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Tiger Golf Unlimited (TGU), Essay Example

Pages: 1

Words: 506

Essay

What types of security issues and requirements will confront TGU if they off-shore manufacturing? At first glance, the primary security issue would seem to be physical theft, not intellectual-property theft. No physical location is safe from the theft of TGU’s new design from Chinese (or any other) industrial espionage: advance word on all kinds of new golf-equipment designs is a staple of the industry (Dawsey). So the issue here is that of factory theft, truck hijacking, port theft, and piracy on the high seas. The Scotland location would likely be the safest of the offshore manufacturers. But is the safety cost-effective?

China is the cheapest at US$149. Malaysia is next, at 670 MYR, which works out to about US$211. Scotland is the most expensive, at £165, which is about US$247. (No costs are given for a domestic manufacturer.) So the spread is $247 – $149, which equals $98.00 per club. Depending on demand that could be too expensive, and the more expensive the club is with high demand, the greater the likelihood of a fast copycat. For that reason, TGU must be its own copycat manufacturer. It can do that by keeping the price as low as possible without degrading the product in any significant way. TGU must price the insurance and shipping for China and Malaysia, and decide their relative benefits with those costs factored in.

Absent that information, for the purposes of this paper I would argue for the Malaysian manufacturer because it is already known for its “tremendous” knockoff of the Callaway Big Bertha line of golf clubs. Since that product is a demonstrated success, the security and costs from that manufacturer and location must be economical as well. There would seem to be no reason why the TGU club couldn’t also be successfully manufactured there, and doing so would at least prevent that factory from copycatting the TGU club outright. Ultimately, a club is a club. It is not as if Malaysian pirates are going to be hunting for a new golf club to ransom. Basic security aside (allowing for the usual wastage from theft, loss, and damage) typhoons would seem to be the biggest transportation risk from that region.[1]

The above reasoning, however, is dependent on the extent to which the manufacturing process (as opposed to the originality of the design alone) is unique to TGU and so must be regarded as a trade secret, the way that Coke is. This is sometimes the case (MadeHow.com). If so, then that could be the very point Ricky Magness was afraid he might have missed after listening to Larry Himmer, the director of transportation, angrily complain of offshore manufacturing risk as well as transportation disruptions. The importance of this point may, in the end, argue for a US domestic manufacturer, which Himmer would seem to favor.

Ultimately, the relative importance of trade-secret protection vs. cost will decide whether to offshore manufacturing at all.

Works Cited

Dawsey, David. Competitive Intelligence. 2013. <http://golf-patents.com/categories/263/competitive-intelligence.aspx>.

MadeHow.com. How Products Are Made. n.d. <http://www.madehow.com/Volume-4/Golf-Club.html>.

 

[1] Air cargo is omitted, as it presumably would be too expensive.

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