Fairway

Suggested case structure:

Information that can be shared if asked by the interviewee:

• There are 3 suppliers operating in the market.
• 2 import their golf balls from China and one supplier (Dolp) imports from the US.
• Each player has 1/3 market share.
• Final sales are made via professional shops situated at the golf courses by using salespeople.
• Dolp is providing premium quality ($0.80/ball).
• The other two competitors provide medium quality ($0.70/ball)
• Fairway Inc. provides slightly better quality than Dolp.
• Consumers are very price insensitive (cost for a ball very low compared to membership fees)

The answer should include some of the following points:

Size of the market (number of balls sold):

• # of players * games played per year * balls lost per game
• Sales per producer * market share of each producer
• # of stores * # of balls sold per store
• # of golf courses * games per year * balls lost per game
• Looking at markets in similar countries

Revenue and costs:

• Pricing by segment
• How are competitors pricing?
• How price-sensitive are customers?
• Cost structure (fixed/variable costs)

Competitors active in the market

• Are the competitors profitable?

Retail structure

Possibilities to enter the market

Value chain

• Who does our distribution?
• Where is the product sold?
• How is the business structured?

Products:

• What can our products offer (quality, etc.)?

This is a very open question; therefore there are many possible answers:

• Using 3rd parties who already have an established distribution system in the market. This would lead to variable costs instead of fixed costs for our own people.
• Trying to convince the 2 companies importing golf balls from China to buy our product instead of the Chinese.
• Trying to reduce the fixed costs by using fewer salespeople, changing the pay packages, etc.

Information that can be shared if asked by the interviewee:

• Number of registered members in the Royal Portugal Golf Association: 40,000
• Amount of golf courses: 200

Information that can be shared if asked by the interviewee:

• Overall 140,000 players (including tourists, casual players, etc.)
• Frequency of playing:
  Registered members: 2 game/week, 1 lost ball/game
  Unregistered members: 12 games/year, 5 lost balls/game
• All lost balls should be assumed to be replaced.

Information that can be shared if asked by the interviewee: 

• Golf courses booked at 100% for 4 months and at 50% for 4 months. Closed for the remaining 4 months of a year.
• Average game: 2 hrs. 9 holes
• 2 players per team and 2 teams per hole à 4 player per hole is the maximum capacity
• 10 hours open per day
• 2 balls lost on an average per game
• All players have to finish 9 holes in a day.

The calculation should look like the following:

The first team needs 2 hours to finish the 9 holes. At that time there are 2 teams/hole.

Information that can be shared if asked by the interviewee: 

• The company already owns a production facility in Spain, where the golf balls for Portugal would be produced and then shipped.
• This production site is not fully utilized and has a capacity of 2,500,000 balls per year.
• 1 salesperson is responsible for up to 40 golf courses.
• Amount of golf courses: 200

With that data the candidate should be able to calculate the break-even point and the needed market share:

The main result is:

Fairway would need at least about 10% market share in order to make no losses. It could provide that amount of balls with the production facility in Spain.

The main conclusion should be:

Fairway should enter the market as they provide a higher quality product than their competitors. They should differentiate their product from the rest of the market and charge a higher price for it. There could also be other possibilities to sell the product