Although the game of golf developed rapidly and became an important part of the American life between1950s and 2000s, it is worth noting that the nature, strength and performance of the national economy have been major factors determining the rate of growth of the game. Between 2006 and 2009, the economic crisis in the US had a major impact on several fields.
The game of golf is perhaps one of the sectors that was mostly affected by the economic decline. The evidence collected from companies dealing with golfing equipment and tools indicates the slow growth in the industry, but a surge in the competition between these companies. In particular, the number of players was stalling, causing a decline in the volume of equipment sales between 2006 and 2009.
It was especially evident that the economic recession and the start of regulations by the USGA and Ancient Society brought a negative impact on the industry, which increased competition between the involved companies. This reviews the competition in the industry in 2009 with a focus on the Porter’s Five Forces Model.
Application of the Porter’s Five Forces Model in this case is likely to reveal adequate and important information significant for providing an explanation of the phenomenon. The golf equipment industry has been a major beneficiary of the growth and expansion of the game over the last six decades, which also has been a subject of the expanding economy.
Nevertheless, an economic crisis is likely to affect the industry in a negative way since the fall in people’s purchasing power is likely to drive more players from the game and hinder the appearance of new players.
Potential entrants: It is worth noting that the American golf industry has been dominated by large corporations, which have invested heavily in the field. In fact, most of the manufacturers of golfing equipment are some of the major corporations that also sponsor major golfing events in the US and the world.
This means that the investment in the sector has been relatively big and that it has been difficult for new companies to enter the market, thus protecting the dominating companies from the threat of new entrants. Secondly, new companies were required to cope with high costs of technology that dominating companies have been using to develop equipment.
Bargaining power: The golf equipment industry in the US is characterized by high bargaining power for the buyers, which allows the consumers to switch to another brand. In addition, the market was on the decline.
The threat of substitute products was also high because golfers had an opportunity to join other sporting activities such as Hunting, Running, Tennis and Riding for their increasing popularity, while their costs remained relatively low. In addition, movies, games and other activities are becoming popular among the American middle class, which seems to be replacing golfing.
It is also worth noting that the supplier’s bargaining power was high, especially because several Asian nations such as China and India were offering products at lower prices. In addition, these foreign suppliers had the technologies and knowledge to develop competitive products.
Moreover, the rivalry among the suppliers was relatively high because the industry had been developing for more than 50 years, attracting high prices and profits. As such, the risks of counterfeits were high, while regulations on products increased with the establishment of the USGA and Ancient Society’s terms and conditions.