The business was started in response to the phenomenal growth in the golf industry. New golf courses were being built almost everywhere, and golf equipment sales were soaring. One result has been a relative decline in the sales of tennis equipment and an increase in the sales of golf equipment. In Asia, economic factors are responsible for the dramatic increase in golf's popularity. As countries such as Japan and Korea become richer, people have higher incomes and more leisure time.
Golf is a recreational activity that requires both time and money.
Newco's owners saw great opportunity in the golfing equipment business. They knew that it was possible to buy the various parts of a golf club from different sources and assemble them at a relatively low cost, without a major investment. They were confident that they could compete effectively in this market niche. However, they thought that learning more about demographics and economics would be important before they made a major investment in the business. In fact, they were starting their market research in the same way that large corporations do when they consider introducing a new product or service.