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Case Study of Callaway Golf Company

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Case Study of Callaway Golf Company

Section I. Summary

Callaway Golf Company began to take form in 1983, after Ely Reeves Callaway Jr. sold Callaway Vineyard and Winery for a $9 million dollar profit. Shortly after the sell of the winery, Callaway ventured in to the golf equipment industry and bought 50 percent of Hickory Stick USA. Callaway knew from the very beginning that this company’s profits were limited as long as the product line wasn’t changing. “Callaway noticed that most golf equipment had changed very little since the 1920s and believed that , due to the difficulty of the game of golf, recreational golfers would be willing to invest in high-tech, premium-priced clubs if such clubs could improve their game by being more forgiving of a less-than-optimum swing.” (Thompson, c205) Callaway then purchased the company outright and changed the name to Callaway Hickory Stick USA and then hires Richard Helmstetter as the companies’ chief club designer. With the help of five aerospace engineers, Helmstetter developed line of clubs that was set apart form competing brands by its technological innovation. In 1988, the S2H2 was launched as well as another name change to Callaway Golf Company. In 1992, sales are more than double recent years and Callaway Golf Company goes public and begins trading on the NYSE. Throughout the 90’s, Callaway leads the golf equipment industry with ongoing new lines of clubs and eventually adds golfing apparel. Donald Dye, Callaway’s new CEO, took the much of the blame for the downturn in Callaway Golf Company. Dye was ultimately responsible for initiatives that took managements focus off golf clubs. The company’s financial and market performance suffered immensely in 1998 causing Ely Callaway to return to rebuild the company. The textbook states on page c208, “Ely Callaway’s first efforts upon his return to active management at Callaway Golf were to ‘direct resources---talent, energy, and money--- in an ever-increasing degree toward the creation, design, production, sale and service of new and better products.’” In Callaway’s turnaround strategy, he initiated a restructuring program and operational improvements. By the end of 1998, Callaway’s strategies allowed the company to regain it s technological leadership.

Callaway’s approach to building competitively important resources and capabilities caused the success o...

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... next season. Offer discounts and sales and maybe even free shipping on internet sales. Offering a larger variety of winter clothes and gloves would help. This also brings back the recommendation of branching into other sporting goods. Offering goods for other sports that are going on during the off season of golf would keep the revenues up throughout the year.

Some quantities of the company’s products find their way to unapproved outlets or distribution channels. This gray market for Callaway’s products can undermine authorized retailers and foreign wholesale distributors who promote and support the company’s products and can negatively impact its image in the minds of its customers. On the other hand, stopping such sales could result in a potential decrease in sales to those customers who are selling Callaway products to unauthorized distributors and/or an increase in sales returns over historical levels.

Overall, the Callaway Golf Company has shown much success in its industry lifeline. Only minor changes and adjustments could increase their success level in the future. Making too many adjustments to Callaway’s strategic vision could harm the successful industry.
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