Callaway Golf

Callaway Golf CompanyI. Industry and Competitive Analysis

Callaway Golf Company is the leader in the golf equipment industry. Its founder, Ely Callaway, is an outstanding businessman, who made among others a winery a $14 million business where nobody would have even tried. His strategy always paid off, which is to provide best quality at a reasonable price (focused differentiation strategy). His last enterprise, the golf equipment business, portrays his outstanding managerial abilities and provides insight how to gain long-term competitive advantage.

1. Dominant economic characteristics of the industry environment

26 million US-Americans play golf. Their number is expected to grow 1 to 2 percent annually through 2010. According to my calculation, the number of players will increase in the US to 32.8 million1 in year 2011.

The typical golfer is aged 39, male and has an household income of $66,000 and plays golf twice a month. There were 5.7 million women and 2.1 million junior golfers aged between 12 and 17 in 1999. About 25% of all sportsmen are seniors. The scope of rivalry now is global, and the pace of innovation is quickening. Golf equipment has become a high-tech business and the market exhibits many of the characteristics of a high-velocity industry. This fact characterizes the barriers of entry as being high.

Golfing is also popular in developed countries, like in Europe, where more that two million people play golf, as well as in Asia, where 16 million people are in that sport. In the former Soviet block countries that sport plays a minor role and will find its prospects in accordance to the economic developments.

The wholesale value of equipment increased from $740 million in 1986 to $2.7 billion in 1999, where about 25% accounts for golf balls. According to my statistical analysis, the sales will have grown to $5,22 billion in 20102. In the international wholesale market, the value of the golf ball market was estimated at $1.5 billion. Golf equipment ranks second in the national wholesale sales of sporting goods.

US and international markets for golf clubs moved to maturity in 1997 and there was only modest growth in the early 2000, because most golfers already upgraded their equipment and were waiting for major new innovations.

In any case, Ely Callaway did succeed in his efforts and BB driver and its "sisters"