strategic-management

280 AMIT J. SHAH
number two on the PGA tour for golf ball usage. The company also achieved the numbertwo
retail market share, second to Titleist, for the same year.
TaylorMade-Adidas Golf (TAG), one of the largest golf club manufacturers in the
world, is a subsidiary of Adidas-Salomon A.G. TAG enjoys a 28 percent market share in
the United States and hopes to have achieve the same market share worldwide that it has in
the United States in 2010. In February 2008, TAG divested the Maxfli brand, which
accounted for 1 percent of its 2007 sales. TaylorMade has also launched a $35 million
advertising push for its golf equipment in 2008. This advertising campaign is the most
expensive one in TaylorMade’s history.
Nike went into the golf business with Tiger Woods, and the company has been
steadily growing in the golf industry with Tiger Wood’s success. In 2007, Nike Golf grew
12 percent to nearly $650 million. Nike Golf accounted for approximately 43 percent of
total revenues for the athletic footwear and apparel manufacturer.
Global Issues
The global golf market is uniform in the sense that firms do not have to develop different products
for different markets. But different economic and competitive situations in global markets
make it sometimes difficult to place products in the right way with the right price, and at the
same time generate profit. Rules vary for different professional tours, like the PGA Tour, the
European Tour, the Canadian Tour, and the Asian-Pacific Tour. It is difficult to introduce and
market a new product that conflicts with rules for the professional players. An innovation is
difficult to market if professional players are not allowed to play with the new equipment and
the recreational players will never see new equipment developed for their game.
A negative factor CGC has to face is the mass amount of imitation of its products,
especially in the Asian-Pacific area. It is very difficult for the company to track the imitations,
which results in high administration costs and loss of revenues. Interruptions and
high fuel costs in air carrier or shipping services, anti-American sentiments, and social,
economic, and political instability all negatively affect the performance of CGC. On
March 24, 2009, according to a CGC press release, the Beijing Chaoyang Administration
for Industry and Commerce (AIC) and the Chaoyang Public Security Bureau (PSB) jointly
conducted raids against an assembly and warehouse facility of the Sunshine Golf Store
located at Shangxinpu, Huanggang Village, Chaoyang District, Beijing. The raids resulted
in the seizure of nearly 10,000 pieces of counterfeit golf equipment, including more than
740 assembled golf clubs, 1,500 club heads, 4,700 golf grips, 2,300 shafts, 280 head
covers, and assorted golf towels, golf bags, and apparel.
Patent infringements are another large risk for Callaway. According to a CGC press
release, on March 3, 2009, it filed a new patent infringement lawsuit against Acushnet. The
lawsuit alleges that the new 2009 Titleist Pro V1 and Pro V1x golf balls, available in spring
2009, breach golf ball patents owned by Callaway Golf. This new lawsuit follows the successful
patent infringement action filed by CGC against Acushnet in February 2006 that resulted
in a permanent ruling halting sales of earlier versions of the Pro V1 family of golf balls.
The Chinese government continues to raid counterfeiters responding to the complaints
of U.S. golf manufacturers including CGC, Acushnet, Cleveland Golf, Ping, Nike,
and TaylorMade-Adidas. These raids are attempts to track down and stop counterfeiting
efforts to make knock-off golf clubs and equipment. Rob Duncanson, an attorney advising
the companies, made this statement after one of the raid: “The manufacture and sale of
counterfeit golf equipment by these modern pirates not only cost US companies millions in
lost revenues, but affects the brand integrity and reputations of companies who invest substantial
resources in R&D and marketing, ultimately undermining the trust of the unsuspecting
consumer.”
Conclusion
For many golfers, the current business climate means bargains. The National Golf
Foundation, an industry group, reports that the number of golfers has ranged between
26 million and 37 million, but the recession has scared many people away from the
courses. Americans are not playing as much golf this year as they did last year. Many