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Callaway Golf Company

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  1. Callaway Golf Company By: Seth Fraser, Megan Foreman, and Corey Daigle

  2. Brief History of Callaway Golf Where we are now New Vision and Mission External Analysis CPM EFE Summary Internal Analysis IFE Financial ratio analysis Net Worth Analysis Summary Strategic Analysis SWOT Matrix SPACE Grand Strategy Matrix IE matrix Possible strategies QSPM Recommendations Strategic implementation and desired results Annual objectives (goal) and polices Evaluation Procedure Overview

  3. History of Callaway Golf • 1981 Ely Callaway sells wine vineyard for 14 million dollars • 83’ Ely renames the company Callaway Hickory Stick USA • 85’ Company moves to Carlsbad, CA • 86’ Callaway becomes first company to use computer controlled machines to insure flatness of the clubs, along with new and innovative designs • 88’ Company renames its self Callaway Golf Company • 89’ Introduce traditional sized steel clubs

  4. History of Callaway Golf • 90’ Callaway drivers are number one on senior PGA tour • 92’ Callaway become publicly traded on NYSE under symbol ELY • 95’ Callaway becomes number one manufacturer of sales in woods and irons • 96’ Callaway becomes worlds largest manufacturer of clubs • 97’ Callaway acquires Odyssey Sports • 99’ Titanium drivers are introduced in Asia and Europe • 02’ Callaway lunches HX Golf Balls

  5. Callaway Golf Today • Callaway uses cutting edge technology to manufacture the world’s longest driver (the Big Bertha) • Along with men's golf accessories and apparel they offer a large selection to women • Callaway also offers a Fantasy Golf Challenge via the internet which offers Callaway products as prizes

  6. Callaway Golf Today • Callaway offers a golf magazine which has details on the number one players, courses and tips on golf • Callaway also offers free donations to the under privileged and to better health benefits such the under insured along with employee volunteering • As well Callaway offers great benefits and services to their employees • http://www.callawaygolf.com/en/customerservice.aspx?pid=sitemap

  7. Vision Statement One good shot is not enough.

  8. Mission Statement At Callaway Golf, we make golf equipment for players world wide who think that hitting just one great shot is not enough. We believe technology is a powerful tool for creating user-friendly equipment that can help golfers of all styles and skill levels enjoy the game- and maybe a few more great shots along the way.

  9. External Analysis Opportunities1. Market in Europe expected to grow by 3-3.5% 2. 35% -43% Cheaper Labor in Eastern Europe and Asia 3. Euro-Zone, no currency fluctuations 4. More open to western culture in the Middle East 5. Attitude towards leisure time 6. Internet as distribution channel 7. High school sport, 2.8 mill Juniors, 2-3% increase

  10. External Analysis Threats 1. Price decline in golf club equipment 1.3% 2. Less rounds played by 2.9% 3. Mergers make former competitors stronger 4. Patent/Trademark infringement, $ 2-4 mill/year 5. Increase coverage of Golf on TV 6. Short production life-cycle 7. Weather conditions

  11. EFE Matrix

  12. CPM

  13. External Analysis Summary • At what point does market saturation occur in domestic and foreign markets • Cheaper labor in Asia and Eastern Europe • Short production life-cycle • Mergers make former competitors stronger • Internet as distribution channel • Marketing channels • Attitude towards leisure time • Consumer interest is getting younger and younger (high school)

  14. Internal Analysis Strengths 1. Financial ratios 2. Strong management team 3. Profit margin of 50%, low cost production 4. High brand equity 5. Diverse product line (width) 6. Technology and innovative skills 7. Net working capital( 2.8% increase)

  15. Internal Analysis Weaknesses 1. Customer service 2. Production process, golf ball company 3. Employment contracts 4. Distribution 5. Only view specified suppliers 6. Only production facility in USA 7. Marketing

  16. IFE Matrix

  17. Financial Ratio Analysis

  18. Financial Ratio Analysis

  19. Financial Ratio Analysis

  20. Financial Ratio Analysis

  21. Net Worth Analysis

  22. Stock Performance

  23. Internal Analysis Summary • Strong Financials • New Working Capital Increasing • Profit Margin of 50% • Weak marketing campaign • Weak Distribution Channels

  24. S-O Strategies Expand production into Eastern Europe 2. Open selected Callaway shops around the world W-O Strategies Start Callaway Online shop Callaway Golf Camps SWOT Matrix

  25. S-T Strategies Improve Production Callaway Golf Camps 3. Acquire competitors like Mizuno W-T Strategies Move Marketing Channels Select personalities for endorsements Buy golf ball manufacturer Backward integration

  26. SpaceMatrix

  27. Y axis • Financial strength 5 +1 worst to + 6 best Y axis: 5 + (-2) = 3 • Environmental stability -2 +1 worst to +6 best • X axis • Industry strength 3 6 best to 1 worst X axis: 3+(-2)=1 • Competitive advantage -2 -6 worst to –1 best

  28. Grand Strategy Matrix

  29. The Internal-External IE Matrix

  30. IE Information

  31. Possible Strategies • Expand into East Europe • Open Selected Callaway shops around the world • Start Callaway online shopping • Move marketing channels • Select personalities for endorsements • Improve Production • Acquire competitors like Mizuno • Callaway Golf camps • Backward integration

  32. QSPM

  33. Primary Strategies Improve production Acquire competitors Secondary Strategy Expand into Eastern Europe Open worldwide stores Online shop Special Credit cards… Special low air fair flights… Offer younger customers (high school students) discounts on goods Set up web site for local golf courses (offer arranged tee time) Get in on Frisbee golf Offer competitions for free weekend golf resort Recommendations

  34. Strategic Implementation and desired results • Expand into European market and help increase the popular western culture on golf • Domestic & International sales • 81.4 to 82.4 (3% increase) • Decrease cost of manufacturing to keep up with cheaper countries • 30.2 (37%) to 29.3 (-3%) Over the next 3-5 years (Numbers in Millions)

  35. EPS/EBIT Analysis $Amount Needed $500 Million Interest Rate 5% Tax Rate 33% Shares Outstanding 66 Million Stock Price $15.00

  36. EPS/EBIT Analysis

  37. Evaluations • Qtr & Annual financial reports • Yearly examination by firms head analysts of the company

  38. Callaway in the News • http://biz.yahoo.com/fool/050425/111445675824.html?.v=1 • http://us.rd.yahoo.com/finance/freex/smart/SIG=11iuhmkjh/*http://yahoo.smartmoney.com/stockwatch/index.cfm?story=20050420&afl=yahoo • http://us.rd.yahoo.com/finance/external/forbes/SIG=1299rdilp/*http://www.forbes.com/facesinthenews/2005/04/14/0414autofacescan01.html?partner=yahoo&referrer= • http://biz.yahoo.com/bw/050322/225702_1.html • http://biz.yahoo.com/bw/050321/215826_1.html