Michael Porter established and wrote about forces that determined the intensity of competition in the market. Besides, he was able to analyze the attractiveness of the market using five forces. For instance, he examined the bargaining power of customers and the threat of the entrance of new entrants into the market. Further, he addressed the issue of threats of substitute goods or products into the market. He concluded his analysis by looking at the bargaining power of suppliers and rivalry or competitiveness in the industry.
We will write a custom Case Study on Competition in the Golf Equipment industry specifically for you
807 certified writers online
What is more, the above five factors are considered external to business organizations. Thus, they cannot be controlled from within the industry. Therefore, this paper addresses competition in the golf equipment industry in 2009 based on Porter’s five- force analysis.
Currently, global events have made the golf equipment industry become extremely competitive. In fact, all matters regarding golf equipment in the year 2009 were decided by competition. This had been traced to the recession that started in the year 2007 and extended to 2009.
Golf is associated with leisure. In fact, most people play golf for leisure. This is because it originated from the elite and wealthy members in America and Britain. It was a way of spending and enjoying their wealth. However, in recent times, golf has been taken and is being taken as one of the best sports.
The purchase of golf equipment was decided by competition. This is as a result of inadequate resources available for the purchase of the same. In fact, this was underpinned by the recession that started in the year 2009. Besides, studies show that recession underpinned the shift in disposable income from expenditure to savings. Furthermore, the same studies show that due to the above shift, there was a decrease of about 5.7% in the sale of golf equipment.
Likewise, unemployment rates within the United States rose at a quick rate. In fact, most Americans were laid off because of the recession. In the year 2009, it was estimated that about 6.5 million Americans lost their jobs. In addition, the price of Gasoline had nearly doubled by the end of 2008.
This saw many people cutting back on expenses and unnecessary purchasing. The focus was on making savings. Equally, the wealthy people cut down on their spending thus, affecting the golf equipment industry. Further, a research done by IBISWorld showed that Country Clubs and their counterparts; Golf Courses would lose up to $430 million in 2010. This was also underpinned by uncertainty in the economy.
The above situation depicts that customers or buyers of golf equipment did not have bargaining power. In fact, they did not have enough or extra money to spend on leisure. Therefore, they sought to satisfy other needs and make savings. There was little attention being given to the Golf equipment industry.
Thus, this is an indication that business aspects in the golf industry were decided by competition. People had to choose between making savings and purchasing golf equipment. Therefore, in my own opinion, making savings and the purchase of golf equipment were competing for the available capital.
What is more, the Golf equipment industry was being faced with the emerging issue of counterfeit products. For instance, research shows that, by the year 2009, there were counterfeits in the golf equipment industry. Counterfeits were being offered by Golf Courses and Country Clubs.
In fact, the counterfeits offered by the management of such facilities were almost the same as the genuine Golf equipment. Therefore, lovers of Golf easily went for the counterfeits at the expense of the genuine Golf equipment. Besides, counterfeits were cheaper than the genuine equipment. This saw the increase in their use by many of recreational players. Moreover, such Golf equipments were easily obtained or available at all times to players.
Therefore, there was a shift from buying genuine equipment to counterfeits that served the same purpose. In my opinion, this can be considered as the entrance of new entrants into the market. Additionally, they provided or gave similar services to the ones given by genuine Golf equipment industry. Thus, the golf industry faced competition from new entrants that dealt with counterfeit products. Thus, as players increasingly went for the counterfeits, the Golf industry lost customers.
Another view to the issue of counterfeits is the threat of substitute products aspects. This aspect is viable if counterfeits are taken to be substitutes to the genuine products. Here, recreational players took counterfeits as substitutes of the genuine equipment. Likewise, in this case, the Golf equipment industry lost out.
It is evident that bargaining power of customers and threat of new entrants affected the Golf equipment industry in 2009. The two aspects affected the Golf industry because they encompassed aspects of competition. In fact, there was a shift to making savings rather than spending on recreation.
Get your first paper with 15% OFF
This was underpinned by the recession that started in 2007. Therefore, it is true that the Golf Equipment industry was becoming competitive in 2009. This was because the purchase of Golf equipment from genuine industries was decided by competition.