Provide an overview of the industry
Golf continues to be a lifelong activity for over 25.7 million people and generate over $ 68.8 billion dollars from the selling of goods and services (Golf 20/20, 2011, p.1). The golf equipment and related products are currently being manufactured in the United States, Japan, and China. This worldwide sport is helping to generate revenue that is beneficial to the global economy. According to the Library of Congress (2005), golf is a growing business and the participation by professionals and amateurs will continue to rise as well as the overall revenue” (p. 4).
Specific golf associations such as: the United States Golf Association (USGA) and the Professional Golf Association (PGA) have always internally regulated golf. As of today the game golf is not government regulated, but the golf industry is facing a proposed golf tax by the federal government. Most of the government regulation in golf falls within the realm of golf course development and operation. This regulation come in the form of pesticide used on the golf course and it monitored and regulated by The Occupational Safety and Health Agency (OSHA) (Fox, Thelin & Fox, 2008, 1364).
Life cycle of a business in the industry
Golf is here to stay. Market analysis has shown that the demand for golf and golf related equipment in on a steady rise. According to Garau-Vadell and de Borja-Solé (2008), several estimates have shown that the total number of golfers in developed countries has reached 80 million while the United States, largest golf market, has over 27 million players (p. 17). Based on these numbers alone, the lifecycle of the golf industry is trending upward with no end in sight.
Porter’s Five Forces.
The Porter’s Five Forces model is a framework the effectively look at industries structure, strengths, and positioning to sustain the performance level in any industry (Allen, 2012, p. 103). I will discuss each force as it pertains to the golf industry.
Barriers to Entry
The major golf equipment manufactures control and has a monopoly on the golf market by set prices to keep new entrants out. Cost, technology, and high startup capital are barriers that will prevent entry into the market by startup companies.
Threat from Substitutes
Business must be aware their product or service will be threatened by cheap, discounted or counterfeit substitutes. Golf counterfeit is a 6 billion dollar worldwide problem according to a recent article in the Golf Digest (Johnson & Stachura, 2010). Counterfeit golf equipment from countries such as China and Korea are the biggest threat to the industry.
Threat from Buyers’ Bargaining Power
Consumer bargaining power will always be a threat in the marketplace. Collectively, consumers can use their bargaining power to drive down prices or ensure manufactures are producing quality products. In the golf industry this threat can have a significant impact on revenue. With the yearly release of...