Реферат: Callaway Golf Case Essay Research Paper Contents1

Buyer Power

Buyer Power varies. With increasing size of the companies they demanded bigger and bigger amounts of raw materials from the suppliers, so it tends to increase. However, golf clubs are not that material intensive, therefore we still consider the buyers power here low.

When it comes to customized goods like shafts etc., we consider Buyer Power as high because of a high grade of concentration, the tendency to backward integrate suppliers etc. This is at least valid for the graphite shaft segment, the steel shaft supply differs a lot because the supplier side there is highly concentrated.

Supplier Power

Supplier power was dependent on the product. As most golf club producers don t believe that grips make a difference to the golfer, supplier power in this segment was quite low. They purchase a limited of grips from one producer, but in case they would be easily ready to change their source.

When it comes to Golf club shafts, supplier power was higher. Because of the very high entry investment in the steel shaft market there are only a few companies competing, the reputation having True Temper.

The graphite shaft market again comes up with very low supplier power. Because of the relatively cheap investments necessary to produce graphite shafts we see some more manufactures on the market as well as buyers tendencies to backward integrate suppliers. As well we have to take into account that with the demand of more and more customized product from the buyers side, the supplier power will grow.

In Raw Materials Supplier Power is still low.

Threat of substitutes

Golf clubs are basically a generic product and must be aware that there is always the threat of substitutes. Companies fight for their share of a relatively small target market. As companies pay high sums to link professionals with their products, they offer high quality before and after purchase service to keep their clients in the line.

Threat of entry

The threat of entry in the economy is not that big because the market is relatively small size and today a successful engagement on the golf equipment segment needs skill and enormous startup investments, mostly in Research & Development. As well it takes time to establish a new brand in the market, when it has to be build up from the scratch.

However keeping in the potential the golf market offer it might be possible that i.e. other sporting goods manufacturers will give it a try.

2.4. ANALYSIS OF THE DRIVERS OF CHANGE IN THE INDUSTRY AND THEIR IMPACTS

Changes in industry growth rate

The market for golf equipment worldwide amplified notably during the last fifteen years. As example in Table 1 we can see the development of market size in the United States and the annual growth rate:

Year Sales of Golf Equipment (in million USD) Groth rate (related to the year before)

1986

1993

1994

1995

1996

1997 (est.) 740

1.490

1.793

2.130

2.295

2.410 Not available

Not available