Case 1 Performance Indicators Memo V2 Essay
The case of Performance Indicator (PI) provides a nice application of the basic economics underpinning strategy decisions facing firms, as summarized by the Value Creation & Capture Framework. The central question to think about is the following seemingly inconsistent set of facts: (1) From the description in Osinski and Winskowicz’s (Robb and Bob) sales pitch and the supporting calculations presented in the case (especially Exhibit 5), PI seems like an obvious source of profits for golf-ball manufacturers.
(2) Not a single golf-ball manufacturer has adopted and implemented Performance Indicator’s technology.
1. What is PI selling, exactly?
PI is selling …show more content…
In analyzing how PI’s technology would affect golfers, we segmented the golfing population by (1) premium / professional players, (2) average golfers, and (3) occasional golfers / low skill.
Premium / professional are technically skilled and probably lose the fewest balls of any of the groups per round of play; however, they are probably the most frequent players. As such, they would find the technology beneficial as it would indicate any degradation of the ball due to water damage. These players are probably the least likely to buy used balls or balls from a water hazard so the benefit would be minimalized due to this factor.
For average golfers, this would improve their game; however, they would not attribute the improvement to the ball as golfers rarely attribute changes to the ball utilized (per case material). Additionally, this would be the group to most likely experience the increase in the cost of playing golf as there would be fewer good used balls which would cause them to be worse off and they would feel that the game was becoming more expensive which would make them feel worse off.
Finally, occasional / low skill golfers would most likely not be overly affected due to the change. They probably would still play grey balls as they would be more difficult to reach with advertising