Essay in Callaway The game of golf Company

Chapter

Callaway Golf Business

Rajiv lal Edith Deb. Prescott

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Ely Callaway, Callaway Golf Industry’s (CGC) 80-year: old president, chairman, and chief executive officer, lay in the conference room one sunny day in fall 1999 contemplating his company's remarkable history. He pondered how that story may possibly continue in light of a lot of recent internal and external challenges. In the span of the decade, Callaway had built CGC in the dominant gamer in the golf equipment business, irrespective of charging high quality prices. CGC sales had increased steadily from $5 million in 1988 to over $800 million simply by 1997 (see Exhibit one particular for salary statements). This individual accomplished this with the clarity of his vision: " If we produce a truly as pleasing product to get the average player, not the pros, and produce it pleasingly different from the competition, the company can be successful. " Established in 1982, the public company designed, developed, created, and sold high-quality, impressive golf clubs, additionally to golfing bags, equipment, and golf balls (CGC baseballs were to be launched February 2000). (See Demonstrate 2 to get CGC goods, Exhibit several for CGC products' contribution to net sales, and Exhibit 4 for a basic explanation of golf club types and features. ) These kinds of clubs had been sold at high quality prices to both average and competent golfers and were known for their high performance and skill forgiveness. Best known in the company's goods were the best Bertha distinctive line of clubs and their subsequent updated versions, which in turn originally totally changed the golfing industry 20 years ago. By 1998, 69% of all professional golfers worldwide played with a CGC driver. More than a decade ago, the magic started to fade when ever sales lowered 17% and CGC knowledgeable a loss of $27 million. Admittedly, CGC had " gotten away with murder" with its retail partners Exploration Associate Edith D. Prescott prepared this case under the direction of Professor Rajiv Lal. HBS instances are produced solely as the basis to get class discussion. Situations are not meant to serve as endorsements, sources of major data, or perhaps illustrations of effective or ineffective managing. Copyright В© 2000 Leader and Geniuses of Harvard College. To order clones or demand permission to reproduce components, call 1-800-545-7685, write Harvard Business Institution Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. Simply no part of this kind of publication could possibly be reproduced, trapped in a retrieval system, employed in a chart, or transmitted in any type or by any meanselectronic, mechanical, photocopying, recording, or otherwise-without the permission of Harvard Business School. 3

Source: CGC

-6% twenty-one % 42% 24 Component One 14% %Sales 97 -4% 5% 8% Introduction Income3, 911) 100% 58% N/A 213, 765 132, 704 81, 061 30, 298 70, 724 36, 848 209, 189 N/A 4, 586Statements 120, 589 $442, 800 842, 927 12, 000(1O) 697, 621 400, 127 (2, 671 54, 235 98, 048 147, 022 CGC dollar (12, 335) 401, 607 296, 014 (38, 899) • (40, 139) (26, 564) R&. D and (benefit) Fascination expense Net (loss) Cash flow Income tax other 1998 1998 Annual Statement, p. 20 and CGC 1997 Twelve-monthly Report, s. 28.

SHOW 1

%Sales 47% 53% 11% 12% 100% 47% 53% 14% 8% 4% 1% 25%

1996 money 678, 512 317, 353 361, 164 80, 701 74, 476 16, 154

N/A

%Sales

100% 22% 49% fifty-one % 1995 N/A money %Sales 553, 287 270, 125 283, 162 120, 201

2%

8, 577 N/A

N/A

2%

N/A 189, 828 5, 804 (37) 195, 595 73, 258

28%

154, 384 4, 017

28% 1%

25%

29%

158, 401 60, 665

29%

16%

*In 1995, includes General and Management Expenses.

122, 337

18%

97, 736

18%

mainly because demand for its products was in the past so strong. While the alterations initiated in 1998-99 acquired begun to deal with fruit (sales in 1st half of 1999 were $415 million surrounding $38 million to net income), Callaway wondered in the event that CGC would need to revise the way it approached retailer relationships to make all of them more mutually beneficial? To deal with possible marketplace confusion, if the communication approach shift? And exactly how should CGC balance the catch-22 of...



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