (A)" written by John T. Gourville, Joseph B. Lassiter includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Steinway Pianos facing as an external strategic factors. Some of the topics covered in Steinway & Sons: Buying a Legend (A) case study are - Strategic Management Strategies, Entrepreneurship and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Steinway & Sons: Buying a Legend (A) casestudy better are - – supply chains are disrupted by pandemic , increasing commodity prices, increasing energy prices, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies,
central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Steinway & Sons: Buying a Legend (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Steinway & Sons: Buying a Legend (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Steinway Pianos, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Steinway Pianos operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Steinway & Sons: Buying a Legend (A) can be done for the following purposes –
1. Strategic planning using facts provided in Steinway & Sons: Buying a Legend (A) case study
2. Improving business portfolio management of Steinway Pianos
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Steinway Pianos
Strengths Steinway & Sons: Buying a Legend (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Steinway Pianos in Steinway & Sons: Buying a Legend (A) Harvard Business Review case study are -
High switching costs
– The high switching costs that Steinway Pianos has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Learning organization
- Steinway Pianos is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Steinway Pianos is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Steinway & Sons: Buying a Legend (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Steinway Pianos has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Steinway Pianos to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Steinway Pianos has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Steinway & Sons: Buying a Legend (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Steinway Pianos is present in almost all the verticals within the industry. This has provided firm in Steinway & Sons: Buying a Legend (A) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Sustainable margins compare to other players in Sales & Marketing industry
– Steinway & Sons: Buying a Legend (A) firm has clearly differentiated products in the market place. This has enabled Steinway Pianos to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Steinway Pianos to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Steinway Pianos is one of the leading recruiters in the industry. Managers in the Steinway & Sons: Buying a Legend (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Steinway Pianos has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Steinway & Sons: Buying a Legend (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Steinway Pianos is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by John T. Gourville, Joseph B. Lassiter can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Steinway Pianos digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Steinway Pianos has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Cross disciplinary teams
– Horizontal connected teams at the Steinway Pianos are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Training and development
– Steinway Pianos has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Steinway & Sons: Buying a Legend (A) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses Steinway & Sons: Buying a Legend (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Steinway & Sons: Buying a Legend (A) are -
Increasing silos among functional specialists
– The organizational structure of Steinway Pianos is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Steinway Pianos needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Steinway Pianos to focus more on services rather than just following the product oriented approach.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Steinway Pianos supply chain. Even after few cautionary changes mentioned in the HBR case study - Steinway & Sons: Buying a Legend (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Steinway Pianos vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Steinway Pianos has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Aligning sales with marketing
– It come across in the case study Steinway & Sons: Buying a Legend (A) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Steinway & Sons: Buying a Legend (A) can leverage the sales team experience to cultivate customer relationships as Steinway Pianos is planning to shift buying processes online.
Need for greater diversity
– Steinway Pianos has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High bargaining power of channel partners
– Because of the regulatory requirements, John T. Gourville, Joseph B. Lassiter suggests that, Steinway Pianos is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
No frontier risks strategy
– After analyzing the HBR case study Steinway & Sons: Buying a Legend (A), it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Steinway Pianos needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Low market penetration in new markets
– Outside its home market of Steinway Pianos, firm in the HBR case study Steinway & Sons: Buying a Legend (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Steinway Pianos has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Steinway & Sons: Buying a Legend (A), in the dynamic environment Steinway Pianos has struggled to respond to the nimble upstart competition. Steinway Pianos has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Steinway & Sons: Buying a Legend (A) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Steinway & Sons: Buying a Legend (A) are -
Developing new processes and practices
– Steinway Pianos can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Loyalty marketing
– Steinway Pianos has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Steinway Pianos is facing challenges because of the dominance of functional experts in the organization. Steinway & Sons: Buying a Legend (A) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Steinway Pianos can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Steinway Pianos can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Low interest rates
– Even though inflation is raising its head in most developed economies, Steinway Pianos can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Steinway Pianos can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Steinway Pianos has opened avenues for new revenue streams for the organization in the industry. This can help Steinway Pianos to build a more holistic ecosystem as suggested in the Steinway & Sons: Buying a Legend (A) case study. Steinway Pianos can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Steinway Pianos has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Steinway & Sons: Buying a Legend (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Steinway Pianos to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Steinway Pianos to increase its market reach. Steinway Pianos will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Steinway Pianos to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Steinway Pianos to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Steinway Pianos can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Leveraging digital technologies
– Steinway Pianos can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Steinway Pianos in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Threats Steinway & Sons: Buying a Legend (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Steinway & Sons: Buying a Legend (A) are -
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Steinway Pianos needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Steinway Pianos can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Steinway & Sons: Buying a Legend (A) .
Technology acceleration in Forth Industrial Revolution
– Steinway Pianos has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Steinway Pianos needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Stagnating economy with rate increase
– Steinway Pianos can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Steinway Pianos in the Sales & Marketing sector and impact the bottomline of the organization.
Regulatory challenges
– Steinway Pianos needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Increasing wage structure of Steinway Pianos
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Steinway Pianos.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Steinway Pianos business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Steinway Pianos high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Steinway Pianos with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Steinway Pianos will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Weighted SWOT Analysis of Steinway & Sons: Buying a Legend (A) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Steinway & Sons: Buying a Legend (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Steinway & Sons: Buying a Legend (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Steinway & Sons: Buying a Legend (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Steinway & Sons: Buying a Legend (A) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Steinway Pianos needs to make to build a sustainable competitive advantage.
