Businesses thrive and prosper as a result of numerous factors. One of the most common elements is the competitive advantage in the market. According to Gamble and Arthur (20), the element of competition dictates the direction of a given company’s operational strategy. The strategy selected is usually guided by theoretical frameworks based on the principles of strategic management.
One such framework is Porter’s five force principles. The framework helps in the evaluation of a company’s competitive strength (Gamble and Arthur 56). The arguments made in this essay are based on the 2009 golf season. The author of this paper will point out the effects of the slow growth in the number of golfers about competitiveness in the golf equipment industry. An analysis of this element is made from the perspective of Porter’s five forces.
Supply and demand are the backbones of the market in which businesses operate (Gamble and Arthur 56). The aforementioned decline in the number of golfers is understood using Porter’s power of buyers. According to Gamble and Arthur (43), the power of the buyer helps in analyzing the competitive intensity of a given company by looking at the price of commodities. The number of buyers available in the market affects the prices of products supplied. The volume of consumers also determines the competitiveness of operators in the market.
Buyer’s Power in the Golfing Case
Gamble (10) illustrates a slow growth in the number of golfers in 2009. Gamble (5) points out that in 2008, there were more than 25.6 million golfers. The figure was a sharp decline from that recorded in 1998. The number of participants in this game stood at approximately 28 million in 1998. From these figures, it is evident that the number of consumers in the golfing equipment industry is not high.
Under such circumstances, the price of products determines the unit volumes sold. Gamble (5) indicates that in the early 1990s, the top tier of golfers in the Professional Golfers Association (PGA) earned $400,000. However, the 2007 figures indicate that the same class of players earned more than $4 million. As a result, golfing equipment became expensive. To some extent, the rise in earnings led to overseas production of equipment. As a result of the lull in growth, companies resorted to alternative and cheaper products.
Availability of Substitutes
In this paper, the author identified the power of the buyer as a force owing to the existence of substitutes. Gamble (8) cites an increase in counterfeits, which act as substitutes in this case. The competitive intensity during the 2009 golfing season increased due to this availability of counterfeits.
Gamble (9) points out that companies dealing with golf equipment were forced to compete with counterfeits in the market. As a result of this, the revenues of the companies decreased since they were unable to sell the large volume of products they had manufactured. Customers could access cheaper alternatives in the market. To this end, the slow growth increased competition in the golf equipment industry.
From the arguments made in this paper, it is evident that the number of buyers in a given market affects the price of a particular commodity. The slow growth in the number of golfers in 2009 led to very few buyers in the market. As a result of this, the competitive intensity in the golfing equipment industry increased.
Gamble, John, and T. Arthur. Essentials of Strategic Management: The Quest for Competitive Advantage. 2nd ed. 2010. New York: McGraw Hill. Print.
Gamble, John. “Competition in the Golf Equipment Industry in 2009.” Essentials of Strategic Management: The Quest for Competitive Advantage. Ed. John Gamble. London: McGraw Hill, 2008. 279-301. Print.