Case of Steinway & Sons: Buying a Legend
In the case of Steinway & Sons, two investment bankers, Dana Messina and Kyle Kirkland are faced with the question of how to build on the business. Steinway & Sons was established in 1853 in New York City, by Henry Engelhard Steinway, a German immigrant who became well known for his technical excellence in piano production. It is a 140 year old company, and has been recognized as a leader in the market for high quality grand pianos. The primary problem facing Messina and Kirkland is whether they should continue producing high-end, top quality vertical and grand pianos or pursue a more aggressive plan, including the mid-priced line of Steinway pianos. Does it make sense to sell a mid-priced line of vertical and grand pianos? Another factor that they must take into consideration is the role they should play, whether it is the role of owners or managers.
There are three main alternatives that Messina and Kirkland must consider in the expansion of Steinway & Sons. The first alternative is that Steinway should exclusively manufacture high end, top of the line products and continue to be the world’s pre-eminent maker of high quality vertical and grand pianos. The second alternative is that Messina and Kirkland should aggressively promote their recently introduced, mid-priced, middle of the line Boston Pianos. The third alternative is that Steinway should maintain their current production lines and introduce a third line of pianos that are fairly inexpensive and more affordable to consumers. There are a few advantages and disadvantages if Steinway maintains manufacturing only high end, top of the line products and continues to be the world’s pre-eminent maker of high quality vertical and grand pianos. One advantage of only carrying top quality products is that you maintain your brand name. This gives Steinway a competitive edge and is why they have around 70% of the concert grand piano market share. It is...
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