Swot Analysis Of Oligopoly

The industry is led by six brands (Callaway Golf ; TaylorMade-adidas Golf ; Titleist ; Cobra Golf ; Ping Golf ; Nike Golf). These six brands are leading the market into an oligopoly, which is basically a group of brands leading the market without any other serious competitors.

Between these six brands, there is always a leader, which in our case is Callaway Golf ($1,117,204,000 of net sales in 2008).

Even if there is a leader, the competition inside this oligopoly is very strong, because each of these six brands wants to be better than the five others. Therefore the competition is very fierce, especially in the technology and innovation field.

Having such an oligopoly also means that the variety of choice in this industry is very poor. Indeed,

For example, golf clubs’ manufacturers are trying to improve their golf clubs by changing their gravity centre, their shape, or weight. These variables influence what is called the Moment Of Inertia (MOI), which is one of the obstacles put by the Golf Governing Associations regarding the production and performance of Golf Equipment.

We can then see that the rivalry is quite strong as the companies want both to be the most innovative one and have to respect the USGA and R&A rules.

It is also tensed about sponsorship, they compete a lot regarding which company is going to sponsor the professional golfers or events in order to be known by the casual consumers who watch golf competitions on TV (such as PGA Tour).

Suppliers bargaining power: Low

The manufacturers are mostly just assembling the different components of the equipment that are made by casting houses. But it is the Golf Equipment Brands who choose to whom they are outsourcing the manufacture of the components.

Because the quality is actually a big deal and they don’t want to have a bad casting house providing bad quality

And most of golf equipment manufacturers sell their products via on-course pro shops, off-course pro shops and online. Most of on-course shops sell only to members so they don’t really have a wide choice of equipment since their members already have equipment while off-course pro shops have many choices of products.

The advantage of off-course pro shops over online shops is that the consumers can inspect and sometimes even try the equipment.

However, most of the consumers purchasing online already know what they want, and are choosing this way to buy the product in order to have discounts.

We can also say that pro shops mostly provide the leading and most famous brands of the industry.

We can say that the bargaining power of consumers is low because they cannot really negotiate the price, and have to pay the price if they want good equipment.

The only negotiation power they have is going on the Internet to have a little price discount. And since the shops only propose the big brands of the industry, the choice of brands for the customers is limited, and so is the customers’ negotiation power.

Substitute products: Low

There is a low threat on substitute products because if they want to practice golf, the consumers have to get golf equipment (buy or rent