Hohner_Case_Problem-Rev_0920.docx - JULIE HENNESSY AND EVAN...

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JULIE HENNESSY AND EVAN MEAGHER 3-112-001 REVISED SEPT 2020 Hohner Musikinstrumente GmbH & Co. KG: Break-Even Analysis Helmut Schmidt recently had been promoted to product manager for Hohner Musikinstrumente GmbH & Co. KG, the world’s foremost manufacturer of harmonicas, accordions, melodicas, and ukuleles. He was sitting at his desk in Trossingen, Germany, reviewing his first assignment, which had just come from the company’s senior executive team. Schmidt, a marketing major who had barely survived Finance I, had just two days to calculate the break-even point for the company’s flagship product, the Marine Band harmonica. A Brief History of the Harmonica Most historians track the harmonica’s roots to ancient China, where either Empress Nyu-kwa or Emperor Huang Tri—depending on the source—invented the sheng in about 3000 B.C. This predecessor to the harmonica used a similar “free-reed” design, in which reeds were affixed to one end of a small, handheld base (the wind chamber); by blowing into the mouthpiece, the player produced a tone when the reeds vibrated. Over the next few thousand years, such free-reed instruments became popular throughout Asia, ultimately making their way to Europe, where organ makers such as John Buschmann and his son Christian Friedrich Buschmann began producing smaller and smaller versions in the early nineteenth century. In the 1850s, Joseph Richter, an American immigrant from the Czechoslovakian region of Bohemia, invented the modern “diatonic” harmonica by adding a second set of reeds on the other side of a cedar “comb,” which were activated by breathing in rather than by blowing out (see Exhibit 1 ). Today, this so-called Richter tuning remains the most common tuning for harmonicas all over the world. The design for the Richter-tuned harmonica, which combines layers of reeds, a comb, and top and bottom cover plates, prompted harmonica players to nickname it the “tin sandwich.” The Richter tuning originally was designed to play Eastern European folk music, but the diatonic harmonica changed forever when its popularity grew among American country ©2012 by the Kellogg School of Management at Northwestern University. This case was developed with support from the December 2009 graduates of the Executive MBA Program (EMP-76). This case was prepared by Evan Meagher ’09 under the supervision of Professor Julie Hennessy. Cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. To order copies or request permission to reproduce materials, call 847.491.5400 or e-mail [email protected] No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Kellogg Case Publishing.
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