Callaway Golf Company

Executive Summary for the Callaway Golf Company

Nature of the situation: CGC had enjoyed many years of positive growth, followed by a down year in 1998. To alleviate some of the problems and to help rebuild, Callaway had made several changes like reducing the workforce, closing underperforming accounts, and discontinuing non-core businesses. More changes were needed.

Decision to be made: Going forward, what changes should CGC make to ensure the company's success? - What products should be developed? How should CGC approach its retail partner relationships? And, should CGC's marketing campaign be refocused?

Alternatives & Analysis: 1) CGC could lower its R&D spending.

Pros: Will help cut cost. Slowing down the pace of new product introductions will give CGC the time to get the products out to the public before closing them out. Millions of dollars spent on getting rid of excess inventory will be saved.

Cons: Will make it difficult to stay on the leading edge of technology and to continually exceed customer expectations, which has historically been the lifeblood of the organization.

2) CGC could use endorsements as a cornerstone, rather than a validation, of its product marketing campaign.

Pros: Validation of CGC's products and technology.

Cons: Increases in CGC's spending on worldwide pro tour endorsements.

3) CGC could have tie-ups with a major golf brand.

Pros: This would be appealing to the brand conscious customers.

Cons: Name-brand products are low margin products for retailers so they might be less inclined to carry them.

4) CGC could focus more on its online retailers who were responsible for selling its products on the Internet.

Pros: Currently, online sales accounted for less than 1% of CGC's business so there is a huge potential to tap this resource.