New Buyer’s Strategy for Steinway& Sons:
“Cash is King”
This essay assesses the wisdom of the $100 million acquisition of Steinway by the Selmer Company given the shrinking sales of recent years and the highly-leveraged failure of the Birmingham ownership. One can justify the purchase from four perspectives: the improvement in the financial resources of the new owners, the reconsideration of the marketing strategy, targeting and positioning, the forecasted improvement in Steinway piano sales and the short and long-term corporate financial effects. Steinway & Sons should be able to prosper under the new owners in both the short term and long term based on the inherent strength of the brand as the world’s finest piano, the…show more content… Both groups are not particularly price sensitive, but they require different servicing needs. Professional players have a higher standard for their instruments but need comprehensive details, convenience and constant service. They prefer to choose their instruments by themselves. On the other hand, the serious music lovers are more likely to listen to different opinions, which require high quality websites and intimate customer services. The training of retail sales personnel is critical. Employee loyalty and retention is also extremely important. That many Steinway craftspeople have been with the company for 20 years or more is a great source of pride. The new owners worked their factory’s labor union from the beginning. It certainly didn’t hurt that Steinway assured union officials that no jobs would be lost as a result of difficult times. I fact Steinway even added positions. A few workers were reassigned, but retained seniority and pay. Steinway’s transformation was the result of management’s smart cost control. For instance, shortly after launching its CI initiative, Steinway management discovered ways to streamline production and improve quality.
The Selmer approach to management was not dissimilar to its predecessor, Birmingham. What made the difference was a sound financial foundation. The new buyers were far less leveraged. About 68% the capital was externally financed versus 98% with previous ownership. (Table1). Another key