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             As Callaway Golf Company prepares to introduce the eagerly anticipated Callaway Golf Ball at the 2000 PGA Merchandise Show, this case study examines whether the company is able to continue to lead the industry as it has done in the past decade, or, in fact, whether it needs to redefine or refocus its business strategy. It will specifically look at the state of the industry and CGC's position within it, any problems that the company may be facing and then suggest and evaluate alternatives based on appropriately chosen criteria. .
             2. Situation Audit.
             To analyse and evaluate CGC's current situation, problems and opportunities, this study will firstly scrutinize the financial standing of the firm, and then summarise several strategy models used in the examination of a company's position.
             2.1 Financial Analysis.
             A snapshot of CGC's financial history (1993-1999) has been provided and is shown in Appendix A, in the form of Income Statements and Balance Sheet. A summary of the key financial ratios is then presented in Appendix B. Together, these documents show that the strong financial position CGC earned in the mid-1990's has somewhat been eroded in 1998 & 1999. At the bottom of Appendix B are the most important points of this analysis.
             In summary, the company's sales have dropped off over the past two years with disproportionate increases in R&D, COGS and SG&A expenses. Indeed profitability, "the single most important factor in many (strategy) decisions" has only increased by 29% in that period. For CGC it means they are expending a great deal more per sale than in years gone by. CGC currently has large cash on hand, small long-term liabilities and low cost to raise funds which would ideally place it for some form of growth strategy of (say) acquisition or diversification.
             2.2 Model Analysis.
             From the SWOT Analysis (refer to Appendix C for greater detail) we can see that CGC has a very strong vision, attaching great importance to innovation through superior R&D.

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