Реферат: Callaway Golf Case Essay Research Paper Contents1

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The historical analysis shows that we had a couple of Boom Years in the early nineties and a decreasing growth rate later on. We still see the market of golf equipment grow moderately. Interesting is that the number of golfers during those years remained stable or was growing moderately. This means that the growth of market size was more attributed to the golfer s preference to can choose between a number of woods, than to the entry of new golfers on the demand side of the market. That furthermore means that the introduction of advanced technology in the game led to a change of costumer preferences. Golfers bought the high technology clubs to see their possibilities and to generally improve their game, and they liked to have different clubs to choose from. This preference demands a higher grade of product differentiation to satisfy the necessities. Taking this change of attitude into account and as well reviewing the socio cultural factors we can draw the conclusion that the decrease of the growth rate will probably come to an end and we will see a stable annual growth rate of around 1 or 2% in the future because of the following facts:

Golf as a sport is still en vogue

Increasing competence between private and public golf courses will lead to a further decrease of green fees and joining fees; that will furthermore lead to an enlargement of the target group

Finally the opening of golf courses in Russia may have signalized an increasing convergence of markets worldwide. Customer preferences become more and more similar. Therefore there is a big possibility that the possible size of target groups worldwide will close up to the one of the United States, where 9 % of the population are more or less active golfers. In Western Europe and Asia we are still far behind that rate, which finally means that those markets offer enormous potential.

Product innovation led to a change in buyer s behavior, it gets more and more common to have more than one driver and a series of woods, this as well improves market size.

However with a persistent tendency to globalization there might appear other companies in the business attacking the already established ones in certain target markets or just compete in their home market. As well it cannot be excluded that other major companies will entry the golf equipment industry, but because of the high grade of concentration we already see this would result in huge marketing and R&D expenses to get a high rating of name recognition. In the golf equipment industry this requires most of all high quality products, we already know that even companies with decades of experience in the golf business are experimenting heavy problems in regaining the market share they lost because of unawareness of the their clients necessities.

However it would easily be possible that companies exit the market segment. As already mentioned above it was estimated in 1997 that only six of the more than 350 competitors in the business are profitable. It is logical that companies generally not maintain an unprofitable commitment in the golf equipment sector for too long time. Indeed, exceptions are possible, for example when companies spend money they earn in other sectors to establish themselves in the golf equipment industry or maintain their position because of other reasons (i.e. image).

Marketing innovation seems to be a driver of change of less importance in the golf equipment industry, the main marketing activity remains the endorsement of pros.

Research and development already is of huge importance, the technological innovation in the golf equipment industry not only forms an entry barrier to the market, it could even lead to the disappearance from the market of companies not able to keep pace with the general technological development for whatever reason.

Anyways, mainly because of the seasonal character the industry has the capacity of remaining companies would be big enough to satisfy the demand.

Government policy changes generally are not supposed to influence the industry dramatically; it may appear an increase of direct or indirect taxes and other , indeed, but the expected consequences would be moderate because of:

relatively high income level in the target group (not very elastic to indirect taxes)

direct taxes would affect the company but could be compensated by moving the company to an other country, etc. (consequence of globalization)

special taxes levied for ecological protection are mostly related to companies causing danger to natural resources or to energy intensive industries. They would only affect enterprises who are in possession of founding facilities etc. and could i.e. be compensated by pricing measures.

More effect on the industry could have the alternations of standards established by organizations like the United States Golf Association USGA or the Royal and Ancient Golf Club of St. Andrews R&A . There is neither a guaranty that existent or future products of involved companies will not be affected by changes of the standards, nor that those changes will not effect sales dramatically. (i.e. it could be possible that a certain golf ball product cannot be used in tournaments because of a change in standards).

Changes in cost and efficiency as well are one of the more important drivers. Apart from the influence of labor unions in some countries that could affect the companies efficiency with demands for i.e. additional payments, more spare time etc. or with measures applied to satisfy their demands (call of strikes etc.) there exists a certain dependence on subcontractors and materials. In the industry there is a certain tendency to backward integrate subcontractors, but at least the prices of some raw materials, i.e. Titanium, could dramatically affect production costs.

As well costs could appear in case of unwanted violation of any patents, trademarks etc., already existing on the market. This point has as well to be seen connected with government policy and their changes, because the implementation of laws and the process of lawsuits should be categorized as part of that driver of change.

3 The companies and their strategy

3.1. WHICH COMPANIES ARE IN THE STRONGEST/WEAKEST COMPETITIVE POSITION

To determine what companies are in the strongest or weakest competitive position the first step is to compare strategic characteristics and basics on which companies compete. For this strategic group analysis we will take into account all the companies active in the golf equipment industry we can consider competitors.

That means: Callaway Golf, Cobra Golf, Karsten, Taylor Made as well as the more traditional manufacturers (i.e. Spalding Sporting Goods) and the competitors which lack a notable market share (i.e. Dunlop).

The characteristics we will review are the following:

Extent of geographical coverage

- As golf is an international sport and it is necessary for manufacturers to be present at all the most important international tournaments we cannot identify differences in that area

Number of market segments served

- Here we can identify differences. Exist companies we can see as alrounders like Callaway golf (production of clubs, steel shafts, graphite shafts, golf balls), exist as well companies who specialize themselves on a certain field like Karsten Manufacturing (does not produce graphite shafts)