Callaway Golf Company: Analysis

Callaway Golf Company: Analysis The driver of the Callaway Golf Company is a world-class institution designed to provide a clear advantage, and to please different golf products, including breakthrough technology the backup these products significantly superior customer service, and generate a return to shareholders the cost in excess of capital. CGC was led by Ely Callaway, a powerful motivator who defined the companys culture. Its a world famous golf brand of club and product. CGCs sales had increased from 1988 to 1998. However, CGCs sales have decreased after 1999. What are the problems to stop that eagle? In fall 1999, Callaway faced these questions; the answers would guide him in refocusing CGCs retail channels, new-product development, and marketing strategies. In my case study, I will focus on new-product development and described my plan. Logistic include products transport, warehouse, and information processing center. Callaway Golf Club is in expensive price, but popular amateurs and professionals alike. Through its website and golf sporting goods stores, sporting goods retailers, large shopping malls selling its products in over 100 countries and regions,.(Hoovers, Dec) External Environment CGC is in the Cash cow. It means high relative market share and low market growth rate. Thats because CGC is well known in the world and their products in a lots of retailer stores and the clubs are famous. When Callaway buy the company, his first initiative is to develop original products. Product of golf innovation and superior performance is very important, because the equipment is considered to have a significant impact the performance of the players. In addition, innovation is very important too, because the CGC technology leader in sales of its premium products continue to exceed our customers expectations. However, his competitors more focus on specific target market. The technical quality of the product, to enhance the CGC of high quality brands and keep customers to replace the brand. The impact of the external environment, customers are more likely to have special clubs and low cast. To pay the annual high. The CGC is located in Carlsbad, CA(CGC official website) which full of sunshine. It is usually a good place to travel and enjoy golf. People in there might feel more relax than other states. Also, in CA, the employees are enough to do the work. Analysis For the external analysis, the company has a lot of opportunities. Many sports good manufacturers are expanding in the golf market. The aging of the worlds population, many old people play golf, they have flexible income to buy golf equipment. Also, in New England state, Mid- Atlantic state and parts of south west, there are many golf players and the number is increasing. (New York Times. Feb) In Figure 3, CGC strengths are new-products development and well known in the world. The weaknesses are high prices and company relied more heavily on off-course shops. The opportunities are new-products on existing markets and marketing strategies. The threat is new-products sales decrease, low prices, cannot have good value. I will talk about products transport and warehouse in my first step, information processing center will be a follow page. The catastrophic storm affects not only the golf round in the storm, but a significant period of time. The external analysis will change, because face different economic and compare the situation in the global market. There are several reasons that will treats the external analysis. The high rate of unemployment rate and the increase in the level of consumer debt. Rejected consumer confidence and spending is increasing year by year. The most important reason is that the increase in the euro against the U.S. dollar, sales in euros had a negative impact. For internal analysis, small golf club manufacturers, new technologies and new production methods to become the worlds largest manufacturer of premium golf clubs and a dominant force in the industry. (ELY: NEW YORK) The CGC sell more units, the highest price of more equipment than any other company in the business of golf. This is a successful marketing decisions and strategies. , And provide high quality at a high price sales. People will be willing to buy products and interest rates high. Callaway consumers can trade allowances. From their club to the new Callaway clubs. This option is for consumers to upgrade their equipment. However, the internal analysis is also have weaknesses. Callaway marketing is focused on promotion, by professional players. The company tracks imitate, resulting in higher administrative costs and loss of income, this is very difficult. Global Manufactory and Warehouse CGC need to set up manufactory in different countries for new-products transporting and saving. In figure 1, I can clearly find that CGC is in the Product development square, the top right side. It means new-products for the existing markets. To achieve that, CGC had to consistently be on the leading edge of technology and to continually exceed customers expectations (CGCs case page 505). CGC need to make new-products to continually exceed customers expectations. But that CGCs biggest challenge, therefore, was to have products differentiated not only from competitors products but also from its own. If a product stayed in the pipeline too long, even if it was the best product, its sales would begin declining. This decline occurred because the people who really wanted the product would buy it within the first two years of its introduction (CGC. 4). The key word is pipeline. What is that? Its a conduit of pipe, especially one used for the conveyance of water, gas, or petroleum products( http://www.thefreedictionary.com/pipeline). Yes, products transport. CGCs wasted time in new-products transp ortation. For instant, main manufactory transports new-products to global market need a month. If CGC has global manufactory, they just need a week or least in the transportation. That is the reason why manufactory set in foreign countries is very important stratagem. For instant, Apple Co. set his manufactory in China, cheap labor and costing, and than area manager saved those products in their warehouse in location and reported main logistic manager how many products they reserved. Marketing research, area manager build profitable relationships and create customer delight and reported main company about their areas demand. And they made every months demand figure for data copy. Manufactories know how much product they need to make and warehouse will has enough room for new-product and old one. Aside from that, global warehouse good at fix that demand exceeds supply and supply exceeds demand problems. In CGCs case, manufactory made new-product and transport to off-cause retailers h ave at least two problems. One is transport slowly, wasting time and declining value of new. Another problem is retailer hasnt enough room for new-products. The second question CGC tried to use other way to fix. Closeouts generally occurred when existing equipment was discontinued to make room for new products or when CGC had too much inventory itself and wanted to get rid of it. At the time of a new-product introduction, for example, if a retailer had eight of the previous clubs left in inventory, CGC would supply the store with one more new club for free, which brought down the average cost of the remaining inventory. Once a new product was introduced, the retailer had the discretion to mark down the remaining inventory to a price at which it would sell (CGCs case page 514). Its helpful to make room for new-products and low price to sell closeout. In 1999, CGC held its own closeout and sold $40 million of excess inventory of Great Big Bertha, Biggest Big Bertha, and Great Big Bert ha irons to the market at a lower price (CGCs case page 514). If they have global warehouse, that would be saving resource and decreasing supply exceed demand risk rate. Information Processing Center Information processing center is the place that customers require report department. Their have information collect and transmit system to support manufactory, warehouse, and logistic manager or decision center. In case, CGCs customers are from True friends shift to Butterflies. Customers are no longer loyalty and they just need the products to play golf thats it. New-products are the way to continually exceed customers expectations, thats a reason why CGC need to know what customers needs and wants. Golf was a difficult game whose participants emotions ranged from frustration to addiction, with passion and fun mixed in. Even when played in teams, golfers were very competitive with themselves. Golfers often blamed their equipment for their poor play and thus often wanted to update their clubs (page 506). Those are all different levels golfers wants and needs, high-level golfers doesnt matter what type of club they used. Average golfers want to play golf and win the game in golf clubs, so they will keep the clubs. Although ones mental state and skill level had much to do with on-course achievement, in golf, unlike almost any other sport, the equipment also had a significant effect on a users performance. Even though highly skilled golfers would play well no m atter what type of club they used, average golfers were able to see noticeable improvements in their game when they used premium equipment. Beginning golfers also benefited because the more forgiving clubs allowed them to make ball contact sooner, frustrating them less so they would not quit the sport prematurely(case page 506). Beginning golfers would more advice of salespeople. For a beginning golfer, buying new clubs was a daunting task. Retail shops offered a wealth of options that forced beginners to rely on the advice of salespeople(page 507). CGC need to have those require from information processing center and make marketing strategies, refocusing on retailer. For example, focus on salespeople training for new-products promotion. For a beginner, salespeople can promote new-products or some old-model with 30%-50% discount. Old-model with discount would easier for people needs. It would not cast a lot of money and good for closeout from warehouse. And CGC gives those salespeop le who are selling master 10% of $500 units sold encourage and 20% maximum. Those encourages also be used to information processing center to collect information from customers demand. And transmit this information to decision center. Summarize CGC has a premium pricing strategy. It provides a high-quality product premium average players who want the performance benefits of the product. Callaways strategy is successful, mainly because of its innovative edge. In addition, the average golfer that their products provide performance advantages. The country has contributed to the success of the industry. During this time the public interest in golf increased a lot. In addition, the market is not over saturated, the Internet is not in selling products an important factor. Establish a global manufacturer and warehouse sales will add new products and maintain profitability. And information processing center is useful to study the market and customer feedback and requirements. This will help from the external environment and threat reduction rate. Cities Callaway Golf Company. New York Times, 8 Feb 2013. Web http://topics.nytimes.com/topics/news/business/companies/callaway-golf-company/index.html Callaway Golf Company Company Information. Hoovers, 31 Dec 2012. Web http://www.hoovers.com/company-information/cs/company-profile.Callaway_Golf_Company.fd42e2e0f3140749.html Callaway Golf Company (ELY: NEW YORK). Bloomberg BusinessWeek, 2 Feb 2013. Web http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=ELY What is involved in an ethical business? What is involved in an ethical business? Nowadays in our global world, national and international competition forces businesses to act in certain ways to achieve particular goals. Every company environment is made up of different cultures, values and believes which makes ethical issues to a complex topic. What is involved in being an ethical business and what are the benefits and disadvantages of being socially responsible? The following assignment explains the need for and some aspects of ethics in companies. It also gives a definition and a brief description on problems arising throughout global businesses and reviews a number of ethical frameworks and their application in company policies and practices. The assessment summarizes different theories, styles, and advantages. It also compares disadvantages and addresses the importance of company profits. It will sketch ethical concerns supported by case studies. To complete the assignment adequate grounds for a conclusion will be assessed and own judgment will be added. Introduction In the early 1980s Britains estimated energy bill amounted to over twenty billion pounds per annum. Throughout the 1970s continually rising fuel prizes had a direct and damaging impact on business costs and profits. Energy use, graphs and tables (1995-2002) Available from: www.dti.gov.uk/graphs/521chart.gif [Accessed 1/12/2005] People and organizations are increasingly concerned that supplies of energy and materials are likely to become scarcer and more expensive. Fossil fuels have finite geological limits and are subject to political, environmental and social questions. Whatever alternative sources may be developed in the future, days of plentiful and cheap energy are not going to return. Debates on business ethics are concentrating on social and ecological responsibility of companies within society which is regarded to be crucial in the external self-presentation and public perception of (economic) organizations. In satisfying our needs, business must be aware of those diverse topics and should aim on achieving a sustainable development. Sustainable development meets the needs of the present generation without compromising the ability of future generations to meet their own needs. Companies positive responses to such issues are rarely altruistic. It is often for their own public relations or enforced by legislation. Findings-main facts about business ethics What does the word ethics mean? The word ethics originates from the Greek word ethos, meaning custom or character. Definitions have included phrases like the science of the ideal human character or science of moral duty. What defines business ethics? Ethical business issues are identifiable problems, situations or opportunities requiring a choice between several actions. It is a set of values, beliefs, goals, norms and responsibilities that members of an organization recognize and share. Business ethics and morality refer to well based standards of right and wrong and prescribe what humans ought to do- usually in terms of rights, benefits to society, or specific virtues. It also relates to how a company conducts its business to make profit. What is an ethical business? An ethical business focuses on giving positive contributions (i.e. providing goods, services) to the community without causing damage to the environment, exploiting its workforce ( paying low wages), using child labor, or producing products which are dangerous content. A company will seek to balance financial and human needs of their stakeholders (employees, customers, suppliers and shareholders) and ensure that it is ecologically sustainable. Corporate businesses are undertaken to create an environment of strong held values, tradition and culture. What relevance do ethics have in business? Companies do not operate in a vacuum, they are part of society. People expect certain standards of behavior from businesses (i.e. addressing its environmental impacts; provide fair salary to employees that can increase motivation). According to MORI research in July 2002, 80 % of the UK public believes that: Large companies have a moral responsibility to society. The 2002 major national survey of public perceptions of energy use (2006) Available from: http://www.tyndall.ac.uk/index.shtml [Accessed 10/05/2006] Corporate ethics- A growing trend In a world of finite resources, wasteful use of energy/materials is increasingly regarded as anti-social behavior and subject to diverse geological and political constraints. Environmental groups and political parties campaign to stop the destruction of ecology and resources. Efficient use of energy provides benefits individual enterprises and a wider society. A socially responsible business will respond to public demand for improved efficiency and includes consumer wants for now and the future. Firms are increasingly aware that ethics are a unique selling preposition in todays business life. Companies are incorporating social responsibility programs into marketing decisions. Increasing evidence indicates that being ethical results in valuable benefits: It can enhance public reputation and therefore increase profits. A recent study discovered that 84 percent of U.S. respondents have incorporated business ethics. A study found that 71 percent of UK companies used codes of ethics in 1991. The 2002 major national survey of public perceptions of energy use (2006) Available from: http://www.tyndall.ac.uk/index.shtml [Accessed 11/05/2006] Introducing strict ethical/environmental considerations in financial markets (FTSE Good Index) shows outperforming conventional stock exchange indices. Figures for the Dow Jones Sustainability Index (ethical index) in the US show that it outperformed the Dow Jones Global Index by 46 %. Griffiths, A.; Wall, S. ;( 2005); Economics for business and management; 1st ed.; UK, Prentice Hall; pp. 149 The ethical code-Code of conduct Ethical codes formalize rules and standards and reflect values and missions of a company. Leaders and members must have an obligation to operate in a consistent way meeting core objectives and society needs. Contributing to local, national and international communities by adopting a code of conduct can ensure honesty, fairness and respect in the organization and its environment it operates in. Developing a code of conduct Developing ethical behavior in an organization can be achieved by enforcing rules and standards that describe what the company expects of its employees and managers. To ensure ethical conduct, open communication and coaching staff are essential. Other important development factors include: Training/ including employees in developing a code of ethics. Clear channels of communication, trust and good employee-manager relationships Improved motivation to achieve objectives and goals Adhering to the guidelines of an ethics code A code of conduct requires shared commitment to achieve and develop high standards of production for its success. Open communication and coaching staff are essential but can introduce high costs and conflicts between share-and other stakeholders. Does being an ethical policy bring advantages? Being socially responsible enhances/protects corporate reputation and motivates/encourages loyalty and trust in organizations relationships. For example an ethical policy can reassure investors and stakeholders about the companys approach to its non-financial risks by providing a license to operate. Where do Ethical issues arise from? Ethical issues generally arise when marketers fail to understand risks of function, value or use of a product. Pressures can arise from substituting inferior materials to minimize costs or failing to inform customers about existing conditions or changes in product quality. Many car, gas and tobacco companies have experienced negative publicity associated with design or safety issues (as well as global warming, water pollution, noise and congestion issues) that resulted in control of their behavior by laws, regulations and higher taxations. Developing and selling a product which does not harm the environment refers to green marketing and must focus on long-term as well as short-term results. Most organizations participating ethics are beginning to realize that they have traded short-term profit margins for long-term morale and productivity. No matter what laws or regulations are passed onto the business, ethics cannot be externally imposed. Buying a healthy product, without considering its prize or shopping for bargains-neither side is immoral or unethical. Ethical companies will focus on all types of consumer wants and try to ensure working within their social mission. Taking social responsibilities towards stakeholders and evaluating the effects of a companys activity in its microenvironment (social auditing) involves/includes: Social auditing Benefits for company No difference between employees(equal rights) Increased motivation, established social performance Identification of ethical values and social objectives Easier identification of criticisms and meeting company objectives Understanding and applying customers views+ providing information for pressure groups Easier to measure performance/ results to make informed decisions about impact of activities, gaining new customers Improving brand and image attracts employees and perhaps leads to higher sales Management setting example to incorporate ethics Employees convinced being ethical improves organization (including profits) Being unethical can lead to: less resources for future generations and environmental damage due to wasteful use of energy high level of unit cost in economy which leads to being uncompetitive in world markets and trading performance increased poverty due to unfair distribution of money (i.e. wasting money on luxuries) price increase of non-renewable fossil fuels, leading to high expenditure on overseas supplies increase of private costs (i.e. wages, rent) and social costs (i.e. noise, pollution) violation of laws or company policies unfair balance to parties concerned both in the short-term as well as the long-term increase of private benefits (i.e. profits) and social benefits (benefits to the rest of the society) Becoming a socially responsible company has many advantages. However, managers of companys hold different views of moral positions. And sometimes, organizations have to choose between being an ethical company or striving for increased or kept profit. Often, companies and customers find themselves in an ethical dilemma by choosing between local or global spending. When money is spent globally, cheaper products are bought, creating a short-term advantage. This can have a negative impact on undeveloped countries if the buyers exploit their monopoly power and pay unfair prices to poor countries. Businesses therefore have to weigh up long-and short term decisions. Suppliers can increase profits by raising prices or reducing the quality of a product (bargaining power of suppliers). Therefore, underdeveloped countries with no other substitute products available have to accept the competitors demands or choose inefficient but cheaper companies to do the job. An example is the case study from Stuart Wall and Bronwen Rees book. Both describe Bribery and corruption by the World Bank as the single greatest obstacle to economic and social development. Poor infrastructure and higher pay from poor countries are often the result of bribes. Rees; B.; Wall, B.; (2004); International Business; 2nd ed.; England; Prentice Hall, pp. 212 Disadvantages of becoming a socially responsible business can include: At first the costly, costly, takes time and effort to introduce changes change of business culture, expensive and time-consuming to promote new culture loosing established customers conflicts of aims between share-and stakeholders (paying increased wages can loose business profit) new recruitment and redundancies of employees (difficult to be ethical since there is the need to get rid of staff in order to keep profit up) time-consuming to adopt to new image turning down low costs of production (i.e. labor) costly to change working conditions for labor being ethical introduces motivation which is not desired in every company adapting to new policies may not be profitable management and employees need training ( costs extra money) organization may not be able to cope with extra pressure increased quality of product will lead to raising productioncosts In every company, profit is an important objective for success and decision making. Being ethical can benefit businesses, society and economy. But should trustees make bad investments for social responsibility? Being an ethical company includes pressure of balancing profits and ethics at the same time (I.e. profits vs. exploiting stakeholders). Organizations have to invest in training, research, and product development. Only a few companies are immune to economic fluctuations and can stay committed to investment in societal behavior. For a new firm entering business, being ethical can mean less profitable short-run incomes that are desired to stay in competition. Larger organizations often have profit to enhance its reputation, creating greater long-term benefits even though is difficult to guarantee a big companys ethical status due to its involvement in many business activities. Customers expect quality products for a fair prize. Often, share-and other stakeholder get in conflicts due to increased prizes on the production of products. Many regard the government as being slow on promoting ethical behavior. Old motorways and power stations are contributing factors to the collapse of many economies. Reconstructions are costly and businesses as well as customers are often the ones suffering higher prizes. For example there is a chance for the UK of loosing out on the new industry for wind farms. Green peace is backing up NPower, defusing local protests for wind power. Creating a new type of electricity shows economic responsibility but is the company socially responsible by defusing customers views about the massive turbines? It can be argued that companies can use a of cost- benefit analysis to determine forecasts, outcomes and consequences. Known to philosophers as utilitarianism, this principle is best known by the maxim: Do whatever produces the greatest good for the greatest number- Do what best is for the best for the greatest number of people. Rushworth, M., (1995), Good people make tough choices, NY, 1st ed., firesides books, pp.24 Some businesses, like Nestlà © and Esso are acting accordingly to fixed rules, never mind the outcomes (Rule-based thinking). Often associated the German philosopher Immanuel Kant, this principle is firmly based on duty- On the way we ought to do, rather than we think what might work- Follow only the principle that everyone else will follow. Rushworth, M., K., Good people make tough choices, firesides books, NY, 1995, 1st ed., pp.24 Some organizations believe that shifting the business to an undeveloped country will reduce prices for production and wages for employees, therefore increasing profits for the company. This behavior seems unethical even if it can lift people out of poverty and assists to international development and the finance for decommissioning for a cleaner environment. The website maketradefair.com shows that 68 % of people in the UK supporting Fair-Trade but green products still command less than 1 % of the market. Make trade fair (2006) Available from: http://www.maketradefair.com [Accessed 16/04/2006] Some companies have had very bad publicity on this and are now trying to rebalance their practice. It can be argued that supermarkets not promoting their (by putting products on bottom shelves) products enough. Another reason is the increased price on Fair-Trade products. To underline the pressure of being a socially responsible business, the example of organic farming is given from the book International Business, by Stuart Wall and Bronwen Rees. Going organic includes changes in transforming middle-class specialties to a mass market phenomena for retailers. Farmers have to switch to natural herbicides and fertilizers which are benefits to society but can include extra costs (for the farmer and the consumer) and are easier to achieve with funding from the government. Those who buy organic food have to except higher prices because they are paying for sustainable, agricultural techniques and healthier food- People have to realize you dont get something for nothing. Simon Brenman, of The Soil Association. Rees; B.; Wall, B.; (2004); International Business; 2nd ed.; England; Prentice Hall ,pp 223-224 To succeed with environmentally friendly products, the image of benefits must be clearly defined and a market segment consisting of consumer who are willing to pay for better quality must be found. Countries have different cultures, values, beliefs and expectations. Companies operating internationally cannot transfer all business standards unchanged, expecting the business partner to understand their core values. For example, ethical codes tend to be seen as legal documents in the US whereas it is viewed as a social compact between company and its workers in Europe. Financial institutions are more experienced in the channels of communication and are sensitive to indices of firm performance. Often, those institutions have profit maximizing objectives but also enough income to spend on promotion and technological innovations to reach their customers to be socially and economically responsible. Promotion can create false or misleading advertising and manipulative/deceptive sales tactics and publicity. A major issue pertains the marketing of video games that promotes violence and weapons to children. Not every company has the choice of being ethical or not. For example the tobacco industry is regarded as being irresponsible towards society but is reasonably safe during market collapses, as they tend to have a safe and predictable profit flow. Defense companies benefited from higher arms spending following September 11 attacks on the US. Nowadays, even ethical businesses agree to. An example is the retailer Body Shop, agreeing to the takeover by French cosmetics giant LOreal in a deal worth  £652m. Anita Roddick, consultant, said the companys values (like community trade) would not change. But the organization has yet to show its commitment to ethical issues. LOreal takes over Body shop 2006) Available from: http:// www.clarionledordger.com [Accessed 12/05/2006] Evaluation Ethics refers to what is acceptable in a certain society. Organizational ethics is an important element and a unique selling preposition in business as it can determine beliefs and responsibility of the company in the eyes of society. However, it should not be assumed that doing good is desirable or acceptable. People expect certain ethical behavior from companies but they do not operate in a vacuum. Every country has different business values and views. Being social and ecological responsible in one country doesnt mean its ethical in the other. It implies that there is no morality of being right or wrong in ethical businesses. Companies focusing on future-orientated thinking are working within their social mission which can enhance public reputation and increase profits to remain competitive in todays business world.