ORGANIZATIONAL DIAGONISIS OF STEINWAY AND SON’S

By;ARPITA GHOSH (Roll-9)TARUSH KHANDELWAL

INTRODUCTION TO THE CASESteinway & sons offers several

different pianos, including two brands(Steinway & less expensive Boston brand) & both upright & grand piano models. The company hand crafts its grand pianos in New York & Germany,& sells them through more than 200 independent dealers.Creating Steinway

concert grand piano requires more than 12000 mostly handcrafted parts.

ii. Parts-making operations involves bending of the piano rim that are formed of multiple layers of specially selected maple that are manually forced into a unified shape held in presses for several hr. Then seasoned for 10 weeks before being joined to other wooden parts.

iii. Piano-making operation include “bellying,” finishing & tone regulating. The bellying process involves the careful fitting of the soundboard ,iron piano plate & rim to each other.

 

There are three major steps in the production process-i. Wood-drying operations convert

moisture-rich lumber into useable raw material through air drying & computer-controlled kilns.

PROBLEMS:•Keeping workers has proved extremely difficult

•Many of the workers could easily set up their own shop to repair or rebuild older Steinways pianos.

•Several Asian companies such as Yamaha, Kawai , Young Chang and Samick emerging as important competitors.

•Increased electronic keyboard sales.

INPUTS:• General Environment of the company•Industry Structure

DESIGN COMPONENTS:• Strategy•Technology•Structure•Measurement System•Human Resource SystemOUTPUT:•Organizational Effectiveness

INPUTS

•GENERAL ENVIRONMENT OF THE COMPANY:Steinway’s external environment is only moderately uncertain and not very complex.

The organization operates on a global basis.

Use of the classic methods of production .

They are very picky while choosing the material for the pianos therefore

•COMPANY’S INDUSTRY STRUCTURE Steinway’s industry is moderately competitive

and profit pressure can be mapped by looking at the five key forces.

The threat of entry is fairly low

The threat of substitute product is fairly low

The bargaining power of the suppliers is high

Rivalry among firms is severe

Bargaining power of buyers varies with segment

DESIGN COMPONENTS• STRATEGY:

Primary strategy is a sophisticated niche and differentiation market.

Attempt to meet their financial and other objectives by offering a unique and high quality product to sophisticated artists.

The dealer network is an important part of Steinway’s strategy because of its role in the “Concert Bank” program.

•TECHNOLOGY:Steinway’s core technology is highly uncertain and moderately interdependent. The manufacturing process is craft based and dependent on the nature of the material.

It is moderately interdependent because the major steps in the process are not linked in time. Making the “action sets” is independent of the “bellying” processes for example.

STRUCTURE:

The corporate organization is division while the piano subsidiary appears to have functional structure.

The key functions are manufacturing, distribution and sales.

MEASUREMENT SYSTEM:

Formal measurement systems within the production process are clearly present.

100% inspection (as opposed to statistical sampling)costs time and manpower is seen as critical to quality.

System of keeping tracks of work-in-progress, finished goods, and concert bank system inventories.

The organization maintains union relationships

Steinways undertakes : -workers retention programs -global hiring -provides compensations & benefits -training programs

HUMAN RESOURCES SYSTEM:

Human resource system is highly developed.

Reward system includes both hourly and piece rate processes

CULTURE:

The dominant focus is on: -the high end segment -craft nature of the production process -important of the concert bank program

-long history of family influence all point to culture of quality -craftsmanship -responsiveness

OUTPUT

ORGANIZATIONAL EFFECTIVENESS:

The first concern is between the environmental inputs and the strategic orientation. The moderate complexity and uncertainty in the general environment argue for a strategy that is flexible enough to address the few critical dependencies but formal enough to control.

The second concern is the alignment of the design component .

I. They intend to differentiate its product by serving the high-end segment with unique high quality pianos but a broad product line could dilute the focus.

II. There appears to be a good fit between the strategy and other design components. The differentiated strategic focus on creating sophisticated and unique product. For this purpose the flexible structure, formal inspection system and responsiveness culture of the organization suits the best

Thirdly, the technology is well aligned and support the structure.I. The production process is craft based

and the functional structure promotes specialization and professionalization of skills and knowledge.

II. It built loyalty into customers and ensured future demand

III.Feedback from customers were taken which ensures the artist demand and emerging trends in sound

IV. Due to well developed Human Resource System, the marketing and production function was facilitated

On the basis of diagnosis of Steinway organization two possible intervention are suggested:

I. Formulizing rather than changing the Steinway strategies

II. Increasing the integration and coordination of its structures, measurement systems and human resource system

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