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Douglas Hentges Austin Mapes David Murdock Cindal Peterson Molly Redden

Douglas Hentges Austin Mapes David Murdock Cindal Peterson Molly Redden. The Guitar M anufacturing Industry. Plated an important role in society Without the electric guitar society may be very different Birth of Rock and Roll

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Douglas Hentges Austin Mapes David Murdock Cindal Peterson Molly Redden

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  1. DouglasHentges • Austin Mapes David Murdock • Cindal Peterson • Molly Redden

  2. The Guitar Manufacturing Industry • Plated an important role in society • Without the electric guitar society may be very different • Birth of Rock and Roll • The music we know today would be very different if were not for companies like Fender • Music Innovation • The Introduction of the guitar allowed music to have a new front man of sound

  3. Industry Analysis negative profit growth with the recent flux of the economy. Barriers to entry of any market are always an issue Intensity of competition between firms is high The degree of product substitutability The technological sophistication in the musical creation industry is moderately high. Management capability in this industry is very low

  4. Competitive Strength Assessment

  5. Top 3 Competitors Harman International Yamaha Corporation Gibson

  6. Harman Harman-Kardon Founded in 1953 by Sidney Harman and Bernard Kardon Harman manufactures and sells high-end audio products and electronic systems for the home and automobiles During the mid 1970s the company was the leader in the U.S. stereo industry

  7. Harman In the early 80s more than half of Harman was sold to a Japanese company The company began to fail, so Sidney Harman and other investors gathered $55 million to repurchase the company This purchase created Harman International Industries In 1986 the company went public on the NYSE

  8. Harman • Through restructuring management and new acquisitions, Harman International regained its status as a top competitor in the industry • 3 main strategies: • Manufacture all products in company-owned facilities • Market products globally • Honor and treat all employees with complete respect

  9. Harman Acquisitions 1983 – UREI and Infinity 1988 – Soundcraft 1990 – DOD Electronics Corp 1995 – Becker GmbH and established Harman China In the 1990s and 2000s established many associations with vehicle manufacturers. They also have associations with Apple, Dell, Compaq and IBM for computer audio equipment.

  10. Harman Today Current CEO DineshPaliwal Headquarters moved from Washington, D.C. to Stamford, CT New engineering center in Bangalore, India 2009 net sales totaled $2.9 billion

  11. Yamaha Yamaha Organ Manufacturing Company founded in 1889 by Toraksu Yamaha 8 years later YOMC became Nippon Gakki In 1902, Nippon Gakki manufactured its first grand piano During the World Wars, the company expanded its product line to plane propellers, fuel tanks and wing parts They entered the electronics industry in 1959 with an all-transistor organ Nippon Gakki changed its name to Yamaha Corporation in its 100th year of operation

  12. Yamaha Since 2004, sales have not fallen below $4 billion and in 2008 reached almost $5.5 billion 2009 net sales totaled $2.9 billion Stock price is currently around ¥10.50 Forecasted total expenditures for fiscal year 2010 = $205 million

  13. Yamaha Today Headquarters are in Hamamatsu Shizuoka, Japan Current President and Representative Director is Mitsuru Umemura 20,068 employees, 106 subsidiaries and 12 affiliated companies

  14. Gibson Founded by Orville Gibson in 1902 in Kalamazoo, MI First 5 stockholders were Orville Gibson, three lawyers, a music teacher and a salesman The company introduced the solid body guitar when Les Paul partnered with Gibson in 1946 The company began to fail in the 1980s Its recovery can be credited to Henry Juszkiewicz

  15. Gibson’s Recovery New technology cost the company almost $500,000 New management strategies to implement updated data-processing systems Juszkiewicz marketed the fact that most of Gibson’s employees are musicians

  16. Gibson Today Purchased Baldwin pianos in 2001 Cooperate with U.S. Fish and Wildlife Service regarding wood procurement Focus on environmentally-friendly wood purchases

  17. Fender vs. Competitors Fender’s specific product line makes Harman and Yamaha less of a threat Fender has larger market share than Gibson and higher annual sales Fender’s reputation in the industry and the quality of its instruments exceed the 3 competitors

  18. Fender History • 1938: Clarence “Leo” Fender opened Fender Radio Service • 1945: K&F Manufacturing Corporation was born (Fender and Clayton Kauffman) • Year later Kauffman leaves and becomes Fender Manufacturing Corporation • 1949: Prototypes for Fender Esquire®, Broadcaster® and Telecaster® were completed, and introduces the single-pickup Esquire® the next year • Over next four years the world’s first electric bass guitar was created (the Precision Bass®) and several other guitars were established and sold

  19. Fender History 1954: Fender Stratocaster (most popular) 1965: Fender was sold to Columbia Broadcasting Systems 1981: William Shultz named President 1985: Fender bought back and renamed Fender Musical Instruments Corporation 1991: Founder of Fender dies of Parkinson's’ disease 2005: Bill Mendello named CEO Today, Fender is the leading maker of solid- body electric guitars with an estimated 50% of the U.S. Market

  20. Acquisitions Currently has 12 subsidiaries 1965-Fender acquired Squier 1995-Guild Guitar Company 2002-Acquired Jackson Guitars 2002-Acquired Gretsch 2003-SWR Sound Corporation 2004-Tacoma Guitars Finally, 2007 acquired Kaman Music Corporation

  21. Fender Australia Est. in 1978 Supplier of Fender in the Southern Pacific Expanded to include Jackson, Gretsch, Guild, and SWR amplifiers Staff of authorized service technicians, and technical experts

  22. Fender Japan • Est. in 1982 • Consists of YamanoGakki and Kanda Shokai (the 2 companies) • Musical instrument wholesalers • Yamano has retail outlets • Shokai only distributes though other company retail outlets • 3 main Japanese manufacturing factories • FujigenGakki, Tokai, and DynaGakki • Fender chose Fujigen, but in 1997 Tokai and DynaGakki took over • Some of the Gakki guitars that are manufactured are exported but none of the Tokai guitars were are exported

  23. Fender Europe • Est. in 1997 • Premier manufacturer of Fender guitars who services all of Europe, Africa and the Middle East • Factory has average of 63 employees • Logistics and distribution costs soared • Two-stage plan that included ending partial shipments, and only shipping in bundled packages • Worked with transportation companies and merged into new warehouse (two existing ones) in Netherlands • 2007: Started manufacturing Taylor Guitars • Cheaper and targeted lower income families

  24. Distribution • Distribution center in California • All products sold around the world pass through here • All products are labeled, inspected, bar coded, weighed, and scanned before being shipped off

  25. Distribution • 5 Rules for Fender distribution: 1.) Have everything in stock 2.) Offer everything at fair price 3.) Provide same day shipping 4.) Offer reasonable credit policies to dealers 5.) Provide after-sale service • In 2003 moved into a larger plant in Ontario, California • Better technology and improved production accuracy and efficiency

  26. Technological Factors • Automated Factories • Transitioned from hand-crafted to automated • Product Cycle • Patents • Failure to obtain a patent for the Stratocaster • Components • Wood • Metal

  27. Neck Tuning Keys Strings Fret Board Body Truss Rod Frets

  28. Environmental Factors • Partnered with Greenpeace • “Music Wood” project • Developing “Green” facilities and distribution systems

  29. Geographical Factors • Headquarters • Scottsdale, Arizona • Main Production Plant • Corona, California

  30. Geographical Factors England France Japan Germany Mexico Spain Sweden The Netherlands

  31. Economical Factors • 2007 Musical Instruments Manufacturing Industry—550 firms • 1st Yamaha $4,795,000,000 • 4th Fender $ 672,000,000 • 5th Harman $ 560,600,000 • 9th Gibson $ 325,000,000 • The top twenty manufacturers earned total revenue of $20.1 billion

  32. Economic Factors

  33. Economic Factors • 2006 Leading Musical Product Suppliers • 1st Yamaha 9.37% • 2nd Harman Professional 6.54% • 3rd Fender 5.62 % • 6th Gibson 2.88% • These market shares are based on sales by the top 125 suppliers.

  34. Economic Factors • Deprecation of the Dollar • Foreign Products Cheaper • Yamaha • New vs. Old Products • School Programs

  35. Political Factors Multinational Fender Corporations Strategic Advantages

  36. Competitive Analysis Managerial Factors Competitive Factors

  37. Managerial Factors Corporate Image and Social Responsibility Strategic Analysis Flexibility Attract and Retain Employees Technology

  38. Managerial Factors

  39. Competitive Factors Product Strength Customer Loyalty Barriers to Entry Advantage Taken of Market Potential

  40. Competitive Factors

  41. Competitive Analysis of Fender and Gibson

  42. Strategy for the Future Guitar Education Fender Representatives Global Communication Structure

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