Case 3 - Competition in the Golf Equipment

Topics: Golf, Golf ball, Golf club Pages: 17 (6113 words) Published: April 30, 2013
Case 3
Competition in the Golf Equipment Industry in 2009

1.What are the defining characteristics of the golf equipment industry? What is the industry like? The sport of golf has a long and regal history. Televised tournaments in the fifties and sixties in America meant that more people became interested in the game. The golf equipment industry in 2009 is in the middle of a crisis with the number of players stalling and the sales of equipment declining since 2006. The industry is defined by endorsements, branding, technological advances and regulation. The industry is currently in a state of decline. The recent recession and the onset of regulations from the USGA and the Royal and Ancient society have had a negative impact on the golf equipment industry. i.Political/Regulatory

The increase of counterfeit items available and their easy availability shapes the industry greatly. It also shapes the relationship between the rival companies. They were able to form an alliance to take a major stance against this issue and to receive the cooperation of the Chinese government whose usual stance is to disregard patents and copyrights. The level of regulation within the industry has risen also leading to situations where companies must take stock off the market each time a new rule is introduced. This has a negative effect on the industry itself. ii.Economic

There is a global recession at the moment and the golf industry is another segment that is feeling the effects of it. The levels of incomes are falling as levels of unemployment rise. Spending on non-essential activities is decreasing and we are seeing a rise in the uptake of “free” hobbies such as walking. People are tending to save now as opposed to spend. However once the economy begins to recover golf maybe one the sports that will see the participation number rising again.

iii.Social Factors
The number of people in the US playing golf at least once a week was 22.7 million, this was a 5 million decrease compared to ten years previously. The reason for this is the lack of free time available to partake in a game of golf. Another reason for the decrease could be the difficulty involve in learning and improving at the game. It needs a lot of time and patience. Unfortunately those that relied on using equipment to improve their handicap are left disappointed due to the regulations introduced. iv.Technological Factors

Technological advances are to improve the user experience be it in virtual or real golf. The technological development of the 1990’s was doing just this. Companies were improving their products by using new technology thus boosting the user experience. Longer drive distances gave golfers confidence. It also allowed recreational golfers to aspire to a better more professional handicap. Greater accuracy also encouraged recreational golfers. These advances not only enhanced recreational golfers but also the professionals. The average driving distance in the PGA tour “increased from 257 yards in 1980 to 290 yards in 2005” v.Rapid growth of technological innovation

Golf equipment manufacturers had developed innovations at a rapid clip which makes the game easier to play. The advent of improvement equipment was also a benefit to the world’s elite professional golfers. For instance, the technological innovation proved to give golfers of modest skills an assist such that their bad shots were not quite so bad. The primary benefit of technological advanced golf clubs and balls related to distance. vi.Innovation of golf equipment features controlled by golf’s governing organization (USGA) The most of golfers did not want to purchase equipment that violated the USGA’s Rules of golf. The USGA clarified its purpose of barring products like the ERC II in 2002 by stating “the purpose of the rules is to prevent an overreliance on technological advance rather than skill and to ensure that skill is dominant element in determining success throughout the game.  2.What...
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