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GOLFSMITH CASE STUDY

Do you like to slog for miles in dewy grass, hunt for very small objects lurking in knee-high underbrush, nurse sore elbow, get strafed by errant dimpled objects, and get attacked by rogue sprinklers? If so, we have a game for you and the business to help you enjoy it! Golfsmith International Inc., based in Austin, Texas, is the worlds largest distributor of golf equipment. The company was founded in 1967 and has grown from a club assembly operation that distributed its product only by mail order to an operation that provides every golfrelated product and service imaginable, either by mail-order or in showrooms in the U.S. and Canada. The showrooms offer extra services that distinguish the company from its competitors. In recent years, golf has become a sport for everyone rather than for just the socially and financially elite. Caddies and Cadillac owners alike can aspire to the PGA. This has opened a large new and diverse market that includes do-it-yourselfers who want to make their own clubs and those who want them ready-made. All of these Tiger Woods, Jack Nicholas, Babe Didrikson Zaharias or Patty Berg wannabes, however, want high quality, reasonably priced equipment, and Golfsmith has the goods for them. Golfsmiths primary direct competitors include companies such as Dynacraft Golf Products, Inc., and Ralph Maltbys Golf Works, both located in Newwark, Ohio. Direct competitors are those that compete with Golfsmith for customers in all of the same market segments. Dynacraft is geared primarily to helping customers make their own clubs. The company offers a technical assistance hotline and sponsors a school, the Dynacraft Club making Institute that provides hands-on training in the art of club making. Dynacraft also provides how-to publications and videos, and a quarterly magazine for club makers. Golf Works is also dedicated to club making and, like Dynacraft, offers technical assistance and publications. This company has recently acquired CAD/CAM technology and CNC machining and is noted for its innovation in component design. Golf Works also operates a pro shop, practice golf links, and a club-repair van on the pro golf tours. Golfsmith is subject to indirect competition for other businesses, such as golf course pro shops, sporting goods stores, and discount department stores that sell ready-made clubs and accessories. We noted that Golfsmith began its life four decades ago as a supplier and assembler of gold club components. The business grew rapidly and dominated the field as a mail-order business by using state-ofthe-art technology to take and assemble orders. Orders-takers transcribe orders into a computerized system that creates bar-code labels. A label for a particular order is placed on a large plastic tub. The tub then makes a journey around a conveyor system where a sequence of barcode scanners signal robots to retrieve the appropriate items from shelves and deposit them in the tub. When the order is complete, the items are packaged for delivery and loaded onto a waiting UPS truck, and the tub is ready for another circuit of the Golfsmith course. An order can be ready for shipment within minutes of being received from the customer. This automated and highly efficient system represents an enormous competitive advantage for Golfsmith. Golfsmith has not rested on its early success it has broadened its target market to include all golf enthusiasts, rather than just those who want customized clubs. The company now operates 25 stores in the United States and Canada, including superstores in Austin and Los Angeles and its headquarters facility. The 41-acre headquarters in Austin is home to 100-station practice range with sheltered hitting positions, 5,000-square-foot putting green, a 2,400-square-foot chipping green, and two sand traps. The facility is home to Golfsmith Harvey Penick Golf Academy and attracts golfers from all over the world. Ponds, waterfalls, rock escarpments, and native plants surround the links and create an award-winning environment. In recent years, Golfsmith has moved from selling only components and assembly tools to making and fixing golf clubs and marketing and selling golf accessories. The companys catalog includes everything from custom-printed golf balls to electronic distance estimators.

After 32 years of assembling golf components and shipping them to about 90 countries, Golfsmith has become the largest mail-order supplier of golf equipment and accessories in the world. Golfsmith presently employs 1,800 people, including 26 golf professionals, and processes about 8,000 Web and catalog orders per day. The company has taken more than 14,000 calls in one day. Golfsmiths headquarters and Learning and Practice Facility houses the entire operation, including open office space, and area for about 250 phone-order-taking stations, the warehouse and order-assembly facility, a large retail showroom, and the Clubhouse Caf, where customers can buy drinks and snacks and watch golf programming on several television screens. Visitors are enthusiastically greeted at the door by n employee wearing golf attire. Specialists are available to advise customers and assess their needs, if desired. All employees of Golfsmith, including those who take phone orders, are very knowledgeable and can speak golfese fluently. A tour of the facility gives the visitor a sense of the corporate culture. The office space, even that of the officers is open. Communication across functional boundaries in this environment is easy, and the officers are always available to all employees. Even the banks of phones where orders are received avoid conveying the feeling of anonymous minions stuck in their hidey-holes. The overriding sense is that everyone associated with Golfsmith seems to live, breathe, and talk golf. The companys strong commitment to customer service and its employees high level of expertise and enthusiasm create a unique atmosphere. QUESTIONS 1. Prepare a service blueprint for Golfsmith. 2. What generic approach to service system design does Golfsmith illustrate and what competitive advantages does this design offer? 3. Why is Golfsmith a good candidate for Internet sales?