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... Only two club makers have integrated backwards into making shafts, one of them being Callaway and none have integrated forward into retailing. ... Because of that economic characteristic and because the industry is mature, it has consolidated into the dominant Callaway Golf, Karsten Manufacturing, Cobra Golf, and Taylor Made. ... Callaway has even increased its profit margin to 18. ... Every 2 or 3 years, there is a new market initiative of Callaway’s competitors to provide a high-tech golf club with matching or improved performance characteristics. ... Who are Callaway’s closest rivals? ...
Callaway closest rivals, as perceived by the company’s mangers, are Karsten Manufacturing and Taylor Made because of their experience in technical innovation and strong brand image but Cobra Golf should also be considered a close rival because it contended the first place in sales of irons with Callaway and was the third in the sales of drivers and woods in 1996. ... Yonex drivers and irons are endorsed by both the second and the ninth ranked players, while Callaway has endorsements only for its drivers. Mizuno also has more endorsements for irons than Callaway. ...
The key success factors in the golf equipment industry have proven to be scientific research expertise, product innovation capability, and good advertising, which builds popularity and high-quality reputation among golfers: Callaway’s number one market position must be attributed to the unmatched R&D expenditures of $36. ... The importance of advertising for successful competition is evident both from the 20% increase of selling expenses of Callaway from 1995 to 1996 and the increasing dollar volume of player endorsements. Greg Norman’s endorsements of Cobra’s equipment, for example, were instrumental for its successful rivalry with Callaway. ... What is Callaway’s strategy to compete in the industry? ...
Callaway employs a broad differentiation strategy to compete in the industry. ... To be able to differentiate in a way, valuable for the clients, and increase their satisfaction, Callaway made large investments in research and development. ... Callaway’s strategy turned out so successful that they became the market leader in 1993 from the 23rd position in 1989. Callaway’ s ranking as the leader not only in sales but also in technology, product innovation, and product quality, has stayed stable for four years and established its superior market performance. The profit margins are increasing (Table 2) but the offensive moves of rival companies such as introduction of their own innovations (the Bubble shaft of Taylor Made, for example) have caused the growth rate of net profits to decline and to hurt the financial performance:
The growth rate of Callaway’s sales at 23% is still much higher than the industry average of 5% but it has experienced a sharp decline (Table 3), which is another signal that the sustainability of Callaway’s strategy is eroding. ... What are the resource strengths and weaknesses of Callaway Golf Company? ... What new market opportunities does Callaway have? ...
Callaway has a remarkable list of competitive strengths:
The strongest advantage that Callaway enjoys is their clear and well-known strategy to capitalize on proven skills in developing innovative products. ... Another strength is the strong brand image they have gained because of their widely recognized market domination ( 64% of totals drivers used by professionals and 75% of titanium drivers used in tournaments are Callaway’s),which even allowed the company to use some free advertising because winning players used their hi-tech golf clubs without being endorsed. Callaway has also formed a strategic alliance with Sturm, Ruger & Company which may result in a beneficial synergy. ...
The core competencies of Callaway that are distinctly different from rivals are: the demonstrated experience of the company employees in producing the best drivers in the industry, the management and especially Ely Callaway’s business acumen in recognizing the importance of technological innovation and good customer service and the ability to custom fit at the Helmstetter Test Center each golf club to the particular requirements of the touring professionals. ...
Otherwise, the major opportunities that the managers of Callaway have opened for exploration are connected with related diversification of the company. Callaway Golf has made a licensing agreement with Nordstrom to introduce its brand for apparel and shoes. The newest initiative of Ely Callaway, namely the subsidiary Callaway Golf Ball Company, to develop a superior golf ball and challenge the domination of Titleist could become a major cash generator for the company at a moment when the demand for golf equipment is slowing down. Additionally, Callaway could investigate the possibility of manufacturing putters besides the irons and woods to fully take advantage of curve effects of the already built technological know-how.
Approximate Word count = 3732
Approximate Pages = 14.9
(250 words per page double spaced)
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