M.tariq khan ..golf equipment industry

Competition in the golf Equipment Industry

in 2005

Question 1 :What are the industry’s

dominant traits ?

Market size and growth rate

PRODUCT innovation along with

celebrity endorsements are the key

factors for the growth of the

industry

Product Innovation

Callaway golf company 1991 launch of

oversized big bertha drivers

The manufactures of golf equipment

introduced new products at intervals of

12-18 months

Technology

Competitive rivalry in the industry

centered on technology innovation in

club head and shaft design product

performance company image and tour

exposure ,New comers are more inclined

to add new techniques in the game for

which they like to experiment with the

different.

Question 2.

What kind of competitive

forces are industry

member facing

Threat of New Entrants/Entry BarriersFactors HUF MU Neutral MFA HF Comment

Economies

of scale

Capital

required

Access to

distribution

channels

Even small size

companies can compete

at low cost

A new entrant can

easily locally produce

and market its product.

product were available

in the market or direct

sales

Threat of New Entrants/Entry BarriersFactors HUF MUF Neutral MF HF Comment

Differentiati

on

Brand

Loyalty

Govt. Action

Little differentiation

among most competing

products.

Brand loyalty is for big

players

USGA, PGA

Exit Barriers

Factors HUF MUF Neutral MF HF Comment

Specialized

Assets

Government Barriers

Assets are not easily

convertible to other related

products

As such no government barriers

The bargaining power of suppliers

Factors HUFA MUFA N MFA HFA Comments

No. of important Suppliers

Switching cost

Threat of forward integration

Fixed suppliers

Less differentiation

Stagnant Market

The bargaining power of Buyer

Factors HUFA MUFA N MFA HFA Comments

Number of

Important

buyers

Threat of

Backward

Integration

Switching

cost

Few buyers, Stagnant Mkt

No such issue reported again

Many product are available by

the different companies and

they have Low differentiation

so there is no such switching

cost

Factors HUFA MUFA N MFA HFA Comments

Profit

earned by

buyer

Quality of

Product

Stagnant Mkt

Product Innovation

The intensity of competitive rivalry

Factors HU MU N MFA HFA Comments

Composition

of

Competitors

Mkt. Growth

rate

Scope of

competition

5 big competitors

Stagnant Market

Presence of

callaway,adidas,cobra,titleist,

ping,nike enhanced the scope

of competition to global level

Factors HU MUF Neu MF HF Comments

Capacity

Increase

Degree of

differentia

tion

Strategic

Stake

Callaway and other

companies increase there

capacity as per demand to

compete in the market and

also less golfers

Degree of differentiation

was little in spite of various

major players competing

Strategic Stake is high for

global competitors

Overall Industry Attractiveness

Factors Unfavorable Neutral Favorable

Entry Barriers

Exit Barriers

Rivalry among

existing firms

Power of buyers

Power of

Suppliers

QUESTION 3: forces exerted

greatest influence over next 1-3

year

Product innovation

Entry or exit barriers

Increasing globalization

Marketing innovation

a.

Are driving forces acting to cause

market demand for product to

increase or decrease

These 4 drivers of change will increase or decrease the

demand for the product

Are driving forces acting to make

competition more or less intense

Yes these forces make the competition between rivals

more intense

Will driving forces lead higher

or lower industry profitability

As the demand for the products increased the

profitability of the industry will be higher

Strategic Map of the

Industry

PRODUCT INNOVATION

P

E

R

F

O

R

M

A

N

C

E

Callaway

TaylorMade

Titleist/Cob

ra

Ping Golf

Nike

Key Success Factors: CPM

Key Success Factors

Technological Innovation

Customization

Direct Sales Distribution

CPMStrategic Factor Weight Callaway Rating

Callaway

Weighted Score

TaylorMade

Rating

TaylorMade

Weighted Score

Technological

Innovation0.4 7 2.8 6 2.4

Customization 0.3 6 1.8 6 1.8

Sales 0.3 9 2.7 8 2.4

Total 1 7.3 6.8

Strategic Factor WeightTitleist/Cobra

Rating

Titleist/Cobra

Weighted Score

Ping Golf

Rating

Ping Golf

Weighted Score

Technological

Innovation0.4 5 2.0 6 2.4

Customization 0.3 6 1.8 5 1.5

Sales 0.3 5 1.5 6 1.8

Total 1 5.3 5.7

CPM

Strategic Factor Weight Nike RatingNike Weighted

Score

Technological

Innovation0.4 5 2.0

Customization 0.3 8 2.4

Sales 0.3 7 2.1

Total 6.5