Chapter 2: Business Foundations for the Golf and Club Industry
Learning Objectives
By the end of the chapter, you should be able to:
- Identify the different club types that make up the golf and club business environment.
- Describe the concept of stakeholders and identify the stakeholder groups relevant to a golf and club organization.
- Discuss and be able to apply the macro-business-environment model to the golf and club industry.
- Explain other key terms related to this chapter including entrepreneur; profit; revenue.
Spotlight: London Hunt and Country Club
The London Hunt and Country Club’s vision is one of the premier private golf and country clubs in Canada offering an exceptional total Membership experience. The Mission statement defines the Club’s purpose and primary objectives:
“The London Hunt and Country Club is a family-focused Club providing its Members with an exceptional golf course complemented by first-class dining facilities. To enhance the enjoyment of Members, the Club includes such programs as fitness, tennis, pickleball, trap and skeet and social activities.” [1]
The London Hunt and Country Club have a strong family foundation built on traditions. It is a community of like-minded people who have chosen to come together to call this place their Club. The club strives to meet the needs of every Member, whatever their interest may be. In doing so, the club offers a variety of activities, social events, dining opportunities, and much more for all members, young and old. The London Hunt Club was established on March 30, 1885.[2]
Getting Down to Business
A business is any activity that provides goods or services to consumers for the purpose of making a profit. Be careful not to confuse the terms revenue and profit. Revenue represents the funds an enterprise receives in exchange for its goods or services. Profit is what’s left (hopefully) after all the bills are paid. As you will note below, there are several club types, but the overall business premise is the same… to be financially successful
Many golf and club businesses provide products or services. From retail items in the pro shop to food products offered in the restaurant, clubs focus on the amenities to support servicing their members and guests. In some cases, you could argue that the experience of playing the course and the aesthetics of the property is a product being sold to the customer. This forms the “value proposition” of what attracts members and customers to the business. The following chart outlines the various club types and an example of each ;
| Club Type | Description | Example |
|---|---|---|
| Private* | Equity & Non-Equity Private Members* | https://www.londonhuntclub.com/ |
| Semi-Private | Members & Public | http://www.golfnorth.ca/ |
| Public | Public Only – No Members | https://www.firerockgolf.com/ |
Each club serves a different purpose within the golf and club landscape, however, the common theme is servicing customers with an interest in recreation and social activities.
* Private clubs can be “For Profit” but many are “Non-Profit”. Equity refers to the member’s financial stake or shares in the club.
Business Participants and Activities
Let’s begin our discussion of golf and club business by identifying the main participants of business and the functions that most businesses perform. Then we’ll finish this section by discussing the external factors that influence golf and club business’ activities.
Participants
Every business must have one or more owners whose primary role is to invest money in the business. When a business is being started, it’s generally the owners who polish the business idea and bring together the resources (money and people) needed to turn the idea into a business. The owners also hire employees to work for the company and help it reach its goals. Owners and employees depend on the third group of participants— customers or members. Ultimately, the goal of any business is to satisfy the needs of its customers in order to generate a profit for the owners of the club.
Stakeholders
Consider your favorite golf course. It may be a local family-run business aka “mom and pop operation”. Or perhaps it is a corporation with several courses running under the same structure, such as Golf North Properties. Whether small or large, every business has stakeholders – those with a legitimate interest in the success or failure of the business and the policies it adopts.
Stakeholders include customers/members, suppliers, employees, bankers, shareholders, and others. Other stakeholders include the general public, the environment, and all the various government departments which impact the business. All have a keen interest in how the business operates, in most cases for obvious reasons. If the business fails, employees will need new jobs, vendors will need new customers, and banks may have to write off loans they made to the business. Stakeholders do not always see things the same way – their interests sometimes conflict with each other. For example, lenders are more likely to appreciate high-profit margins that ensure the loans they made will be repaid, while customers would probably appreciate the lowest possible prices. Pleasing stakeholders can be a real balancing act for any golf course or club.
Functional Areas of Business
The activities needed to operate a business can be divided into a number of functional areas. Examples include human resources, operations, marketing, accounting, finance, and information technology. Let’s briefly explore each of these areas.
| Human Resources
|
HR managers are responsible for ensuring that the organization has all of the skills and capabilities necessary to run the business. HR managers develop staffing plans, recruit and select new employees, monitor the performance management process, and develop succession plans for advancement and replacement. They develop standards for compensation and benefits and assist managers with staff issues. |
|
Operations |
All companies must convert resources (labour, materials, money, information, and so forth) into goods or services. Some companies, such as Apple, convert resources into tangible products—Macs, iPhones, etc. Others, such as hospitals, convert resources into intangible products — e.g., health care. The person who designs and oversees the transformation of resources into goods or services is called an operations manager. This individual is also responsible for ensuring that products are of high quality. In many organizations, operations management includes managing the supply chain which controls the delivery of raw materials and the distribution of finished goods. |
|
Marketing |
Marketing consists of everything that a company does to identify customers’ needs (i.e. market research) and design products to meet those needs. Marketers develop the benefits and features of products, including price and quality. They also decide on the best method of delivering products and the best means of promoting them to attract and keep customers. They manage relationships with customers and make them aware of the organization’s desire and ability to satisfy their needs. |
|
Accounting |
Managers need accurate, relevant, and timely financial information, which is provided by accountants. Accountants measure, summarize, and communicate financial and managerial information and advise other managers on financial matters. There are two fields of accounting. Financial accountants prepare financial statements to help users, both inside and outside the organization, assess the financial strength of the company. Managerial accountants prepare information, such as reports on the cost of materials used in the production process, for internal use only. |
|
Finance |
Finance involves planning for, obtaining, and managing a company’s funds. Financial managers address such questions as the following: How much money does the company need? How and where will it get the necessary money? How and when will it pay the money back? What investments should be made in plants and equipment? How much should be spent on research and development? Good financial management is particularly important when a company is first formed because new business owners usually need to borrow money to get started. |
|
Information Technology
|
Information is one of the critical assets of most businesses. Businesses such as Facebook are entirely information-based businesses. Information technology (IT) managers are concerned with building a computer and network infrastructure, implementing security protocols, and developing user interfaces and apps for customers. Usually, there is a high level of integration between the business’s website or application and other departments within the business, such as finance, marketing, and operations. Often, businesses must develop interfaces to send and receive information from other companies, including suppliers, logistics, and shipping suppliers. |
External Forces that Influence Business Activities
Businesses don’t operate in a vacuum: they’re influenced by a number of external factors. These include the economy, government, consumer trends, information technology, public pressure to act as good corporate citizens, and other factors. Collectively, these forces constitute what is known as the “macro environment” – essentially the big picture world outside over which the business exerts very little if any control.
Golf/Club Business and Its Environment sums up the relationship between a business and the external forces that influence its activities. The golf and club industry is clearly affected by all these factors. Unlike the ability to control the operations within the business, the components of the macro-environment can have a positive or negative impact on the business. For example, during the global pandemic, where other businesses were being shut-down due to COVID restrictions, golf courses were allowed to remain open. As a result, GM’s reported an increase in business of 25% or more is certain markets. Also, with golf being one of a few recreational activities allowed to remain open, the industry reported a vast increase in new golfers taking up the game.
The National Golf Course Owners Association (NGCOA) is a leading resource for the business of golf offering hundreds of programs that facilitate growth for industry stakeholders. The services, tools, and information is designed to support business and help organizations succeed. Engagement in the association helps maximize business success and make valuable connections.
Finally, a number of decisions made by the industry result from its desire to be a good corporate citizen. For example, several food and beverage operations at clubs have responded to environmental concerns by eliminating Styrofoam containers and reducing disposable plastics. [3] Of course, all industries are impacted by external factors, not just the food and beverage operations at clubs. As people have become more conscious of the environment, they have begun to choose new technologies, like all-electric cars to replace those that burn fossil fuels.
Both established companies, like Nissan with its Nissan Leaf, and companies like Tesla have entered the market for all-electric vehicles. While the market is still small, it has grown at a compound annual growth rate of 19.2% between 2013 and 2019. [4] Fast-forward to current day and we see every large vehicle manufacturer providing EV options to its customers. This is due to rising fuel prices and environmental concerns. Equipment on the turf side of the industry is evolving as well, such as all-electric mowers like the models Toro has developed. To see the all-electric mower, watch the video: Toro Greensmaster eTriFlex 3370 All-Electric Riding Greensmower by Reesink Uk LTD. [3:34] (transcript available).
As you move through this text, you’ll learn more about these external influences on a business.
Key Terms
Business is an organization that produces or sells goods and/or services for a profit. Other organizations, such as non-profits, may provide goods or services, but do not do so for a profit.
Participants are the people who participate in conducting the work of the business. These always include the employees and managers, but often include suppliers, customers, and shareholders.
Functions when we look at the functional area of business, we are organizing the work in terms of the type of work. The most common functional areas are marketing, information technology, human resources, finance, operations, and accounting.
Customers buy the products and/or services from the business. Customers are extremely important to the business. In fact, they are participants, stakeholders, and an external environmental influence.
Stakeholders are those affected by the business’s operations and its decisions. Examples of stakeholders include shareholders, investors, the community, customers, competitors, and governmental agencies.
Human resource is an organizational function that is about searching for, selecting, training, and maintaining workers.
Operation is the organizational function that is focused on producing the goods and/or services of the business.
Marketing is the organizational function that aims to promote and sell the goods and/or services of the business.
Accounting is the organizational function that is focused on recording, keeping, analyzing, and communicating financial information.
Finance is the organizational function that is about planning what financial resources are needed, procuring the necessary financial resources, and then maintaining financial health for the business.
Information technology is the organizational function that aims to understand the information and data needs of the company in terms of obtaining, analyzing, and protecting information.
Economy is a region’s or country’s system for selling, trading, and consuming goods and services. The economy is an external environment that influences the business. It affects the money available to the customers and to the business. Factors, such as interest rates, inflation, and deflation, greatly influence the buying behaviours of customers and how businesses should adapt their offerings.
Governmental agencies are made up of the agencies, policymakers, and other actors within the government. These agencies are stakeholders impacted by the business and its decisions. For example, the government can benefit from the business’s innovations that help improve the government’s work. A major impact for governmental agencies is the taxes that come from the business’s profits.
Macro environment is the external forces (economic, demographic, technological, social and cultural, legal, and political) that influence a firm’s decision-making and have an impact on its performance.
Key Takeaways
- The primary participants in a business are its owners, investors, employees, and often its customers. The secondary participants are customers, competitors, and suppliers.
- Every business must consider its stakeholders, and their sometimes conflicting interests when making decisions.
- Businesses are influenced by such external factors as the economy, government, and other forces external to the business.
- The activities needed to run a business can be divided into functional areas. The business functions correspond fairly closely to many majors found within a typical college of business.
- Jon Nusink (General Manager/COO) London Hunt and Country Club in discussion with author June 2022. . ↵
- London Hunt and Country Club. (2021). History https://www.londonhuntclub.com/history/ ↵
- Baron, D. (2003, August). Facing-Off in Public. Stanford Business. Retrieved from: https://www.gsb.stanford.edu/sites/gsb/files/2003August.pdf ↵
- Transparency Market Research. (2014, July). Electric Vehicles Market (on-road) (hybrid, plug-in, and battery) – Global Industry Analysis, Size, Share, Growth, Trends, and Forecast, 2013 – 2019. Retrieved from: http://www.transparencymarketresearch.com/electric-vehicles-market.html ↵
