The Nazareth, Pennsylvania-based C.F. Marin Guitar Company has been producing acoustic instruments since 1833. A Martin guitar is among the best that money can buy. Current CEO Christian Frederick Martin IV--better known as Chris--continues to be committed to the guitar maker's craft. During 2002, the company sold about 77,000 instruments and hit a record $77 million in revenue. Despite this success, Chris is facing some serious issues.
Martin Guitar Company is an interesting blend of old and new. Although the equipment and tools may have changed over the years, employees remain true to the principle of high standards of musical excellence. Building a guitar to meet these standards requires considerable attention and patience. In a 1904 catalog, a family member explained, “How to build a guitar go give this tone is not a secret. It takes care and patience.” Now well over a century later, this statement is still an accurate reflection of the company's philosophy.
From the very beginning, quality has played an important role in everything that Martin Guitar does. Through dramatic changes in product design, distribution systems, and manufacturing methods, the company has remained committed to making quality products. Part of that quality approach includes a long-standing ecological policy. The company depends on natural-wood products go make its guitars, but a lot of the wood supply is vanishing. Chris has long embraced the responsible use of traditional wood materials, going so far as to encourage suppliers to find a sustainable-yield alternative species. Based on thorough customer research, Martin introduced guitars that used structurally sound woods with natural cosmetic defects that were once considered unacceptable. In addition, Martin follows the directives of CITES, the Convention on International Trade in Endangered Species of Wild Fauna and Flora (www.cites.org), even though it has the potential to affect its ability to produce the type of quality products it has in the past. This treaty barred the export of the much-desired Brazilian rosewood, which is considered endangered. A guitar built from the remaining supply of this popular wood has a hefty price tag-more than $9,500. Similar prices may be in line for the leading alternative. Honduras mahogany.Even ebony, used for fingerboards and bridges, is likely to be next. Chris says, “All of us who use wood for the tone (it makes) are scrambling. Options are limited.”
Although the company is rooted in its past, Chris isn't afraid to take it in new directions. In the late 1990s, he decided to start selling guitars in the under-$800 segment, a segment that accounts for 65 percent of the acoustic guitar industry's sales. Although this model doesn't look, smell, or feel like the company's pricier models, customers claim it sounds better than most other instruments in that price range. Chris explained, “My fear was that if we didn't look at alternatives, we'd be the company making guitars for doctors and lawyers. If Martin just worships its past without trying anything new, there won't be a Martin left to worship.”
Questions
1.How do you think good decision making has contributed to the success of this business?
2.A decision to move into a new market as Chris did is a major decision. How could he have used the decision-making process to help make this decision?
3.What criteria do you think would be most important to Chris as he makes decisions about the company's future?
4.Would you characterize the conditions surrounding C.F. Martin Guitar Company as conditions of certainty, risk, or uncertainty? Explain your choice.
5.What could Chris learn from the concept of highly reliable organizations to help him be a better decision maker?