Would You Buy Steinway If You Were an Investment Banker

Q: “Would you buy Steinway if you were an investment banker?”

Even though Steinway and Sons had annual sales of $100M, I as an investment banker would not buy Steinway and Sons for $100M as profit was only $3M and the sales of piano has continued to drop due to alternatives forms of entertainment and competition, which would only indicate a decline in profit and sales over the coming years. Steinway and Sons was originally started in New York City in the year 1853 by Henry Engelhard Steinway, an immigrant from Germany. His business excelled because of it’s technical brilliance and shortly, a year later, his company won a gold medal at the Metropolitan Fair in Washington D.C. The following year, Steinway and Sons introduced the cross-stringing technique in a piano with a cast iron frame, an innovation that is now an industry standard. Over the course of 140 years, Steinway and Sons would be recognized as the industry leader in high quality pianos. Over the years, piano sales have rapidly dropped from 223,000 units in 1980 to 100,000 in 1994. One of the cause of this decline is sales is the idea that the decrease in sales is simply because of computer home entertainment and electronic devices such as keyboards were being sold more than traditional pianos. Steinway and Sons had only a few competitors that were considered threats. After the industry’s consolidation of manufacturers from hundreds of makers to only eight companies that were considered major competition, their high volume manufacturing competitors included Kawia, Yamaha, and Baldwin. Their competition in the low volume, high quality market was Bosendorfer and Fazioli. In order to expand market share and gain profits, Steinway and Sons need to take steps towards using technology to enhance their products while maintaining their traditional brand reputation. While continuing with their high-end products as well as introducing a mid-priced line, Steinway and Sons will be able to reach more of the markets demand.

Q: “Can a beer be a luxury product?”

According to the research based on what was provided on the case