Реферат: Callaway Golf Case Essay Research Paper Contents1

3.3. KEY FACTORS FOR COMPETITIVE SUCCESS IN THE INDUSTRY

Generally we talk about the necessary resources a company must have to compete in the business connected with the threshold competences. If a company tries to be competitive successful that may not be enough and it is necessary to have unique resources and core competences.

From the customer demand point of view there exist a couple of factors which are of critical importance for their buying decision. These are the following:

Following the clients self-assessment the willingness to pay a certain maximum price

The possibility to notably improve the golfers game because of advanced technology clubs

The availability of the clubs in reach of the potential buyer and the pre-purchase service quality

Customer perception of the companies quality (image)

As a consequence of the first one a company needs to have sufficient financial resources and as well a good cost efficiency. If a product is too high priced compared to competitors products it will probably have problems to find buyers. On the other hand the selling price on long-term view must be profitable, otherwise the company will get driven out of business. Cost efficiency is affected by supply costs, experience, product & process design and the influence of economies of scale, which we can term as key success factors.

The second point demands a good product, or better an outstanding product, which provides advantages compared with the products of the competitors. For the company it means that R&D becomes critically important (necessity of facilities) and that as well there must be an efficient quality control, better tending to Total Quality Management.

The availability links with an efficient net of distribution and sufficient production capacity to provide the customer with the demanded amount of clubs. The net of distribution includes the necessary sales personnel etc.

The perceived value by customers of a couple of factors the customers values most in golf equipment. Normally there is an hierarchical order. In the golf equipment industry we can identify more or less the following order:

1. Technical quality

2. Delivery reliability

3. Post-Sales Service

4. Overall Reputation

This order may vary from costumer to customer.

Once achieved a competitive advantage facilitates the business, but it has to be maintained. For example Cobra s in-house production of graphite shafts is a competitive advantage, which makes the company more independent to supplier power. Besides it is not very easy to imitate, it needs to undertake massive investments in facilities etc. But once gained by competitors as well a competitive advantage is not anymore. It is very important to use it to gain market share etc.

3.4. THE PROSPECTS FOR ABOVE AVERAGE PROFITABILITY IN THE GOLF-EQUIPMENT INDUSTRY

The number of golfers on the US Market has only seen a very moderate growth during the last 10 years. This might be a sign for that the target group reached its maximum size with a 9% of the total population and that golf in that market is at the climax of its popularity. Further growth of the target group could be linked to the population growth rate, but not higher. But in spite of the target group remaining at nearly the same level, we had an exploding market volume in the nineties. Thanks to advanced technology we experienced a change in costumer preferences, the costumer replaced his old iron by the new one, which promised to help him to improve his game. We experienced Research & Development as key factor in the business and companies dominating the market for decades nearly disappeared in a few years.

Because of increasing worldwide market convergence we can today preview the popularity of golf worldwide will close up to the north American level. Therefore there is huge growth potential in the industry, which we can suppose above-average.

With increasing globalization and concentration in the industry we will see a weaker threat of entry in the industry for the following reasons:

Immense marketing costs to enter

Immense R%D Investments

Market structure close to oligopoly

Built up customer preferences to stick to their company in major markets

Only a few of the competing companies will be profitable

Risk loss of R&D expenses because of intervention of R&A or USGA

Huge dependency of retailers on the companies (Pro shops)

The Buyers Power on the other Hand is supposed to increase in the future because of a high grade of concentration opposing a larger number of operators on the supplier side. Another reason is the tendency to backward integrate suppliers in the industry. The switching costs from one supplier to another remain still low.