Technology as a driver of the golf equipment industry
The following are the key drivers or success factors of change in the golf equipment industry in the macroeconomic environment of the United States of America:
Technology is one of the strongest drivers of the golf equipment industry in the United States of America. Dingler and Enkel (2016) mention that advancement in technology paves ways for innovation which in turn drives growth in industries. It can be pointed out that this fact applies very strongly to the golf equipment industry which is also mentioned in the case study. The advancements in the technology enabled the golf manufacturers produce more player friendly golf equipment which enabled the players to play the game more accurately. For example, Callaway Golf Company, the leading American golf equipment manufacturer is able to manufacture clubs of different categories like Drivers and hybrids. Similarly, the company is also able of manufacture different types of golf balls owing to the availability of advanced technology (Cmp.callawaygolf.com, 2018). Moreover, the American economy has a very developed ecommerce market which enables golf equipment companies market their products on the ecommerce platforms and generate high revenue. This is evident from the official website of the leading golf equipment making companies like TaylorMade have online shopping portals which enables customers to order for golf equipment online. (Taylormadegolf.com, 2018). Thus it can be inferred from the discussion that availability of advanced technology in the United States of America both in terms of manufacturing and marketing is driving the golf industry.
Favourable financial factors are important drivers of the golf equipment industry in the United States of America. Patel and McClelland (2017) mention the there are two important sources of financial cash flow in companies which attribute them with strong financial base namely, revenue and capital. The graph below shows that the per capita income in the US has increased which means consumers in the American market have more disposable income to buy expensive golf equipment. Thus, increase in the per capita income in the American economy is attributing the golf equipment companies with larger consumer base and high revenue.
Figure 1. Graph showing per capita income in the US
(Source: Tradingeconomics.com. 2018)
The second pillar of financial stability in the golf equipment companies is their capital base. The leading golf equipment companies in the USA are either public limited companies or subsidiaries of public limited companies (Figure 2). For example, Callaway is listed on the NASDAQ while Cobra is subsidiary to Puma, which itself is a public limited company (CCobragolf.com, 2018). Thus, this analysis shows that golf equipment companies in the US are generating high revenue and capital. Thus, can be pointed out that high capital and revenue generation is one of the most important factors driving the golf equipment industry (Wisdom et al., 2017).
Figure 2. 10 years stock chart of Callaway
(Source: Nasdaq.com,. 2018)
Global market is largely responsible for driving the business of the global industry in the US. Cashin, Mohaddes and Raissi (2017) mention that access to global markets enables industries to get access to a global consumer base and resource market which also include technology. For example, Cobra Golf being a subsidiary to Puma is able to market its products in markets in which the latter is present. Moreover, the Government of the United States of America has strong foreign relationship several countries which enable the golf equipment company to expand into foreign markets and source resources from them (History.state.gov,. 2018). Thus it can be inferred from this discussion that access to global markets has enabled the golf equipment companies to generate immense amount of revenue, thus propelling the business of the golf equipment industry as a whole.
Favorable financial factors driving the industry
The following is the Porter’s five forces model analysis of the golf equipment industry as far as its attractiveness is concerned:
The power of suppliers in the golf equipment industry is high and is largely dominated by large suppliers supplying materials to the leading golf equipment firms like Callaway. This is because the leading golf equipment companies based in the US source raw materials from different markets and control their supply chains strategically./ The supply chain provide materials to these leading companies and the prices at which these leading companies buy raw materials are considered as standards. This association with the golf equipment companies render high power to the suppliers.
The golf equipment industry is highly attractive and profitable largely dominated by multinational companies like Puma. The main players in the market are either listed or subsidiaries to listed companies with huge resources which attribute them with their competitive advantages. This has made the golf equipment market very competitive and difficult for smaller firms to thrive.
The golf equipment industry is highly attractive and the existing players face high level of threats from new entrants. It can be pointed out that smaller firms cannot stand against the established players. However, multinational firms from other countries do present considerable threats to the resident firms like Callaway. Thus, it can be pointed out that the golf equipment industry in the US suffers from high level of threats from new entrant companies especially multinational companies from other nations.
It can be pointed out that customers enjoy immense power in the golf equipment industry which has made it extremely competitive. This due to available of golf equipment products from large number of companies both from the US as well as overseas.
The threats from substitute products are high in the golf equipment industry. This is because the industry faces competition from other sports industries like hockey and cricket.
This availability for large numbers of companies is an advantage to customers and companies. The companies get a large number of customers to offer their products and earn immense profits. Similarly, customers get access to large number of alternative golf equipment manufacturers which ensures high level of customer satisfaction.
The two strategic maps would consider Callaway and Cobra. The two variables which Callaway would take would be financial results and customer results. Cobra would consider the two variables of business processes and organisational capabilities.
Figure 3. Strategic maps for Callaway
(Source: Author)
Figure 4. Strategy map for Cobra
(Source: Author)
The concept of blue ocean thinking is of great importance to golf equipment industries. It provides them with opportunities to seek new business opportunities like new innovative products and new customer bases.
References:
Cashin, P., Mohaddes, K., & Raissi, M. (2017). China’s slowdown and global financial market volatility: Is world growth losing out?. Emerging Markets Review, 31, 164-175.
CCobragolf.com. (2018). Retrieved from https://www.cobragolf.com/#
Cmp.callawaygolf.com. (2018). Retrieved from https://cmp.callawaygolf.com/about-us/?_ga=2.35954279.613359319.1541840881-650818997.1541840881#nav-mobile
Dingler, A., & Enkel, E. (2016). Socialization and innovation: Insights from collaboration across industry boundaries. Technological Forecasting and Social Change, 109, 50-60.
Golfdigest.com. (2018). Retrieved from https://www.golfdigest.com/hot-list/golf-clubs/drivers
Gordon, J. (2018). Livestrong.coms. Retrieved from https://www.livestrong.com/article/380883-top-10-golf-club-brands/
History.state.gov. (2018). Retrieved from https://history.state.gov/historicaldocuments/about-frus
Nasdaq.com. (2018). Retrieved from https://www.nasdaq.com/symbol/ely/stock-chart?intraday=off&timeframe=10y&splits=off&earnings=off&movingaverage=None&lowerstudy=volume&comparison=off&index=&drilldown=off
Patel, E., & McClelland, J. (2017). What Would a Cash-Flow Tax Look Like for US Companies? Lessons from a Historical Panel. Office of Tax Analysis Working Paper, 116.
Taylormadegolf.com. (2018). Retrieved from https://www.taylormadegolf.com/M4-Irons/DW-WZ725.html
Tradingeconomics.com. (2018). Retrieved from https://tradingeconomics.com/united-states/gdp-per-capita
Wisdom, O., Oyebisi, O. M., Lawrence, I. A., & Bibiana, N. O. (2017). TREASURY MANAGEMENT POLICY AND IMPROVEMENT IN REVENUE BASE IN NIGERIA. Journal of Internet Banking and Commerce, 22(3), 1-9.
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