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WIKI ANALYSIS
Business Overview
Aldila is a golf company that specializes mainly in high performance graphite golf shafts both aftermarket and stock. Jim Flood founded the company in 1972 in Poway, California, where their headquarters is still located today. [1] Aldila primarily operates in the United States, throughout Europe, Vietnam, China, Canada, and Australia.Their Aldila shafts are the most popular on the PGA tour, as well as the Nationwide tour. Aldila started to become a main player in the golf shaft industry with its introduction of the NV shaft, which is most highly recognized by its deep green color. Aldila has since differentiated itself from other shaft companies by providing a wide array of colors and flexes that stand out when used. This differentiation of its products by color, have greatly helped its sales especially with the younger market that has greatly increased in the past 10 years. Along with aftermarket shafts such as the NV, Aldila also has a large affiliation with stock shafts for big players in the driver and fairway wood market. These affiliations are with Titleist (Fortune Brands (FO)), Adams Golf (ADGF), Callaway Golf Company (ELY), Mizuno (TYO:8022) , and many more.
Employees
- Peter R. Mathewson
Chairman of the Board and CEO President and COO, Aldila Golf Corp.
- Robert J. Cierzan
Senior Vice President, Composite Materials and Secretary
- Scott M. Bier
Vice President, Chief Financial Officer and Treasurer
- Michael J. Rossi
Vice President, Sales and Marketing, Aldila Golf Corp.
- 1,300 employees worldwide
Advertising
Are you playing Aldila or just graphite? Aldila has been very successful by revolutionizing their shafts on a yearly basis, and being in the market for almost 40 years. With this advertising, experience, and quality of products Aldila was the most popular shaft for woods on the PGA tour in 2010, as well as the leading hybrid shaft on tour.
Marketing Mix
Product
- Uses top of the line materials
- Innovative design
- Market Leader
- Customizable
- Shaft Optimization
Place
- Global, sales and distribution in 4 continents
- North America
- Europe
- Asia
- Australia
Promotion
- Celebrity endorsement
- Product Differentiation
- Most popular shaft on tour [3]
Price
- Comparable to its competitors
- Low-end can be as cheep as 20 dollars
- High-end tour models can be upwards of 200 dollars
Product Lines
As previously stated Aldila offers a wide array of flexes, styles, models, and colors in its shafts. The main 5 aftermarket shafts are the DVS, NV, Voodoo, VS Proto, and the most recent RIP. These aftermarket shafts can be individually customized by flex, color, kick-point, torque, and weight, based upon the proper specs associated with individual players. These specs are determined by Aldila’s extremely accurate fitting system. Aldila also has the ability to design different types of shafts to fit players to the preferred ball flight. Tour players all are given the optimal fitting on a per club bases for the exceptional performance required by the player.
Demographic
Aldila focuses greatly on its endorsements with the PGA tour and its players. Aldila sponsors players such as Stuart Appelby, Boo Weekly, and Paula Creamer. These players help Aldila reach out to the young crowd, by the overall demeanor of its players with big personalities, and with a lot of physical power on the golf course. The young crowd is portrayed as a new generation in golf highly dependent on hitting the ball a long way. Adhering to the wants and needs of the younger crowd, allows for life long customers, with maximum revenue from its customer’s life. Aldila also sponsors many junior tournaments such as AJGA (american junior golf association) tournaments, and other national and international organizations that influence golf at a young age.
Competitors
Aldila’s main competitors in the golf shaft industry are True Temper Sports (Graffalloy), Mitsubishi Rayon (Diamana), Fujikura Composite, and UST Mamiya (Proforce, etc).
All of these companies regularly compete for the stock shaft in all the new models of clubs released each year. Taylormade has chosen a Fujikura shaft to put as one of its high-end clubs. This shaft is known as the Speeder shaft and it is used primarily in the “Tour Preferred” models of Drivers and fairway woods Taylormade releases. Diamana has had the majority of Nike clubs until Aldila won the VR model in 2009. UST Proforce is normally one of the stock options in Titleist clubs, as well as many other off-brand clubs with its V2 design, but Graffalloy focuses mainly on aftermarket shafts ever since the early Ping designs. Even with this high level of competition, Aldila does hold the highest market share on both stock and aftermarket shafts.
[5] [6] This graph shows the price of Aldila (red) vs. Fujikura (blue) from 4/21/2006-4/21/2011 at its adjusted close. This shows how Aldila's competitors have caught up, at least in stock price over the past 5 years. Aldila revolutionized the golf shaft market, but now its competitors are starting to caych up in technology and quality.
Partnering with 3M
Aldila announced on November 23, 2010 that they will be partnering with 3M to help create a stronger and lighter resin for its products, ultimately leading to higher quality. This partnership served as a means of innovation in the golf industry. Investors responded favorably as seen in the following graph shown as Aldila before 3m and Aldila after 3m (2 month intervals).
[7]
As shown in the graphs of the stock prices of Aldila previous to and after partnering with 3M, Aldila has visibly shown growth at a higher rate. This partnering proved to be a spark that Aldila needed to boost earnings towards the end of the quarter in 2010.
Losses and Solutions
To keep up with the ever-changing market and continued innovation Aldila employs 1,300 full-time workers who mainly focus on research and development, marketing, and maintenance of extremely high quality standards. Unfortunately for Aldila, due to the high Cost of Goods Sold (72%-78% of revenue over the last 2 years) it has posted a net loss for the past two years straight [8]. Due to the high Cost of Goods Sold Aldila has highly decreased its inventory, and overhead decreasing its net loss, which hopefully will ultimately allow Aldila to become a profitable company once again in the near future. Also, with a higher utilization of Aldila's website can allow for higher future profits with the ability to sell directly to the end user, and eliminate all middle man profit.
Swot Analysis
- Strengths
Aldila's strengths lie with their experience in the golf shaft industry (39 years) which allows for more trust from consumers of the products they produce. Also, Aldila's overall advantage in the market with being the most popular shaft played by tour professionals allows for a strong hold over the other shaft manufacturers.
- Weaknesses
- Highly volatile market
- High industry competition
- Revenue highly dependent on other companies success i.e. Titleist, Adams, Nike etc.
- Opportunity
- Eliminating the middle-man via internet sales
- Expansion into growing market in Asia
- Marketing to younger customers
- Threats
- Threat of new entrants rather high
- Growing competition in Diamana, and Fujikura
- New competitors rising in Asia such as Mitsubishi
Porter's 5 Forces
Competition Very high especially with the recent narrowing in technology and quality across competitors. Other than brand name many shafts can be interchanged without much difference across companies within the same price range. All competitors have low-end affordable shafts (under 50$), mid range shafts (50$-100$), High-end shafts ($100-$200), and tour models (upwards of $200).
Buyer Power
Very high in the after-market sector of the industry due to the multitude of options, but is fairly low when the end user is purchasing a new model club with a predetermined stock shaft. In the Business to Business realm of the market buyer power is very high, due to the many golf shaft companies competing for the shaft in new product lines. Also, when an end-user orders a club they can personally customize the shaft from any company they want, with the specs they need. Aldila is considered a favorite in this form of the market because its name is much more recognized than its competitors. Ultimately the end-user and businesses that purchase from Aldila have numerous quality options for shafts, inherently giving the buyer the power.
Supplier Power
Relatively low with end user and other businesses, due to the high competition and narrowing of quality between companies. With so many shafts to choose from in this market it is easy for the supplier to lose contracts with businesses, because they carry a higher cost.
Threat of Substitution
Extremely high due to the extensive options within the market. All competitors have shafts that are comparable to each other regardless of flex, or quality. For every price range, each of Aldila's main competitors can provide a shaft that is of quality with similar specs. This leads to high costs for Aldila in marketing to continue to be the most popular shaft company in the world.
Threat of New Entrants
Relatively high due to the difficult design of the product and overall high start-up costs. Also with the already high competition, finding a market share would be extremely difficult. The materials, and resources used to make these carbon fiber and graphite shafts are also expensive. This means that volume is key when entering the market, which is unlikely when starting up against already proven companies.
References
- ↑ http://www.aldila.com/
- ↑ http://www.aldila.com/corporate.php?page=overview
- ↑ http://www.worldgolf.com/newswire/browse/66801-Triple-threat-technology-helps-sustain-Aldila%E2%80%99s-status-1-shaft-Tour
- ↑ http://www.aldila.com/products.php
- ↑ http://finance.yahoo.com/q/hp?s=ALDA.PK&a=03&b=21&c=2006&d=03&e=21&f=2011&g=m
- ↑ http://finance.yahoo.com/q/hp?s=FJK.BE&a=03&b=21&c=2006&d=03&e=21&f=2011&g=m
- ↑ http://www.wikinvest.com/stock/Aldila_%28ALDA%29/News/2072477/3M_and_Aldila_Announce_Agreement
- ↑ http://www.aldila.com/corporate.php?page=reports
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