Golf Industry Callaway Case

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Callaway Case: Golf Equipment Industry

1. What are the industry’s dominant economic characteristics? According to a recent market study "Opportunities in the Global Golf Club Market 2004-2009" published by E-Composites, Inc ,within the last 5 years, the golf industry has seen a significant growth of 5-15% annually at various regions of the world. The market size for the worldwide golf club manufacturing industry is estimated at US $3.9 billion. An increasing number of golfers in the world have come to rely on higher- level products and thus titanium and carbon fiber have become the mainstream materials in the industry, and the trend now is toward lightweight golf clubs. According to the study, carbon composites dominate over steel in the manufacturing of golf shafts. The market for manufacturers of golf clubs / golf shafts is crowded with small to large corporations such as Callaway, Taylormade, Acushnet, Ping Golf and Wilson. There are more than 100 manufacturers of golf clubs around the world and about 50 of these golf clubs/shafts manufacturers are in the USA. Suppliers of golf clubs/shafts are mostly based in the US, China, Taiwan, Korea, Japan, UK, and Germany.

2. What kinds of competitive forces are industry members facing, and how strong is each force?
According to Hoovers, competition is driven by the demand in consumer income and demographic trends. The profitability of individual companies depends on unique product designs and effective marketing. Large companies have some advantages in brand recognition, but small companies can compete effectively by building unique products. The golf equipment industry can be broken into two competitive groups: low-end and high end manufactures. The low-end manufactures include companies such as Spalding, MacGregor, and Dunlop. These manufactures mainly sell their equipment in department stores. The high-end manufactures include Callaway, TaylorMade and Karsten Manufacturing. These manufactures sell...
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