Реферат: Callaway Golf Case Essay Research Paper Contents1
2.1.1 POLITICAL AND LEGAL FACTORS
Generally one can mention that the activities of governments worldwide during the last decade tended to globalize the industry. The trade policies of core markets like the European Union, most of Asia and the United States encouraged free markets between nations. However, country specific laws are still reality, and enterprises are still affected by them. The actual tendency is clearly orientated to furthermore encourage global competition, a fact, companies of all kinds have to respect. However, in some countries we still have Foreign trade regulations aiming at protecting the own economy. As well all the major markets are stable democracies which act with a great political and government stability, therefore this does encourage spends for leisure activities.
Monopoly restrictions may get more important for the golf equipment sector, as we already have a high grade of concentration.
As Callaway Golf is an American enterprise it deals under American law protection. The United States possess a strong developed patent right combined with a system of lawyers fees based on commission, which in the past affected the company in a way that as a consequence of settled lawsuits against competitors, mostly with knockoff imitations, it was awarded more than USD 5 million in judgments and fines for imitative infringement.
Finally it should be mentionen that theincreasing popularity of environmental protection legislation may affect future production costs in general.
2.1.2 ECONOMIC FACTORS
The company is (because of social cultural factors and its policy) mainly affected by the economical development in three key markets, which are the United States, Japan and Europe. In some of those markets the company actually noted a decrease of the total dollar volume; if the trend holds on it could affect production costs because of over-capacities.
As it would be necessary to perform an analysis of the economical influences not only in the home country, but as well in every target market, I will skip this point and solely give some basic information about the development of the world economy.
In the year 2000 we find world economy once again in a better shape. With a general increase of world industry output of 2.9 % that is about 0.3 % higher than in 1999 the world economy finally seem to have recovered from the negative influence of the Asian crisis in 1997.
2.1.3 SOCIO CULTURAL FACTORS
The socio cultural factors are very much influencing the success of an enterprise like Callaway which dedicates itself to the development and production of goods useful for just one determined target group: The golfer
In 1995 there were 25 million of americans (representing a nine percent share of the total population) playing golf, which was by far the most important target market of Callaway.. The second important target market was Asia were about 16.5 million people were playing golf. Europe with just 2.3 million is on third place. As a tendency we can say that golf is practices in the developed countries, the developing ones are not very significant for the golf industry. The typical golfer had a relatively large annual household income of USD 57.000 to USD 59.000. A level of income of which in developing countries just a small percentage of the population dispose. However this might be a problem: The target market consists of high income persons and in spite of the notable decrease of the average green fee to the 1998 GBP 17.50 during the last years, playing golf in some countries (for example Italy or in Switzerland) keeps a luxury activity. Figure 1 shows us the average joining fees in a golf club by country in GBP. Easily we can see that joining a golf club still causes costs not affordable for everyone, this still limits the target group. However, playing golf seems to be a modern phenomena. Even in Europe we noted the opening of more or less 250 new golf courses every year in the beginning on the nineties, and about 150 annual opening in the second half of the decade. And the US shows us how it could be the future. From its 25 million golfers 5.4 million were female ones and about 2 million were teenagers. states. Especially the involvement of teenagers in the sport gives us an insight in the potencies the sport offers. And in Europe still only 1.4 % (2.3 million) of the total population plays golf at least once a year. Figure 2 shows the the coverage of the population of some European countries with Golf courses. While the US offers one golf course for every 23.000 people in 1998, we can see that Europe steps far behind with a medium of one golf course per every 77.000 people. As well we can see sharp differences between the European countries themselves. As well we can detect more potential for the sport in the former communist block countries like Poland, Hungary and Russia. In Russia the first country club opened in 1993 and until 2015 an availability of more than 100 golf courses in the country is expected. Western Europe counts more than 5000 golf courses today, but the opening rate is not supposed to decrease. Finally it must be mentioned that with the opening of more and more golf courses around the world competition is increasing, with all its consequences, but mostly we will see falling joining fees for private clubs and falling green fees in the public one. This will furthermore increase the target group for Callaway Golf. Golf forms today an important part of the upper classes life and is absolutely en vogue . As well we have to see that golf is not an one time investment, players usually buy other clubs, frequently buy golf balls etc. All these goods belong to the product line Callaway offers. As a conclusion let me mention that in spite of the specialization on golfers Callaway has excellent opportunities, because Golf is in , the rapid growth in one core market, the United States, is not supposed to come to an end soon, and the potential in other markets is enormous.
2.1.4 TECHNOLOGICAL FACTORS
In the golf equipment industry there was nearly no technological progress for decades. With the introduction of perimeter weighting in the late sixties we experienced a tendency to more and more introduce advanced technology in golf equipment. The next key invention was made in the early 80 s with metal woods, in the late 80 s followed graphite shafts and in the early 1990 s finally appeared the oversized club head. From the late 80 s on we have seen more and more expenditures into Research & Development, and the appearance of advanced technology completely changed the market structure.
A further consequence was that product innovation caused shorter life cycles and stimulated sales, because of the customer supposition that the technology will improve their game. Technology transfer was still possible in short time, and the market leader were steadily attacked by companies with knockoff imitations.
2.2. THE INTERNATIONAL GOLF EQUIPMENT MARKET INTRODUCTION
During the last years the market size of golf equipment generally experienced rapid growth. Solely the US market had a total sales volume of an estimated USD 2.410 million in 1997. Compared with 1996 we noted a growth rate of about 5 %, slightly less than 1995/1996 when sales in golf equipment rose by about 7%. That means as well that the share of golf equipment sales in the total sports equipment market raised from 9% in 1986 to 15% in 1997, a sign for an increasing popularity of golf (see chapter 2.1.3.).
Competitors
The worldwide market for golf equipment is highly competitive and extremely dynamic. However in 1997 there were more than 350 enterprises involved in manufacturing golf equipment, but only six of them dominated over 80% of the market. Therefore we can talk of a high grade of concentration. As well it was estimated that only those six companies were profitable. Callaway Golf finds itself among some very strong competitors; the best positioned ones are Karsten Manufacturing, Taylor Made, Cobra Golf (which belongs to the Fortune Brands group, which actually as well is home for two other golf equipment companies: Titleist and Foot-Joy), and the old fashioned competitors like Wilson, Spalding and MacGregor who even with the introductio of technologically advanced clubs- were not able to regain the market share they lost before. These companies are well established and well financed and in possession of recognized brand names. Apart from that there are a couple of small uprising companies attacking the market leaders with knockoff imitations (see chapter 2.1.1). In the golf ball segment, which is as well highly competitive we can find one competitor with an estimated market share of more than 50%. Callaway Golf ball company s mayor competitors are brand names like Slazenger, Titleist, Spalding, Wilson and Maxfly. But on all mayor golf markets in the world Callaway Golf still remains the number one in sales.
As distribution channels we see mostly on-course pro shops and some off-course retailers specialized on golf equipment. Examples are Edwin Watts and Nevada Bob s. During the flow of time the last ones gained more importance because of offering a wider range of brands and more aggressive marketing. But they generally only hold pro-line equipment on stock, and offer as well qualified personnel or even computerized systems to fit the golfer with the for him optimal club. While high-end manufacturer still keep this distribution system (necessity of custom fitting ), we find as well low-end manufacturer who are distributing through discounters, mass merchandisers and sporting-goods stores. They attract basically newbies to the sport as well as occasional golfers who don t want to spent that much money in equipment.
The golf equipment market today is very dynamic, and with increasing spending for Research & Development we experience shorter and shorter product life cycles.
As well because of the more and more advanced technologies implemented in a simple golf club the necessities on raw material and goods delivered by subcontractors as well increase. Today it deals with to a high grade customized products which leads to high switching costs and bigger interruption times when it comes to a change of buyers. However the companies consider it still not too complicated to find alternative suppliers. As well the raw materials are available and until now there are signs of shortage in the future.
As already mentioned only six of the more than 350 competitors on the golf equipment market are profitable.
Callaway uses as well sales companies established in the target markets, as partnerships with other companies. Since the year 2000 in Japan for example the products are delivered directly to retailers by a wholly owned sales company. This is supported by a new product introduction policy which encourages retailer support and as well assures client support before and after the purchase of Callaway equipment.
As well there exists a certain quantity of products that are sold through unapproved outlets or distribution channels, but mark a notable part of the total sales.
One of the core points in advertising is to be present at all the grand international opens. An important indicator of popularity is the use of drivers or clubs of a certain brand by pros in international tournaments. The golf equipment manufacturing companies try to endorse the most popular players, and in history for some of them this became instrumental, one is example is Cobra Golf who contracted Greg Norman, another Titleist with the endorsement of Tiger Woods. However, endorsement of players gets more and more costly, because the contract amounts get bigger and bigger.
2.3. ANALYSIS OF THE COMPETITIVE FORCES (FIVE-FORCES-ANALIYSIS)
Competitive rivalry
By the end of the 90 s competitive rivalry in the golf equipment market was high. Only six manufacturers dominated more than 80% of the world market, and most of them had roughly the same size.