Questions
Zekany Corporation would have had identical income before taxes on both its income tax returns and...

Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2018 through 2021 except for differences in depreciation on an operational asset. The asset cost $220,000 and is depreciated for income tax purposes in the following amounts:

2018 $ 72,600
2019 96,800
2020 33,000
2021 17,600

  
The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes.
  
Income amounts before depreciation expense and income taxes for each of the four years were as follows.
   

2018 2019 2020 2021
Accounting income before taxes and depreciation $ 120,000 $ 140,000 $ 130,000 $ 130,000

  
Assume the average and marginal income tax rate for 2018 and 2019 was 30%; however, during 2019 tax legislation was passed to raise the tax rate to 40% beginning in 2020. The 40% rate remained in effect through the years 2020 and 2021. Both the accounting and income tax periods end December 31.
   
Required:
Prepare the journal entries to record income taxes for the years 2018 through 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

In: Accounting

Problem 11-6A Partnership entries, profit allocation, admission of a partner LO2, 3, 4 On June 1,...

Problem 11-6A Partnership entries, profit allocation, admission of a partner LO2, 3, 4

On June 1, 2020, Jill Bow and Aisha Adams formed a partnership to open a gluten-free commercial bakery, contributing $296,000 cash and $392,000 of equipment, respectively. The partnership also assumed responsibility for a $56,000 note payable associated with the equipment. The partners agreed to share profits as follows: Bow is to receive an annual salary allowance of $166,000, both are to receive an annual interest allowance of 5% of their original capital investments, and any remaining profit or loss is to be shared 40/60 (to Bow and Adams, respectively). On November 20, 2020, Adams withdrew cash of $116,000. At year-end, May 31, 2021, the Income Summary account had a credit balance of $540,000. On June 1, 2021, Peter Williams invested $136,000 and was admitted to the partnership for a 20% interest in equity.

Required:
1. Prepare journal entries for the following dates.


a. June 1, 2020



b. November 20, 2020

c. May 31, 2021


d. June 1, 2021


2. Calculate the balance in each partner’s capital account immediately after the June 1, 2021, entry.

In: Accounting

Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement,...

Alsup Consulting sometimes performs services for which it receives payment at the conclusion of the engagement, up to six months after services commence. Alsup recognizes service revenue for financial reporting purposes when the services are performed. For tax purposes, revenue is reported when fees are collected. Service revenue, collections, and pretax accounting income for 2017–2020 are as follows:

Service Revenue Collections Pretax Accounting
Income
2017 $ 687,000 $ 662,000 $ 230,000
2018 790,000 795,000 295,000
2019 755,000 725,000 265,000
2020 740,000 760,000 245,000


There are no differences between accounting income and taxable income other than the temporary difference described above. The enacted tax rate for each year is 40%.

(Hint: You may find it helpful to prepare a schedule that shows the balances in service revenue receivable at December 31, 2017–2020.)

Required:
1. Prepare the appropriate journal entry to record Alsup's 2018 income taxes, Alsup’s 2019 income taxes and Alsup’s 2020 income taxes. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in thousands.)

Record 2018,2019,2020and income taxes

In: Accounting

(Recognition of Profit on Long-Term Contract —Overall Loss) Assume the facts given in E6.37 except that...

(Recognition of Profit on Long-Term Contract
—Overall Loss) Assume the facts given in E6.37 except that
Vaughn's non-cancellable fixed price contract with Atlantis is for $9.5
million. Billings and collections are lower in 2022 by $500,000 each.


2020 2021 2022
Costs for the year $3,825 $4,675 $1,200
Estimated costs to complete 4,675 1,270 –0–
Progress billings for the year (non-refundable) 3,500 4,100 1,900
Cash collected for the year 3,100 4,150 2,250
Instructions
a. Using the percentage-of-completion method, calculate the
percent complete for 2020 and 2021. Round the percent complete
to the nearest whole percentage point.


b. Calculate the amount of revenue to be recognized in 2020 and
2021.


c. Calculate the construction costs to be expensed in 2021.


d. Prepare the journal entry at December 31, 2021, to record longterm
contract revenues, expenses, and losses for 2021.


e. What is the balance in the Contract Asset/Liability account at
December 31, 2020 and 2021?


f. Show how the construction contract would be reported on the
SFP and the income statement for the year ended December 31,
2021.


g. Assume that Vaughn uses the zero-profit or completed-contract
method. What would be the journal entry recorded on December 31, 2021?

In: Accounting

Question 12 A comparative balance sheet for Rocker Company appears below: ROCKER COMPANY Comparative Balance Sheet...

Question 12

A comparative balance sheet for Rocker Company appears below:

ROCKER COMPANY
Comparative Balance Sheet
Dec. 31, 2020 Dec. 31, 2019
Assets
Cash $34,000 $11,000
Accounts receivable 18,000 13,000
Inventory 25,000 17,000
Prepaid expenses 6,000 9,000
Long-term investments 0 17,000
Equipment 60,000 33,000
Accumulated depreciation—equipment (20,000 ) (15,000 )
    Total assets $123,000 $85,000
Liabilities and Stockholder's Equity
Accounts payable $17,000 $7,000
Bonds payable 36,000 45,000
Common stock 40,000 23,000
Retained earnings 30,000 10,000
    Total liabilities and stockholders' equity $123,000 $85,000
Additional information:
1. Net income for the year ending December 31, 2020 was $35,000.
2. Cash dividends of $15,000 were declared and paid during the year.
3. Long-term investments that had a cost of $17,000 were sold for $14,000.
4. Sales for 2020 were $120,000.


*Prepare a statement of cash flows for the year ended December 31, 2020, using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

In: Accounting

Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is...

Alta Company is constructing a production complex that qualifies for interest capitalization. The following information is available:

  • Capitalization period: January 1, 2019, to June 30, 2020
  • Expenditures on project:
    2019:
    January 1 $ 516,000
    May 1 549,000
    October 1 492,000
    2020:
    March 1 1,512,000
    June 30 600,000
  • Amounts borrowed and outstanding:
       $1.4 million borrowed at 12%, specifically for the project
       $5 million borrowed on July 1, 2018, at 14%
       $18 million borrowed on January 1, 2017, at 8%

Required:

Note: Round all final numeric answers to two decimal places.

  1. Compute the amount of interest costs capitalized each year.
    Capitalized interest, 2019 $ fill in the blank 1
    Capitalized interest, 2020 $ fill in the blank 2
  2. If it is assumed that the production complex has an estimated life of 25 years and a residual value of $0, compute the straight-line depreciation in 2020.

    $ fill in the blank 3

  3. Since GAAP requires accrual accounting, if a company capitalizes interest during the construction period it will report _________ income than if it had not capitalized interest. In future periods, the same company will report ________ income than if it had not capitalized interest.

In: Accounting

The separate condensed balance sheet of Patrick Corporation and its wholly-owned subsidiary, Sean Corporation, are as...

The separate condensed balance sheet of Patrick Corporation and its wholly-owned subsidiary, Sean Corporation, are as follows:

Balance Sheets

December 31, 2020

Patrick

Sean

Cash

$      80,000

$   60,000

Accounts Receivable (net)

      140,000

     25,000

Inventories

        90,000

   50,000

Plant & equipment (net)

      625,000

   280,000

Investment in Sean

      460,000

Total Assets

$ 1,395,000

$ 415,000

Accounts Payable

$ 160,000

$   95,000

Long-term Debt

    110,000

    30,000

Common Stock ($10 par)

    340,000

     50,000

Additional paid-in capital

     10,000

Retained Earnings

    785,000

   230,000

Total Liabilities & Stockholders’ Equity

$1,395,000

$415,000

Additional Information:
* On December 31, 2020, Patrick acquired 100% of Sean’s voting stock in exchange for $460,000.
* At the acquisition date, the fair values of Sean’s assets and liabilities equaled their carrying amounts, respectively, except that the fair value of certain items in Sean’s inventory were $25,000 more than their carrying amounts.

1. In the December 31, 2020, consolidated balance sheet of Patrick and its subsidiary, what amount
of total assets should be reported?

2. In the December 31, 2020, consolidated balance sheet of Patrick and its subsidiary, what amount
of total stockholders’ equity should be reported?

In: Accounting

Comparative Statements of Retained Earnings for Renn-Dever Corporation were reported as follows for the fiscal years...

Comparative Statements of Retained Earnings for Renn-Dever Corporation were reported as follows for the fiscal years ending December 31, 2019, 2020, and 2021.

RENN-DEVER CORPORATION

Statements of Retained Earnings

For the Years Ended December 31

2021

2020

2019

Balance at beginning of year

7,094,292

5,620,052

5,804,552

Net income (loss)

3,326,700

2,420,900

(184,500)

Deductions:

Stock dividend (61,500 shares)

260,000

Common shares retired, September 30 (140,000 shares)

230,660

Common stock cash dividends

907,950

716,000

0

Balance at end of year

9,253,042

7,094,292

5,620,052

At December 31, 2018, paid-in capital consisted of the following:

Common stock, 2,190,000 shares at $1 par

2,190,000

Paid in capital—excess of par

7,600,000

No preferred stock or potential common shares were outstanding during any of the periods shown.

Required:
Compute Renn-Dever’s earnings per share as it would have appeared in income statements for the years ended December 31, 2019, 2020, and 2021. (Negative amounts should be indicated by a minus sign.)

Year

Numerator

/

Denominator

=

Earnings (Net Loss) per Share

2019

$(184,500)

/

2,190,000

=

$(0.08)

2020

$2,420,900

/

=

0

2021

$3,326,700

/

=

0

In: Accounting

THE COMPANY HISTORY Callaway Golf got its start in 1982 when the late Ely R. Callaway...

THE COMPANY HISTORY
Callaway Golf got its start in 1982 when the late Ely R. Callaway invested $400,000 for half interest in a golf club company called Hickory Stick. Callaway-Hickory, later renamed Callaway Golf, had sales of just $22 million in 1990 and was considered a small player as an OEM (original equipment manufacturer) for golf clubs. Callaway Golf made golf history and truly established itself in 1991 with the introduction of a very popular stainless-steel driver called “The Big Bertha.” The Big Bertha driver was soon followed by one of the biggest- selling drivers of all time, the titanium headed “Great Big Bertha.”
The success of the Big Bertha products—drivers,
irons, and fairway woods—made Callaway Golf a major player in the golf club business and the oversized tita- nium driver explosion was on. The Big Bertha name and product line continued with Steelhead, Hawkeye, ERC, C4, and ERC Fusion. Recent additions include the FT-3, FT-5, and FT-i irons and drivers, the Odyssey putter line—the most popular putter in the United States, Europe, and Japan—as well as the Callaway Golf X Ju- nior set for 8- to 12-year-olds with a manufacturer’s sug- gested retail price of $275.
By 2007 Callaway revenues exceeded $1.0 billion annually, making Callaway Golf one of the major OEMs in the business of golf. Callaway sells drivers and fairway woods, irons, and putters under the Callaway, Odyssey, Ben Hogan, and Top-Flite brands and also markets balls and accessories such as golf bags, gloves, headwear, foot- wear, and umbrellas. The Callaway trademarks and ser- vice marks are also licensed for products such as golf apparel, watches, travel gear, and eyewear. In November 2006, Callaway launched an online store where customers can order pre-owned golf products.
BUYER BEHAVIOR
Golfers, pros, and amateurs experiment with drivers, fairway woods, and putters more than other clubs in their golf bags. Many top professionals and amateurs choose to play with their favorite irons for years before chang- ing. Callaway Golf made a cunning decision to enter the club market the way it did in the late 1980s and early 1990s. By introducing drivers and uniquely designed fairway woods, clubs that players often change in the constant quest for distance and accuracy, Callaway Golf quickly became a name and force in the golf club equip- ment business.

THE GLOBAL GOLF MARKET
The golf industry has a broad and diverse global market. The game is popular around the world. The game and the rules are essentially the same everywhere. Golfers share similar characteristics and interests—a beginning golfer or an avid golfer in the United States is not much differ- ent from a beginning golfer or an avid golfer in Australia or Germany.
APPENDIX D Alternate Cases
The professional golf tours have done much to link golf as a global sport. Golf enthusiasts from around the world can follow their sport and stars through televised tourna- ments, daily newspaper coverage, weekly golf journals, monthly golf magazines, and the Internet. Golf-related websites are among the most popular sites on the Internet. The Golf Channel on cable television continues to be a strong venue for direct product marketing as well as inter- national event coverage. Golf is truly a global sport. Courses and competitions exist in many countries and on every continent except Antarctica. Professional and ama- teur players from around the world compete and interact with a high degree of etiquette and sportsmanship. Golfers at all levels share ideas and experiences from the game.

D-15
There are notable differences among global golf mar- kets. Japanese golfers seek out technology and products to compensate for their smaller average stature. Savvy golf equipment manufacturers have developed clubs specifi- cally for the Japanese market with different head shapes, weight, lie angle, and shafts adjusted for the average Japanese golfer’s height. And the long or distance ball is very popu- lar. In the United States, distance balls are inexpensive and fairly low-tech. In Japan, distance balls can sell for up to 500 yen each or more than $49 per dozen. While many
U.S. golfers—regardless of ability—seek out the equip- ment used by professional golfers, Japanese golfers often think they are “not worthy” to use top-caliber equipment.
“In the U.S. we talk about the pyramid of influence and how the best players dictate what everyone else wants to buy,” says Maki Shinoda of Nike. “But in Japan, you basically need to flip the pyramid upside down.” This creates an interesting challenge for golf equipment manufacturers— technology sells, but manufacturers must also consider how best to position the product for the Japanese market so that it does not appear to be “too professional.”
COMPETITION
The golf equipment business is a highly congested and very competitive marketplace. Many merchants exist, and the field is constantly changing with new start-ups, mergers,
and acquisitions. Major equipment manufacturers include Titleist, TaylorMade, Callaway, and Ping. Adams, Cleve- land, Wilson, Mizuno, Nike, and others also compete for a slice of the multibillion-dollar worldwide golf equipment market. Almost all well-established club manufacturers have followed Callaway’s “Bigger Is Better” philosophy when it comes to the marketing and manufacturing of popu- lar drivers. In many respects, today’s design and engineer- ing for drivers has been a contest of who can make the most forgiving, longest-driving club that technology and the rules of golf allow. Premium clubs today not only offer technological innovation, forgiveness, power, distance, and accuracy, but they are also pushing the laws of physics and the rules of golf.
CALLAWAY’S INTERNATIONAL MARKETS
For Callaway Golf, the global market is a very big part of its total market, with about 44 percent of all sales coming from golfers in countries outside the United States in 2006. The global market has grown in importance since the U.S. market—estimated at 28.7 million golfers—is relatively stagnant in terms of participants and number of rounds played (around 500 million annually). In fact, for the first time since World War II, more golf courses closed in the United States in 2006 than opened.
The Japanese golf market has yet to recover from a se- vere economic downturn in the 1990s, and this has hurt Callaway and other golf equipment manufacturers. The typical Japanese golfer is male, spends approximately 480,000 yen ($4,500) per year on golf, and plays 6.8 times a year, practicing 9.5 times a year. Although the cost to golf in Japan has actually fallen as the economy struggled (which should have helped make golf more af- fordable, boosting rounds played), demographics are now a huge factor. Forecasts predicted that Japan would see negative population growth for the first time in its history in 2007. Younger golfers are working more hours to sup- port themselves and the aging Japanese population, leav- ing them fewer hours on the course to enjoy themselves.
One of the hottest Asian markets is South Korea. More than 30 percent of Korea’s 4 million golfers are women, compared to 10 percent of U.S. golfers. Korean women account for the lion’s share of the $600 million in golf and apparel/footwear sales tallied at retail compared to hard goods sales of $275 million. The female golf market is also growing faster than the male market in Korea. Pur- suing the style-conscious female golfer domestically and internationally would represent a change for most golf equipment manufacturers, including Callaway.
What appeals to style-conscious women golfers? The upscale Shisegae Department Store in Seoul provides

some insight. Shisegae devotes nearly an entire floor to golf equipment and apparel and nothing is cheap. Most of the customers are women. The TaylorMade r7 driver re- tails for 750,000 won ($810). Nearly every shirt costs at least $300! Form-fitting, stylish apparel is the norm. No khakis found here. The sale rack has a plethora of size large items, unlike U.S. stores where small sizes domi- nate among unsold merchandise.
Nike has a significant head start over many of its rivals in this market. Korean consumers aspire to look and dress like celebrities, and Nike has LPGA stars Michelle Wie and Grace Park endorsing and using Nike golf products.
ISSUES
In sports, it is often said that getting to the top is easier than staying there. Callaway Golf is faced with the bur- densome task of sustaining its phenomenal growth and market share against competitors in hot pursuit. Discount- ing and innovation by competitors are challenges that Callaway now faces. Fast followers like Adams Golf and others have developed and discounted products that cut into Callaway’s mainstay, the driver, fairway wood, and specialty club market. Callaway and others have been left swimming for higher ground, moving into discount stores such as Target, as discounting and dumping have changed the market share landscape. Callaway has often resisted discounting its premium product line.
Technology does drive the industry. In 2004, Adidas-
Soloman A.G. (TaylorMade) released a driver with tech- nological innovation unlike any other on the market. TaylorMade’s new driver, the r7 Quad, introduced a unique interchangeable weighting system that allows golfers to customize their driver for different course con- ditions and desired ball flight. More than three years later, the TaylorMade r7 was still arguably the most popu- lar driver on the market.
Other big players in the equipment business are also after Callaway’s market share and may pose a greater threat to Callaway’s long-term success. Titleist, Taylor- Made, and Ping are large enough and strong enough to survive any market slump and also have the resources to buy smaller successful companies and the technology to provide popular products.
Steps have been taken by golf’s ruling bodies—the United States Golf Association (USGA) in North America and the Royal and Ancient Golf Club of St. An- drews (R&A)—to limit driver head size (larger heads im- prove forgiveness on off-center hits) and coefficient of restitution (the springiness of the club face surface that creates a trampoline effect producing more distance). Many of the golf greats believe more should be done to protect the game and have bemoaned the fact that tech- nology and equipment advances have changed the game
D-16
for the worse. Jack Nicklaus says, “It used to be 80 per- cent shot making and about 20 percent power.” Those percentages have been reversed today, according to Nicklaus. Many classic golf courses have been rendered obsolete for professional tournaments by balls and clubs that allow players to reach the greens on par four holes in one shot and par fives in two shots.
There are calls to restrict the type of equipment pros can use for tournaments. Equipment manufacturers are not eager to back away from pursuing technological ad- vances. The vast majority of customers are amateurs looking for any edge to improve their games, and one way is through more forgiving equipment. What will happen to the “pyramid of influence” if the pros or even amateur tournaments have to be played with a “handicap” on con- forming equipment rather than the latest, greatest, most forgiving equipment? Will it protect the game and put more of the emphasis back on skill?
The newest and potentially biggest golf market is now emerging in China, where golf is becoming a popular choice for a growing population of young professionals.

Although there are currently only about 1 million Chinese golfers, an annual growth rate of 25 percent is forecast over the next five years. The key to future global growth for the golf equipment industry may be in the budding Chinese market or the growing Indian market, also ex- pected to grow at the same healthy rate as the Chinese market.
Questions
1. What are the pros and cons of a global versus a multi- domestic approach to marketing golf clubs for Callaway? Which approach do you feel would have more merit and why?
2. What are 3 significant environmental factors that could have a major impact on the marketing of golf clubs internationally? Briefly explain each factor you list.
3. What marketing mix recommendations would you have for Callaway as it attempts to increase international market share, especially in Asian markets? (price, product, promotion, place)



plz read case study and give the following answer

In: Finance

Challenge THE COMPANY HISTORY Callaway Golf got its start in 1982 when the late Ely R....

Challenge
THE COMPANY HISTORY
Callaway Golf got its start in 1982 when the late Ely R. Callaway invested $400,000 for half interest in a golf club company called Hickory Stick. Callaway-Hickory, later renamed Callaway Golf, had sales of just $22 million in 1990 and was considered a small player as an OEM (original equipment manufacturer) for golf clubs. Callaway Golf made golf history and truly established itself in 1991 with the introduction of a very popular stainless-steel driver called “The Big Bertha.” The Big Bertha driver was soon followed by one of the biggest- selling drivers of all time, the titanium headed “Great Big Bertha.”
The success of the Big Bertha products—drivers,
irons, and fairway woods—made Callaway Golf a major player in the golf club business and the oversized tita- nium driver explosion was on. The Big Bertha name and product line continued with Steelhead, Hawkeye, ERC, C4, and ERC Fusion. Recent additions include the FT-3, FT-5, and FT-i irons and drivers, the Odyssey putter line—the most popular putter in the United States, Europe, and Japan—as well as the Callaway Golf X Ju- nior set for 8- to 12-year-olds with a manufacturer’s sug- gested retail price of $275.
By 2007 Callaway revenues exceeded $1.0 billion annually, making Callaway Golf one of the major OEMs in the business of golf. Callaway sells drivers and fairway woods, irons, and putters under the Callaway, Odyssey, Ben Hogan, and Top-Flite brands and also markets balls and accessories such as golf bags, gloves, headwear, foot- wear, and umbrellas. The Callaway trademarks and ser- vice marks are also licensed for products such as golf apparel, watches, travel gear, and eyewear. In November 2006, Callaway launched an online store where customers can order pre-owned golf products.
BUYER BEHAVIOR
Golfers, pros, and amateurs experiment with drivers, fairway woods, and putters more than other clubs in their golf bags. Many top professionals and amateurs choose to play with their favorite irons for years before chang- ing. Callaway Golf made a cunning decision to enter the club market the way it did in the late 1980s and early 1990s. By introducing drivers and uniquely designed fairway woods, clubs that players often change in the constant quest for distance and accuracy, Callaway Golf quickly became a name and force in the golf club equip- ment business.

THE GLOBAL GOLF MARKET
The golf industry has a broad and diverse global market. The game is popular around the world. The game and the rules are essentially the same everywhere. Golfers share similar characteristics and interests—a beginning golfer or an avid golfer in the United States is not much differ- ent from a beginning golfer or an avid golfer in Australia or Germany.
APPENDIX D Alternate Cases
The professional golf tours have done much to link golf as a global sport. Golf enthusiasts from around the world can follow their sport and stars through televised tourna- ments, daily newspaper coverage, weekly golf journals, monthly golf magazines, and the Internet. Golf-related websites are among the most popular sites on the Internet. The Golf Channel on cable television continues to be a strong venue for direct product marketing as well as inter- national event coverage. Golf is truly a global sport. Courses and competitions exist in many countries and on every continent except Antarctica. Professional and ama- teur players from around the world compete and interact with a high degree of etiquette and sportsmanship. Golfers at all levels share ideas and experiences from the game.

D-15
There are notable differences among global golf mar- kets. Japanese golfers seek out technology and products to compensate for their smaller average stature. Savvy golf equipment manufacturers have developed clubs specifi- cally for the Japanese market with different head shapes, weight, lie angle, and shafts adjusted for the average Japanese golfer’s height. And the long or distance ball is very popu- lar. In the United States, distance balls are inexpensive and fairly low-tech. In Japan, distance balls can sell for up to 500 yen each or more than $49 per dozen. While many
U.S. golfers—regardless of ability—seek out the equip- ment used by professional golfers, Japanese golfers often think they are “not worthy” to use top-caliber equipment.
“In the U.S. we talk about the pyramid of influence and how the best players dictate what everyone else wants to buy,” says Maki Shinoda of Nike. “But in Japan, you basically need to flip the pyramid upside down.” This creates an interesting challenge for golf equipment manufacturers— technology sells, but manufacturers must also consider how best to position the product for the Japanese market so that it does not appear to be “too professional.”
COMPETITION
The golf equipment business is a highly congested and very competitive marketplace. Many merchants exist, and the field is constantly changing with new start-ups, mergers,
and acquisitions. Major equipment manufacturers include Titleist, TaylorMade, Callaway, and Ping. Adams, Cleve- land, Wilson, Mizuno, Nike, and others also compete for a slice of the multibillion-dollar worldwide golf equipment market. Almost all well-established club manufacturers have followed Callaway’s “Bigger Is Better” philosophy when it comes to the marketing and manufacturing of popu- lar drivers. In many respects, today’s design and engineer- ing for drivers has been a contest of who can make the most forgiving, longest-driving club that technology and the rules of golf allow. Premium clubs today not only offer technological innovation, forgiveness, power, distance, and accuracy, but they are also pushing the laws of physics and the rules of golf.
CALLAWAY’S INTERNATIONAL MARKETS
For Callaway Golf, the global market is a very big part of its total market, with about 44 percent of all sales coming from golfers in countries outside the United States in 2006. The global market has grown in importance since the U.S. market—estimated at 28.7 million golfers—is relatively stagnant in terms of participants and number of rounds played (around 500 million annually). In fact, for the first time since World War II, more golf courses closed in the United States in 2006 than opened.
The Japanese golf market has yet to recover from a se- vere economic downturn in the 1990s, and this has hurt Callaway and other golf equipment manufacturers. The typical Japanese golfer is male, spends approximately 480,000 yen ($4,500) per year on golf, and plays 6.8 times a year, practicing 9.5 times a year. Although the cost to golf in Japan has actually fallen as the economy struggled (which should have helped make golf more af- fordable, boosting rounds played), demographics are now a huge factor. Forecasts predicted that Japan would see negative population growth for the first time in its history in 2007. Younger golfers are working more hours to sup- port themselves and the aging Japanese population, leav- ing them fewer hours on the course to enjoy themselves.
One of the hottest Asian markets is South Korea. More than 30 percent of Korea’s 4 million golfers are women, compared to 10 percent of U.S. golfers. Korean women account for the lion’s share of the $600 million in golf and apparel/footwear sales tallied at retail compared to hard goods sales of $275 million. The female golf market is also growing faster than the male market in Korea. Pur- suing the style-conscious female golfer domestically and internationally would represent a change for most golf equipment manufacturers, including Callaway.
What appeals to style-conscious women golfers? The upscale Shisegae Department Store in Seoul provides

some insight. Shisegae devotes nearly an entire floor to golf equipment and apparel and nothing is cheap. Most of the customers are women. The TaylorMade r7 driver re- tails for 750,000 won ($810). Nearly every shirt costs at least $300! Form-fitting, stylish apparel is the norm. No khakis found here. The sale rack has a plethora of size large items, unlike U.S. stores where small sizes domi- nate among unsold merchandise.
Nike has a significant head start over many of its rivals in this market. Korean consumers aspire to look and dress like celebrities, and Nike has LPGA stars Michelle Wie and Grace Park endorsing and using Nike golf products.
ISSUES
In sports, it is often said that getting to the top is easier than staying there. Callaway Golf is faced with the bur- densome task of sustaining its phenomenal growth and market share against competitors in hot pursuit. Discount- ing and innovation by competitors are challenges that Callaway now faces. Fast followers like Adams Golf and others have developed and discounted products that cut into Callaway’s mainstay, the driver, fairway wood, and specialty club market. Callaway and others have been left swimming for higher ground, moving into discount stores such as Target, as discounting and dumping have changed the market share landscape. Callaway has often resisted discounting its premium product line.
Technology does drive the industry. In 2004, Adidas-
Soloman A.G. (TaylorMade) released a driver with tech- nological innovation unlike any other on the market. TaylorMade’s new driver, the r7 Quad, introduced a unique interchangeable weighting system that allows golfers to customize their driver for different course con- ditions and desired ball flight. More than three years later, the TaylorMade r7 was still arguably the most popu- lar driver on the market.
Other big players in the equipment business are also after Callaway’s market share and may pose a greater threat to Callaway’s long-term success. Titleist, Taylor- Made, and Ping are large enough and strong enough to survive any market slump and also have the resources to buy smaller successful companies and the technology to provide popular products.
Steps have been taken by golf’s ruling bodies—the United States Golf Association (USGA) in North America and the Royal and Ancient Golf Club of St. An- drews (R&A)—to limit driver head size (larger heads im- prove forgiveness on off-center hits) and coefficient of restitution (the springiness of the club face surface that creates a trampoline effect producing more distance). Many of the golf greats believe more should be done to protect the game and have bemoaned the fact that tech- nology and equipment advances have changed the game
D-16
for the worse. Jack Nicklaus says, “It used to be 80 per- cent shot making and about 20 percent power.” Those percentages have been reversed today, according to Nicklaus. Many classic golf courses have been rendered obsolete for professional tournaments by balls and clubs that allow players to reach the greens on par four holes in one shot and par fives in two shots.
There are calls to restrict the type of equipment pros can use for tournaments. Equipment manufacturers are not eager to back away from pursuing technological ad- vances. The vast majority of customers are amateurs looking for any edge to improve their games, and one way is through more forgiving equipment. What will happen to the “pyramid of influence” if the pros or even amateur tournaments have to be played with a “handicap” on con- forming equipment rather than the latest, greatest, most forgiving equipment? Will it protect the game and put more of the emphasis back on skill?
The newest and potentially biggest golf market is now emerging in China, where golf is becoming a popular choice for a growing population of young professionals.

Although there are currently only about 1 million Chinese golfers, an annual growth rate of 25 percent is forecast over the next five years. The key to future global growth for the golf equipment industry may be in the budding Chinese market or the growing Indian market, also ex- pected to grow at the same healthy rate as the Chinese market.
Questions
1. What are the pros and cons of a global versus a multi- domestic approach to marketing golf clubs for Callaway? Which approach do you feel would have more merit and why?
2. What are 3 significant environmental factors that could have a major impact on the marketing of golf clubs internationally? Briefly explain each factor you list.
3. What marketing mix recommendations would you have for Callaway as it attempts to increase international market share, especially in Asian markets? (price, product, promotion, place)


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