Callaway Golf Company
- What are the industry’s dominant economic characteristics?
Callaway Golf Company is a high-end manufacturer of golf equipment. Its dominant economic characteristics include high quality products and intensive promotions in order to have a high competitive advantage. It targets to reach a large market that is very competitive since there are about 26 million American golfers, and the numbers have been increasing over the years. It also tries to capture the greatest share by producing very high quality golf equipment such as clubs and shafts by use of the latest technology. It has invested many resources in adopting high-tech manufacturing strategies and promoting their products in endorsement deals, magazines, and displays. This way, they are able to reach top professional golfers worldwide, with pro shops being their main target (Thomson and Strickland Web).
- What kinds of competitive forces are industry members facing, and how strong is each force?
The members of the golfing industry face competitive forces such as price, product performance, tour exposure, technological innovations, and marketing of the brand. Callaway and other golfing companies such as Karsten Manufacturing and Taylor Made are high-end manufacturers, and a strong force for such companies is marketing and brand recognition. They target professional players and sell their pro-line equipment in pro shops. On the other hand, low-end manufacturers such as MacGregor, Dunlop, and Spalding sell their products in departmental stores targeting amateur and occasional players. Their strong force is the production of unique products that make them stand out in the market and sell their equipment at low prices. Price is a weak force in the golfing industry, and different companies set a price that will be competitive and favorable in the market (Canak 2).
- What factors are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?
Technology and innovation are the key factors that are driving change in the golf industry. Companies are striving to produce lighter golfing equipment in order to increase the scores for golfers and enhance their shots. Callaway is one of the companies that have embraced innovation to manufacture hollow metal woods and sweet spots that are bigger in size than usual. It invented the driver named Big Bertha, which marked the initiation of high-tech production. Titanium and carbon fibers are the preferred materials for making oversized drivers over stainless steel. Most golfers, due to technological advances in the industry, also preferred graphite shafts to steel ones. Therefore, with the use of technology and innovation, the industry has become more competitive since players prefer purchasing lighter equipment for increased performance and convenience. In addition, the industry has also experienced greater profit margins due to increased sales of the improved equipment in comparison with the steel equipment (Thomson and Strickland Web).
- What market positions do industry rivals occupy—who is strongly positioned and who is not? Give quantities
High-end manufactures such as Callaway occupy the biggest market share in the industry, and thus are better positioned than low-end manufactures. The high-end companies embraced innovative technology to produce equipment that woos both professional and amateur players. The low-end manufactures lacked technological advances to enable them produce innovative equipment causing their market share to diminish.
- What strategic moves are rivals likely to make next?
Rivals in the industry are likely to invest in innovative products that meet the players’ needs. In addition, they are likely to increase image branding through intensive promotions in order to increase their popularity both locally and internationally.
- What are the key factors for competitive success in the industry?
Innovation, marketing and pricing, are the key factors for competitiveness in the industry. As new companies enter the market, both low-end and high-end manufacturers, companies need to come up with a strategy to remain competitive. There is a need for improved technology in manufacturing of better equipment that is favorable and convenient to players. Companies also need to brand their products and promote them appropriately and competitively in the market. In addition, they need to have competitive prices that will attract golfers especially beginners and occasional players who may not need to buy expensive golfing equipment (Canak 1).
- Does the industry outlook offer good prospects for attractive profits?
The golf industry outlook does not offer good prospects for attractive profits because of the high costs involved in equipment and apparels. The current economic conditions in the United States are not favorable for leisure activities such as golfing thus reducing the returns on investment in this industry. However, the game is gaining popularity in India and China, which proves to be promising market for the industry since it needs to cater for the increasing number of golfers. The industry could thrive in these regions thus creating attractive profits.
Canak, Nihat. Callaway Business Case Study. Munich: GRIN Verlag, 2006. Print.
Thomson, Arthur, and Strickland A.J. “Callaway Golf Club.” McGraw-Hill Higher Education.1997. Web. 23 Aug . 2013.
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