Golf Equipment Industry Analysis
I. Competitive Forces: The Five-Forces Model
A. Threats of New Entrants:
1. The threat of new entrants into the market is moderate, indicators point in mixed directions. Companies within the industry can be separated into two parts: golf and sporting goods. To take the largest golf company, Callaway, and to look at its total assets which total $846,000,000. For a company to enter into this market would require significant amounts of investment. One could assume that other sporting goods companies could diversify into golf similar to Adidas and Nike, but there are no large manufactures that are not in the market already.
2. Brand preferences are very important to consumers. Callaway lists brand preferences as one of the top five reasons why consumers buy their clubs in their 2006 annual report along with technology, quality, customer service and price.
3. Capital requirements are low the production of clubs are very labor intensive and very little animation is in the manufacturing process. Ping is a good example of a literal garage based manufacturing process was able to make a club that could compete with larger companies.
4. Regulation is import and has hurt companies substantively as it did with Ping when all but one of its clubs was labeled as illegal during its earlier years but with due care there is little cost of compliance.
5. Access to distribution channels are very important the quality of the club which is largely based on the material of the club are very expensive. To obtain carbon fiber and specific alloys that few manufactures make would be troubling for a small c ...