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									Profe ssor BRI AN L. MARUFFI—MGBU3223_Sample Case Analysi s



        MGBU3223 Management—Sample Case Analysis

Case#1: Saturn - Making Pay-for-Performance Pay Off
   Introduction
   As one of the world's best-known brands, Saturn, the General Motors car division that brought new
   production and marketing concepts to American car manufacturers, faces tough questions in an
   increasingly competitive global market. Its reliance on a limited offering of c ompact models hurts its
   performance in the face of declining sales. Can it continue to set the standards for customer satisfaction
   and reliability and depend on an innovative employee pay -for-performance package?

   The Saturn Story
   Jack Smith Jr. was appointed CEO and President of General Motors Corporation in 1992 after a revolt of
   the outside members of the Board of Directors, noted that the firm had turned around its losing ways by
   focusing on its customers. In a speech to auto dealers in Michigan, he cited the success of the Sat urn
   Division of GM for setting the standard for "hassle -free purchasing and services, and ... exceeding
   customer expectations." Smith further noted that this success had led to the addition of a third shift at the
   Spring Hill, Tennessee, complex that produced Saturns. Moreover, Saturn dealers continued to lead all
   dealer organizations in the United States in unit sales per outlet. (1)
   The original plan, developed in 1982, was given to Richard LeFauve, who was named President of
   Saturn Corporation after its first president died shortly after the company was set up. The plan called for
   a $5 billion investment in a series of plants that would produce up to 350, 000 cars per year. By 1988,
   when the plant was just about complet ed, the investment had been trimmed to approximately $3 billion.
   The Saturn complex was comprised of a series of six interconnected buildings. Four of the six buildings
   were manufacturing and assembly plants. The remaining two were a maintenance and utilities facility
   and a training and administration building. The complex had a rated production capacity of 240,000 cars
   per year. This was to be ex panded to 310, 000 with the addition of a third shift in 1993.
   The Saturn Corporation was the first new automotive division of General Motors since 1918. The
   purpose of developing a new division was to meet the competition of the Japanese, particularly at the
   lower end of the product line. (2) GM had seen its share of the U.S. market fall throughout the 1970s.
   This was especially true for lower-priced cars. U.S. auto consumers no longer had confidence in the
   ability of GM to be able to produce a low-priced, high-quality car. Roger Smith, then CEO of GM, felt that
   the only way to overcome this perception was to launch an entirely new line of cars. The technology,
   labor policies, work rules, and marketing of this new product were to be developed from scratch; there
   would be no preconc eived notions concerning any of these areas brought in from the existing
   organization structure or culture. (3) The initial phase of planning for the Saturn Corporation was carried
   out by bringing together managers and workers from 55 plants in 17 GM divisions. The "Group of 99" -
   so named because it consisted of 99 United Auto Workers (UAW) members, GM mangers, and staff
   personnel - started meeting in 1984. (4) The group quickly split into separate research teams to study all
   aspects of the new operation. One of the teams realized that labor relations would be a critical factor in
   the development and implementation of a successful new offering. GM entered into s eparate
   negotiations with the UAW to develop a new contract strictly for the Saturn Corporation. The rest of GM
   was covered by a master cont ract with the United Aut o Workers, which covered not only wages,
   benefits, and hours of work but also a complex series of work rules that restricted Gm's ability to transfer
   work ers from one task to another on the production line. GM felt that the effective ness of the new Saturn
   Corporation would be dependent on more flexible work rules. Management want ed the ability to develop
   the kind of work flexibility found in most Swedish and Japanese a uto plants. The UAW finally agreed to a
   system of self-governing work teams on the production line at the Saturn assembly plant. These teams
   would be designed to follow the construction of an automobile unit throughout the entire assembly line.
   Under the terms of the contact, workers would be cross -trained so that the members of each team could
   switch off on the various tasks required to complete the assembly of each individual unit.
   Saturn us es a "risk and reward compensation system" that puts 12% of a worker's pay at risk, contingent
   on:



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           5% risk on quality - a threshold, measured in reduction of sample defects per vehicle, that must
            be met before the reward potion, which also contains a quality goal, can kick in;
         5% risk on training; and
         2% risk on team skills.
   All Saturn workers are paid at a rate equal to 88 percent of average GM compensation. The 12 percent
   at risk brings pay "up to a line" roughly equal wit h industry averages, with the reward portion providing
   possibilities "above the line." (6) The basis for the reward portion cont ains provisions regarding
   schedules, productivity, and quality. Saturn uses the Uniform Vehicle E valuation system, an international
   standard in which auditors enter the plant and select 20 to 25 cars at random and evaluate thes e for
   sample defects (4). With the American publics' present loss of appetite for small cars, the system may
   need to be revamped for cost reduction rather than output. In early 199 8, the Saturn union voted to
   retain the innovative system, 4,052 in favor with 2,120 oppos ed. (7)
   In many ways, this was similar to the assembly process employed by Volvo at some of its auto plants,
   which had led to increas ed quality, decreas ed boredom, and increased job satisfaction on the part of its
   work ers. Each member of the Saturn work team was put through an extensive training program before
   joining the assembly line. The 350 hours of training were designed to cover both technical and team-
   building aspects of the job. Richard LeFauve was selected as the new president of Saturn Corporation
   because of his experience within GM. He had spent two years in charge of GM's Adam Opel unit in
   Germany, where he had supervised the development of a sporty new Kadett model. Moreover, LeFauve
   had gained experience with the German labor-management system. Under German co-determination
   laws, labor is required to have a say in decision making and management is required to grant labor a
   position on the board of directors. This, it was felt, would give LeFauve better insight into the problems
   that might develop as the new labor contract was implemented.
   GM management sought and developed new technology and machinery consistent with the new labor
   agreement. A great many robots and ot her forms of automation were incorporated into the production
   line to help reduce employee boredom and fatigue and to help ensure high quality standards.
   Furthermore, company engineers developed a plat form that was designed to move along with the car. In
   this manner, workers no longer needed to walk at a steady pace beside the car to be able to complete
   their tasks; instead, workers and the car moved together on the new platform.
   The new organization was built around several key factors. They included:
         Quality as a top priori ty
         Ownership by all
         Equality of all
         Total trust
         People orientation
         Union/management partnership
         Authority commensurate with responsibility
   These factors were put to the test in 1991. Unfort unat ely, the results of the first year of operation
   indicated that the Saturn plant would not meet its goals. Under the terms of the Saturn/ UAW contract,
   work ers could suffer penalties that would mean their salary would equal approximately 80 percent of the
   average GM worker's annual wages. There was concern that the workers would find this unacceptable
   since some of the failure was not their fault. Furthermore, t here had been quality lapses in the initial
   products. While many had been caught and corrected before the autos left the plant, other cars had to
   be recalled. All of these factors led to lower production, productivity, and quality standards than had
   originally been planned for the first year.
   Management decided to share the responsibility for falling short of the first -year goals. It relaxed the
   terms of the contact and essentially granted bonus es that brought Saturn salaries to approximately 95
   percent of an hourly worker's average annual wage. Management hoped this would convince the
   work ers that the company planned to live up to the seven key points outlined earlier.
   It was still unclear, however, whether the Saturn cars being sold were replacing Japanese sales or cars
   that would have been sold by other GM units. Moreover, GM management realized that sales of Saturn
   cars could not possibly recoup the original $3 billion investment in the new unit. They would have to be
   able to transfer the ideas, technol ogy, concepts, and labor relations developed for the Saturn plants to
   other parts of the GM organization to mak e the investment worthwhile.
   To compound problems, the new work ers that were being added to the S aturn workforce were being



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   recruited from closed GM plants, under an agreement with the UAW. These new workers were being
   rushed onto the production line with only one-third the training time of the original Saturn workers. Many
   managers and original members of the Sat urn union felt that these two fact ors might reduc e morale at
   the Saturn complex and could lead to a decline in the quality standards that had cont ributed to the
   success of this unit. Both Smith and LeFauve knew that the continued growth and quality of the Saturn
   projects and service would be key factors in the success of GM as a whole.
   Saturn's Future
   The Saturn story has been one of alternating success and failure in the 1990s. IntelliChoice ranked the
   1997S L1, SL2, SC1 and SC2 models as the "Best Overall Values" in their respective classes. J.D.
   Power put Saturn in first place for sales satisfaction and seventh in customer satisfaction. (The top six
   were all luxury cars -- Lexus, Infiniti, Acura, Mercedes-Benz, Cadillac, and Jaguar). At the same time,
   the competition in the 1998 small-c ar market is increasing dramatically. Experts claim that Saturn's
   limited lineup is holding back sales, with the car company only offering a coupe, sedan and wagon - all
   small cars based on the same architecture and looking pretty much the same. Saturn brought a new
   midsize car online in 1999, and added a sport -utility vehicle in 2001. (8) Sat urn desperately needs to
   broaden its product line in order to stay competitive. (9)
   New initiatives include an attempt to open foreign markets with Japan target ed with 80 dealerships. In
   addition, GM wants Saturn to market its electric vehicle, the EV-1. (10) Mike Bennett, head of the UAW
   Local 1853 at Saturn, states: "We're going to be a 100 -year car company, right? Well, if we're going to
   be a 100-year car company, we need to be a learning organization. " (11)

   REVIEW QUESTIONS:
       1.   In terms of promoting high performanc e teams, what were the strengths and weaknesses of the
            Saturn Experiment, What were some limitations of the Saturn teams ?
       2.   Was the reward system and ot her incentive plans effective in facilitating high performance?
            What alternative rewards might have been more effective?
       3.   What would you want to change in order to increase team performance in the future—what
            factors would be MOS T import ant?
       4.   Describe the changes that G.M. is trying to implement at Saturn Corp—What impact will these
            have on the Saturn Teams, What are the critical factors in developing the management of the
            Saturn Corp. plants? What are some of the Cultural obstacles?
       5.   What problems might G.M. management face in trying to transplant the Saturn concept to other
            G.M. units?
       6.   Can GM become a Team-based Organization?
            Briefly update where GM Saturn is Today


ANSWERS TO REVIEW QUESTIONS:

1. Describe the changes that GM is trying to implement at Saturn Corp.

       GM is trying to change its management style from one of administrative policy based
       on rules and procedures to one based on participation between employees and
       management. The company realized that the former organization structure, decision-
       making style, and labor relations were not adequate to meet global competition. The
       quality of GM products was perceived by customers to be low relative to foreign
       automakers. Moreover, management had come to the realization that the company
       was unable to develop new products as rapidly as Japanese manufacturers were.

       Management at GM decided that a totally different type of organization was needed in
       order for the company to survive in the long run. In establishing the Saturn operation,
       GM decided that it would adopt a management and organizational style similar to the
       form described by Peters and Waterman.


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      Peters and Waterman identified eight attributes of performance excellence. Some
      discussion can focus on which of these attributes GM seems to be using. Students will
      most likely mention the following: productivity through people, hands-on and value
      driven (because of the emphasis on quality and on cross-training, and because top
      management agreed to accept the financial consequences of Saturn’s initially less-
      than-satisfactory performance), and a bias toward action (developing an entirely new
      form of organization in order to compete). The Saturn plant also illustrates
      simultaneous loose-tight properties (flexibility but under tight control, particularly of
      quality) and sticking to the knitting, or possibly returning to the knitting in terms of
      GM’s long-term ability to produce cars that Americans would demand.

      General Motors’ top management was trying to promote greater involvement of people
      at all levels. In an attempt to gain greater efficiency and quality in the production
      process, GM instituted several changes in the decision-making process during the
      development of the Saturn project. This included the development of group decision-
      making processes with the formation of the “Group of 99” described in the case. A
      major change in the formation of this group was the inclusion of the United Auto
      Workers (UAW) as part of the planning team. This quickly led to the realization that
      good labor relations would be critical to the success of the Saturn project. It should be
      noted that the UAW workers are already highly paid and may be seeking higher-order
      need satisfaction. At the time of the case, involvement of labor appears to have
      succeededthe quality of the new Saturn was perceived to be high and the plant had
      recently gone to a third shift to increase production.

2.    What are the critical factors in developing the management of the Saturn Corp.
      plants?

      The first critical factor is the involvement of the UAW in the decision process. Labor
      and management had traditionally taken on an adversarial relationship at GM There
      was little trust between the two groups. The UAW agreed to participate in this
      experiment to try to retain jobs and job security in the U.S. and among its members.

      At the end of the case, GM management had to change the method by which Saturn
      hourly employees were paid, since the previously agreed upon plan would have left
      them receiving approximately 85% of what UAW members at other GM plants would
      normally receive on an annual basis. It is interesting to note that GM management felt
      compelled to do this despite the fact that Saturn employees had greater job and wage
      security than other GM hourly employees. Management felt that wage parity with other
      GM employees was important. This would prevent Saturn employees from feeling that
      this experiment was just another way of getting employees to work harder for less
      pay. Clearly, the trust issue and the human relations aspect of the new management
      procedures at GM were perceived to be critical to the success of the Saturn project.

      Another critical factor was the ability of GM to gain acceptance of the shared decision-
      making process by first-level and second-level supervisors and managers. For the
      participative management style at Saturn to be successful, these managers had to
      change their methods. In the past, these lower-level managers operated under the
      administrative principle of clearly defined rules and regulations. Under the new model,
      rules were to be made by individual work units. Moreover, small groups could select
      their own leaders. They could also change the rules without having to go through
      contract negotiations with the union.


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      Workers were expected to be cross-trained in several different tasks, thereby adding
      flexibility to the production process. As a consequence, better-trained employees were
      needed. It also required better-trained and more responsible supervisory ranks. The
      supervisors must understand the interaction required of the various tasks. Rather than
      being task specialists, they would need to become generalists in their supervisory
      approach.

      The changes GM has proposed for the Saturn organization require different forms of
      training for hourly workers as well as management and supervisory personnel.
      Everyone must be willing to work closely together. Trust in the participative process
      will be necessary for all concerned.

3.    What problems might GM management face in trying to transplant the Saturn concept
      to other GM units?

      The first potential problem is that the Saturn project might not succeed to the degree
      desired by the board of directors to justify its use throughout the rest of the company.
      This is important, since the Saturn program required a sizable commitment of
      resources for new plant redesign as well as wage and job security guarantees.
      Commitment from top management is required for this type of organizational change
      to succeed. Shifting from administrative to human relations and participative styles of
      management that focus on a total quality program is not an easy task.

      A major problem that will need to be overcome involves the suspicions of ardent and
      long time union members. The Saturn plants were staffed primarily with new
      employees; the case describes later hires as being transfers from closed GM plants.
      While the original employees became union members upon starting work at Saturn,
      many did not belong to the UAW prior to this. Transforming existing plants will require
      the cooperation of older UAW members. This may be difficult since there is a great
      deal of distrust between both management and labor. Previous changes have been
      viewed as means for increasing productivity with no perceived benefit to labor, in
      either wages or job security.
      Many employees, both hourly workers and supervisors, may feel threatened by these
      changes. Supervisors may not feel capable of developing participative styles of
      management, even with proper training. Some workers may be resistant to being
      required to cross-train in several tasks. Moreover, they may also find it difficult to
      adapt to a participative form of management. Some of the older employees have
      spent much of their working lives following clearly defined rules and roles. The open
      systems format developed for the Saturn plants may be quite threatening for these
      workers.




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Case Assignment Grading Criteria
         MGBU3223-PRINCIPLES OF MANAGEMENT- CASE EVALUATION FORM (Criteria)
NAME OF STUDE NT
TITLE OF CASE:                                      Date:
Overall Grade:
                A+ A A- B+ B B- C+ C C- D+ D D- F+ F F-
        Points: 97 93 90 87 83 80 77 73 70 67 63 60 57 53 50

                   CASE ANALYSIS RATING CRITE RIA:                     MA XIMUM    POINTS
                                      :                                 POINTS    OBTA INED
1. Summary of relevant facts and details of the case                       5
2. Statement of the problems and Issues                                   10
3. Causes (number and clarity) of problems--Accuracy and                  15
completeness of facts of case including description of core
management concepts from text
4. Alternative solutions (number and clarity).                            10
5. Your Recommendations--Best solution, its implement ation and           15
justification (Why is it the best?).
6. Citation and/or reference of theories, concepts and examples from      10
textbook, and/or other outside sources.
7. Soundness of Conclusions--Quality and accuracy of research,            10
findings and information presented
8. Quality, clarity, organization and effectiveness of report —and        5
supporting documentation. (The CEO Test)
9. Accurate and complete responses to all Review Questions                15
10. Updating of the case—Indic ate where is this company today? —in        5
relation to case.
                                                                         100
TOTAL POINTS:
GENERA L FEEDBACK A ND AREAS FOR I MPROVE ME NT:




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TIPS FOR COMPLETING THE CASE ASSIGNMENTS--

1--READ THE SAMPLE CASE POS TED ON BLACKB OARD AND DIS TRIB UTED IN CLASS
2--READ THE RELEVA NT CHAP TERS THE TE XT
3--USE THE FORMA TE IN THE SAMPLE CASE TO STRUCTURE YOUR ANALYS IS OF THE CASE
AND THE REVIEW QUES TIONS AS TO HINTS AS TO WHA T TO FOCUS ON
4--CREA TE AN OUTLINE TO ORGA NIZE YOUR ANSWERS —USE SUGGES TED FORMA T IF IT
HELPS YOU TO ORGANIZE YOUR ANSWER
5—SUMMARIZE THE KEYFACTS OF THE CASE—THIS DOES NOT MEAN REGURGITA TING
BACK ALL THE DE TA ILS BUT FOCUS ING ONLY ON THOSE THA T ARE RE LEVANT TO YOUR
ANALYSIS (RELA TE TO CAUSES < PROB LEMS OR SOLUTIONS)
6--BE SURE TO ANSWER ALL THE REVIEW QUES TIONS THA T A RE AT THE END OF THE
DOMINO CASE
7--TYPE IT UP--E-MA IL OR HA ND IT IN BY DUE DA TE
8--Y OU DO NOT HAVE TO ANSWER THE RESEARCH QUES TIONS --HOWEVER BE SURE TO
UPDA TE THE CASE--SAY WHE RE THE COMPANY IS TODAY (S INCE THE CASE WAS WRITTE N)
9--BE SURE TO INTE GRA TE CCONCEP TS FROM THE TE XT CHAP TERS (TE RMS, E XAMPLES,
CONCEP TS, etc.) INTO YOUR A NSWER
10—THE REPORT YOU SUBMIT SHOULD BE DOUBLE SPACE D TYPE -WRITTE N AND S HOULD
NOT E XCEE D 7 PAGES (COVERS DO NOT COUNT)—LONGE R IS NOT NE CESSARILY BE TTER—
THINK OF THIS REPORT AS A DOCUMENT THAT YOU WOULD SUB MIT TO A CE O OF A
COMPA NY THAT YOU WORK FOR DESCRIBING A SOLUTION TO AN I MPORTANT PROB LE M

PLEASE NOTE--you can ans wer the review questions within your analysis of the case or at the end of
your analysis.

PROFESSOR MARUFFI




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Profe ssor BRI AN L. MARUFFI—MGBU3223_Sample Case Analysi s



Case #2-Steinway and Sons - Combining Craftwork
and Teamwork
   Introduction
   Steinway and Sons remains one of the best-known producers of concert pianos in the world. Throughout
   its great history the company has shown a distinctive talent at innovation and quality workmanship, as
   evidenced by its 114 patents. In an age of mass production, Steinway continues to manufacture a limited
   number of handmade pianos in a unique testament to individual craftsmanship. However, Steinway's
   dominance in the concert piano market is being challenged by several rivals. Can Steinway continue its
   cherished ways, or will it need to adjust to new circumstances?


   Steinway: A History of Quality
   Steinway & Sons was founded in 1853 by German immigrant Henry Engelhard Steinway in a Manhattan
   loft on Varick Street. Henry was a master cabinetmaker who built his first piano in the kitchen of his
   Seesen, Germany, home. By the time Henry established Steinway & Sons, he had built 482 pianos. The
   first piano produced by the company, number 483, was sold to a New York family for $500. It is now
   displayed at New York City's Metropolitan Museum of Art.
   Steinway 's unique quality became obvious early in the history of the firm, evidenced by its winning gold
   medals in several American and European ex hibitions in 1855. The company gained international
   recognition in 1867 at the Paris Exhibition when it was awarded the prestigious "Grand Gold Medal of
   Honor" for excellence in manufacturing and engineering. (1) Henry Steinway developed his pianos with
   emerging technical and scientific research, including the acoustical theories of the renowned physicist
   Hermann Von Helmhotz.
   In the early 1890s, Steinway moved to its current location in the Astoria section of Queens, New York,
   and built Steinway Village. Virtually its own town, Steinway Village had its own foundries, factory, post
   office, parks, and housing for employees. It's factory today still uses many of the craftsmanship
   techniques handed down from previous generations. Steinway produces approximat ely 5,000 pianos
   annually, worldwide, wit h over 900 prominent conc ert artists bearing the title of Steinway Artist. (2)
   New Competition
   Yamaha Corporation of America has sold pianos in the United States since 1960 and remains the
   preferred brand for top jazz and pop artists. But in the late 1980s, Yamaha chos e to enter the concert
   piano market in direct competition with Steinway. Developing grand pianos such as the CFIIIS provided
   Yamaha with the product offering to attack Steinway's 95 perc ent market share in co ncert sales. Yamaha
   created its Concert and Artist Service - similar to Steinway's - to supply pianos across the country.
   Steinway was owned in the 1970s by CBS, and many concert artists complained that the quality had
   suffered as a result of that ownership. Pianists talked of the " Teflon controversy," when Steinway
   replaced some fabric innards with Teflon (it now coats the Teflon wit h fabric). Steinway was sold by CBS
   in 1985, and many experts voiced the opinion that Steinway's legendary quality was returning. Larry Fine,
   a piano expert, argues, "a Steinway has a kind of sustained, singing tone that a Yamaha doesn't have.
   Yamaha has a more brittle tone in the treble that some jazz pianists prefer." (3)
   E ven with increased competition, the Steinway Tradition continues. Every grand piano takes over a year
   to complete and incorporates over 1,000 details that set a Steinway apart from competitors. A tour of the
   Steinway factory is a trip back through time, as many of the manufacturing techniques have not changed
   since 1853.
   Recently, Steinway developed. Boston Piano in an attempt to broaden its market. Boston pianos -
   designed by Steinway & Sons with the latest computer technology - are manufactured in Japan by Kawai,
   the second-largest Japanese piano maker. At first, Boston intended to ship all of its pianos to markets
   outside of Japan, but when Kawai expressed interest in distributing them throughout Japan, Steinway
   took a different tack. Boston's success in Japan is a result of an unorthodox method called "guerrilla
   marketing." This approach involved developing new dealers, referrals and direct-mail programs. But the
   strategy also brought into play "selection events." With display space at a premium in Japan's cramped
   cities, displaying 65 grand pianos in one location was something quit e new. Using telemark eting and



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   direct mail, Boston's Japanes e distributor attracted 260 people to a selection event in Osaka ... and sold
   100 pianos. Boston Piano now accounts for 10 percent of the Japanese market. (4) By trans ferring its
   quality and knowledge of building pianos to Boston, Steinway is able to open up a whole new market to
   exploit. Its core compet ence of hand craftsmanship can be applied in a newer, high technology manner to
   a lower-priced mark et niche.
   A New Partnership
   On May 25, 1995 Steinway and Sons merged with The Selmer Company, manufacturer of brass wind,
   woodwind, percussion, and stringed instruments, to form Steinway Musical Instruments, Inc. The new
   company 's strategy strives to capitalize on its strong brand names and leading market positions. The
   company 's net sales of $258 million for 1996 were split bet ween Steinway piano sales (53 percent) and
   sales of Selmer band and orchestral instruments (47 percent). In addition, the purchase of William Lewis
   Violin and the Emers on Flute Company adds to the band and musical instrument line.
   On August 1, 1996, an initial public (IPO) offering of common stock raised $63 million in new equity
   capital. This money allowed the firm to repay over $54 million of senior secured notes, thereby greatly
   improving the financial flexibility of the new company.
   Steinway 's piano sales are influenced by general economic conditions in the United States and Europe,
   demographic trends, and general interest in music and the arts. Steinway's operating results are primarily
   influenced by grand piano sales. Given the total number of grand pianos sold by Steinway in any year
   (3,066 in 1996), a decrease of a relatively small number of units sold by Steinway can have a material
   impact on its business and operating results. Domestic grand piano unit sales have inc reas ed 32. 2% from
   1993 to 1996, largely attribut able to the economic recovery in the United States and increased selling and
   marketing efforts. Grand piano unit sales to international markets have remained relatively flat over the
   same period primarily as a result of the weakness of the European economies.
   In 1996, approximately 54 perc ent of Steinway's net sales were in the United States, 33 percent in
   Europe and the remaining 13 percent primarily in Asia. (5) Unlike many of its competitors in the piano
   industry, Steinway does not provide extended financing arrangements to its dealers. To facilitate the long -
   term financing required by some dealers, Steinway has arranged for financing through a third-party
   provider, which generally involves no guarantee by Steinway.
   In early 2001, Steinway and sons introduced a third line of pianos, called the Essex, to complement its
   Steinway and Boston lines. The line offers two grand and two upright models ranging in price from $5,200
   to $17,800. With the Essex, Steinway now provides pianos for every level of musical ability and budget.
   The question remains; can Steinway continue to operate in the way that has proved successful over the
   past 140 years? The recent merger with The S elmer Company creates a stronger and more diversified
   firm.

   REVIEW QUESTIONS:
   1. How have group norms developed in Steinway ?
   2. How does Steinway’s piano manufacturing process exhibit the need for teamwork? Would you
      consider Steinway a High Performance, Team Based Organization? Why or Why Not —Support you
      answer with facts.
   3. What are some of the challenges of working on craft teams at Steinway? Can the Team Concept still
      work in tha as the markets, products and customers change; how does Steinway continue its
      emphasis on craftsmanship and teamwork in this age of mass production?
   4. What impact will the merger have on the Team Culture at Steinway?
   5. What kinds of changes would you recommend to help the Steinway organization adapt the new
      business environment? What role if any would high performance teams play in the organization; how
      would you structure these teams, the organization to maximize competitiveness and efficiency?
      Briefly update where Steinway and Son’s is today.




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