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... Golf Industry and Callaway Company Analysis
The golf industry is characterized by a medium sized market (26 million American players), a competitive rivalry between few competitors (only 6 companies commanded over 80% of the market for golf equipment in 1997) and a huge place for technological changes and innovations. The golf equipment sales have grown grew a lot significantly during the last 15 years. ...
There are some major driving forces that influence the golf industry. ... Second, the launch of the Callaway Golf ball (Rule 35) in 2000 was awaited by all companies in the industry. This innovation in the golf ball’s industry could boost the growth again and reinforce Callaway’s leader position. If it won’t be a success, it could be difficult for the Callaway Golf Ball’s company to reach his 10% market share target and to become one of the two top brands of golf balls. Last, but not least, the retirement of the charismatic CEO Ely Callaway will be a huge lifestyle concern. ... Remember that after his first retirement in 1998, the company made a lot of bad strategic decisions and obliged E. Callaway to come back and deals with a company who was going through a bad path.
Callaway Golf company is clearly the leader in the industry but all of the competitors are quite similar in price, quality range, geographic coverage, distribution channel and services offered (although Callaway Golf company has the best sales and customer service that provide him a real level of differentiation) . ...
Looking at the possible next strategic moves for the two strongest Callaway’s competitive rivals it is clear that Ping could maintain its position in drivers and irons and try to overtake Callaway in putter (Ping’s greatest strength) to become leader in this segment. Taylor Made should try to propose a real innovation instead of making new products only to response to Callaway’s innovations. ... Orlimar or Titleist and Cobra Golf) to benefit above all from biggest R&D capabilities and secondly from new endorsements.
Callaway Golf Company is distinctively better than its rivals with regards to some Key Success Factors (like technical capabilities to make product innovative improvements thanks to the Helmstetter Test Center, sales and customer services, scientific research, highest quality product). This KFS allows Callaway to gain competitive advantage. ... Callaway has to follow a cost-reduction strategy and a product innovation strategy to boost long-term competitiveness and protect profitability. This unattractive industry could be interesting for Callaway who owns skills and resources to take business away from weaker rivals. ... Strategic analysis and various alternatives
The SWOT analysis shows that Callaway Golf Company built huge financial entry barriers with aggressive R&D investment. Callaway Golf Company’s biggest danger comes from its rivals. A feasible merger or joint venture between two rivals could affect the Callaway’s leader position. To avoid this scenario, one solution for Callaway would be to acquire a rival who has complementary core competences with its own. Another solution could be to find a new segment to exploit (like clothes and accessories) thanks to the strong brand recognition and the huge Callaway’s reputation of superior quality products. ... Personnel recommendations
First, we suggest for Callaway to pursue his differentiation strategy but based not only on technological skills and quality, but also on sales and customer services. ...
Second, Callaway should try to exploit new segments like socks, gloves, caps, bags, clothes, shoes and glasses to create a special Callaway brand for the golf’s accessories. ...
Lastly, we propose for Callaway to rent its know-how and expertise, its Helmstetter Test Center and his engineers’ team to other balls producing companies in different sports like tennis, baseball and ping-pong. ... these substitutes’ products are not dangerous for the golf industry. ... Gains mad in this way will reduce Callaway Golf Company’s fixed costs. Thanks to this cost reduction, Callaway will not need to decrease its price (because consumers could interpret this cost reduction like a quality reduction) but will increase his profit margins. ... Illustration of the shorter life cycle with the Callaway’s product innovations
Type of product Innovations Date
Metal woods Big Berta driver 1990
Great Big Berta driver 1994
Biggest Big Berta 1997
Big Berta Steelhead 1998
Hawk Eye titanium 1999
Big Berta Steelhead plus 2000
Irons Big Berta irons 1994
Great Big Berta irons 1997
Big Berta X-12 irons 1998
Hawk Eye titanium irons 1999
Big Berta X-14 irons 2000
A2. The competitions forces: Porter analysis
Substitutes products: There isn’t a sport how provide the same sensations and pleasure that golf. Moreover, people how practice golf is usually rich people, and those people won’t change sport because another one would be cheaper. ... There isn’t an industry where firms are in close competition whit the golf industry’s firms.
Approximate Word count = 3941
Approximate Pages = 15.8
(250 words per page double spaced)
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