Chapter
Callaway Golf Company
Rajiv lal Edith D. Prescott
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Ely Callaway, Callaway Golf Company 's (CGC) 80-year:old founder, chairman, and chief executive officer, sat in the conference room one sunny day in fall 1999 contemplating his company 's remarkable story. He wondered how that story might continue in light of some recent internal and external challenges. In the span of a decade, Callaway had built CGC into the dominant player in the golf equipment business, despite charging premium prices. CGC sales had increased steadily from $5 million in 1988 to over $800 million by 1997 (see Exhibit 1 for income statements). He accomplished this with the clarity of his vision: "If we make a truly more satisfying product for the average
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Company History
CGC was led by Ely Callaway (pronounced E-lee), a powerful motivator who defined the company 's culture. People described the LaGrange, Georgia, native as charming, feisty, optimistic, energetic, and inspirational. A distant cousin of golf legend Bobby Jones, Callaway was a golf club champion at 20 and a three-handicap golfer at 40. In recent years he found that he did not have much time to play golf. He said, "I spend my time trying to put myself in the place of the average hacker and see how they will react to our new woods and irons."1
The Start of CGC
The day after he sold his winery in 1982, Callaway received a cold-call from the cashstrapped founders of a small golf manufacturing company named Hickory Stick USA, Inc. Callaway saw potential in the antique-looking, yet modern clubs, and decided to invest $435,000. He changed the name of the company to Callaway Hickory Stick, Inc. and focused on expanding the product mix. The designs were essentially knock-offs of existing companies ' clubs (the only difference lay in the hickory shafts); thus, Callaway 's first priority was to develop original products. Callaway put in $2 million of his own money over the first three years, thinking it would take the company eight to ten years to break even.
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Glenn Sheeley, "Callaway led golf 's charge out of the woods,"
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Greg Hamilton purchased the Hickory Ridge Golf Club in 1988. This publicly nine-hole golf course was located in Columbia, South Carolina. HRGC initially opened in 1957 as an 18-hole, par-71 golf course by a family who go by the name Williams and who also owned the land it sat upon. Williams’s family sold the course in 1964; the business had been exchanged between many purchasers before getting cut back to a nine-hole 35-par course by the McAlister’s. The McAlister’s who were in the construction business brought the golf course in 1978 making major renovations to the course. McAlister had not sufficiently maintained the clubhouse or the course adequately while in ownership of the land; he took
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Callaway Golf Company (CGC) excelled in designing, development, manufacture and marketing of Golf clubs and accessories. Established in 1982, the publicly traded company recorded a steady growth in sales from $5million in 1988 to $800 million in 1997. This was possible due to clarity in vision of its CEO Ely Callaway, which was aimed at making a satisfying product which was uncommon and enjoyable for the average player rather than professionals. The revolutionary clubs were sold to professional as well as average players at premium prices driven by the high performance delivered by them.
“Given the year we just experienced in golf, it would be phenomenal if we see anything in 2001 that will even remotely compare. We witnessed an incredible season by the game’s most dominant player-in this era or any other. We saw how fans and players alike could respect the game in an international competition. And, we have seen the game’s visibility skyrocket” (Strange 20).
Callaway Golf's success story begins with a small three-person golf company called Hickory Stick USA, which was founded in 1982 in Temecula, California. The company initially made wedges and putters that had unique shafts constructed of hickory with a steel core. These clubs caught the eye of Ely Callaway, who bought an interest in the company the following year. Mr. Callaway had already been a successful businessman in the fields of textiles
Ely Callaway founded Callaway Golf Company in 1982. In the early years, the company was named Callaway Hickory Stick USA, Inc. and specialized in hickory shafted putters and wedges. In 1988 the name of the company was changed to Callaway Golf Company. In the '90s, Ely Callaway and his company changed the golf industry in ways no one could have anticipated. Richard Helmstetter and his R&D department found a way to create a stainless steel driver that had a larger and more forgiving