Callaway Golf ? Case B
Ely Callaway felt proud as he took stock of the year 1997 in his report to
shareholders. Callaway Golf had yet another year of strong growth in sales, with net
sales up by $125 million from 1996. Sales in the US had increased 19% while sales to
Europe and Asia had increased 46% and 20% respectively. International sales, which
were ~ $300 million in 1997 now accounted for 35% of the firms total revenues, more
than the total sales of the entire firm in 1993 (see Exhibit 7a for details on Callaway
financials). In addition to its wholly owned subsidiary in the UK, Callaway Golf now
had a subsidiary in Germany as well as in Japan.
Callaway Golf had consistently been the market leader in US market for Golf
Clubs over the past 5 years, with an estimated market share over 25% despite the
introduction of many new products by leading competitors (Ping's "ISI" Irons, Taylor
Made's "Burner Bubble Shaft" Irons, Cobra's "Ti" Titanium Metal Woods, "King Cobra
II" and Armour's "Ti 100" Irons; see Exhibit 4 for market shares of leading players).
The use of Big Bertha drivers by professional tour players on the five major tours (PGA,
Senior PGA, LPGA, NIKE and PGA European Tours) in the 1997 was 66%1, and
Callaway's two new products ? the Biggest Big Bertha Titanium Driver and the Great
Big Bertha Tungsten-Titanium Irons had done well with consumers and constituted over
20% of 1997's sales. Part of this success had stemmed from its continued ability to
deliver new, innovative golf equipment at regular intervals since its introduction of the
Big Bertha in 1992. In the preceding five years it had introduced the ...