Golf Company the Calloway Golf Website States Essay

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Golf Company

The Calloway Golf website states that their aim is pure in that they are "always looking to raise" their game and as well stated is that each day the company searches for "Pure innovation and performance." (2011) The Calloway Golf Company offers a 'wide range of products, each with advanced technology nd a variety of options suited to every type of player. Callaway Golf's specific 'Mission Statement' is as follows:

"Callaway Golf Company is driven to be a world class organization that designs, develops, makes, and delivers demonstrably superior and pleasingly different golf products that incorporate breakthrough technologies, and backs those products with noticeably superior customer service. We share every golfer's passion for the game, and commit our talents and our technology to increasing the satisfaction and enjoyment all golfers derive from pursuing that passion." (CallawayGolf.com, 2011)

Vision

Callaway Golf's vision statement is as follows:

'One good shot it not enough, so let's play Golf." (2011)

III. Primary Stakeholders

Primary stakeholders for Calloway Golf include the owners, investors, non-profits affected, as well as customers and Board of Directors for Callaway Golf.

IV. Five Forces of Competition and How Company is Impacted

Buyers

Buyer Power -- It is reported that high-end golf-equipment manufacturers sell through on-course golf-shops, off-course golf shops, and online venues." ( Harkness Consulting, 2010) The largest majority of these distributors are not large and generally do not account for more than 3% of a manufacturer's sales because of low buyer power. (Harkness Consulting, 2010) It is reported that this would have been different "if the high-end manufacturers chose to use the same channels are low=end ones: End users, or "core" golfers in this case, have some buyer power because they usually have the information about the features of the products they're buying. Many golf magazines feature comparisons of various golf clubs and their performance characteristics, and this information is easy to find, making golf equipment, essentially, a "search good." Also, end users have relatively low switching costs between rival products, adding to their power.

Supplier Power -- It is reported that on the supplier side "the essential aspect is the labor force employed in R&D and selling and marketing campaigns that a golf equipment manufacturer undertakes. The market for star golfers is a very limited one, which leaves very little power to golf equipment manufacturers. There are little outsourcing opportunities in design because almost all pieces of an iron are technologically advanced (aside from the grips that can be outsourced rather easily), and this gives more power to the labor suppliers in R&D.( Harkness Consulting, 2010)

Competitive Rivalry -- Stated as the primary driver is the "…number and capability of competitors in the market. Many competitors, offering undifferentiated products and services, will reduce market attractiveness. (Harkness Consulting, 2010)

Substitution of Products - Substitution is a "strong competitive factor within the high-end segment for golf clubs, and brand loyalty is not a strong defense against competition above a certain price threshold. A "core" golf player would probably view Callaway and TaylorMade drivers as very close substitutes." (Harkness Consulting, 2010) An older model of golf clubs is reported to potentially represent a threat and specifically close substitutes for the newer ones by many core and non-core players.

Threat of New Entrants -- stated to be 'moderate'. "A small player entering the golf equipment market would not be competing for the same type of customers as Callaway, simply because it would not have the technologically advanced equipment and the brand name that Callaway has to offer. Since the high-tech materials, such as carbon fiber or super-light metal alloys, used in production of high-end golf clubs are available from only a few manufacturers, a small company would have a difficult time accessing these. And given that Callaway's inventories and property, plant and equipment amount to almost $380, and considering the importance of R&D and marketing, the expenses that an entrant would have to incur in order to compete on the same level with a company of Callaway's scale, stand at half a billion dollars." (Harkness Consulting, 2010)

V. SWOT Analysis

Strengths

(1) Callaway golf products built and designed on Carlsbad, California campus where most of the 3,000 individuals employed for the company work.

(2) New technology and methods of production turned Callaway Golf, originally a small golf club manufacturer into the world's largest premium golf club producer and a dominant force in the industry.

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(3) Callaway designs and manufactures high quality golf clubs and sells accessories.

(4) Callaway Golf Company and its subsidiaries design, manufacture and sell high-quality golf clubs and golf balls for both the average and professional players.

(5) The employment system is very adjustable;

(6) Callaway consumers can receive trade-in allowance on their previously owned Callaway golf clubs toward the purchase of new clubs. (Slideshare, 2011)

Weaknesses

(1) Callaway Golf experienced operating loss totaling 25.6 million in the golf ball business due to product line expansion and price reduction geared toward remaining competitive and defending its market share.

(2) Callaway new product the C4 driver was expected to capture a large portion of the market but failed to do so however, the financial position of the company is strong due to lack of long-term debt and high liquidity;

(3) rapid introduction of new golf clubs could result in existing inventory closeout on whole sale and retail levels which would result in reduced margins on sale of order production nd reduced sales of new products;

(6) Marketing is limited and focused on promotion through professional players;

(7) The company has trouble in tracking imitations resulting hi high administration costs and loss of revenues. (Slideshare, 2011)

Opportunities

1. Owning subsidiaries in various parts of the world;

2. Expansion in the market;

3. Aging of world population and growth of individuals playing golf and purchasing golf equipment.

4. Increase in the numbers of golf round played in New England state, Mid-Atlantic States and part of Southwest.

5. Internet as distribution channel.

6. Use of Top Flite brand to launch 2nd tier clubs

7. Addition of 2nd tier apparel line with Top Flite name

8. Wider PGA tour player sponsorship (volume of players using clubs)

9. Further diversify portfolio to other golf complements (cigars, tees, watches)

10. Top Flite returning to market share dominator in golf balls (D2 ball)

11. Callaway Pre-owned resale (high margin, low processing costs) (Slideshare, 2011)

Threats

1. TV rating is increasing for TV commercial

2. Weather

3. Impact of government military spending;

4. Different economic and comparative situation in the global market;

5. Increase in value of Euro and decrease in value of dollar;

6. Rule (professional players disallowed playing with new equipment;

7. High unemployment rate.

8. Ebaying threat to Calloway pre-owned clubs (Slideshare, 2011)

IX. Corporate Governance

The guidelines are comprised by the following: (1) The size of the board is restricted to not less than six and not more than 15 directors; (2) A significant number of the members of the Board of Directors for Callaway Golf are required to be independent meaning that a director is a non-management directors and has not direct or indirect material relationship to the company; (3) All directors are annually elected for one-year terms; (4) A Chairman of the Board is selected by the Board of Directors and presides at meetings of the Board; (5) The board does not limit the number of terms that an individual may serve as a director. Continued service will be made on a case-by-case basis in connect with the director nomination process each year; (6) Retirement Policy -- no arbitrary limit is placed on the age that the individual may progress to before being disallowed to serve as a director. This is made on a case-by-case basis; (7) Change in Principal Occupation/Business Association by the director must be reported to the board and may be asked to resign if a conflict of interest that is unacceptable occurs that might affect the director's ability to complete his duties; (8) Board directors may not serve on boards of more than four other public corporations in addition to the Company's Board of Directors; (9) Directors are elected through the individual with the greater number of votes; (10) The Board of Directors has oversight responsibility and are to oversee the company's business and affairs and to make the provision of counseling and direction to the company's management and to do so for the benefit of the shareholders of the company. Key responsibilities are stated to include: (a) selection, evaluation, and approval of the compensation of the Chief Executive Officer and overseeing of management in regards to business operations being consistent with company standards and practices. Provides the Board with instructions and directions; (b) planning for succession, officer and monitoring and advising on management.....

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