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Beta Golf Case Solution

Solution Id Length Case Author Case Publisher
2661 2365 Words (8 Pages) William A. Sahlman, Michael J. Roberts, Laurence E. Katz Harvard Business School : 898162
This solution includes: A Word File A Word File

Beta Group was founded in 1983 by Bob Zider, and the company received a $300,000 investment from BCG and $1.5 million in donations. The company observed that venture capitalists rarely invest in research and development. Also, the VCs don’t take the risk when it comes to technology, and in the majority of the cases, the VCs enter after the product development. Zider found this as an innovation gap, and he came up with the idea to support startups with R&D, making marketing plans for them, helping them find the right resources and also managing their finances. By 1997, the company managed to successfully register forty patents. The company is also planning to come up with its own venture in the golf industry but is considering the pros and cons of coming up with a new business. The company has evaluated a few options for Beta Golf, and also, they are analyzing the options in terms of profitability. 

Following questions are answered in this case study solution

  1. Why does Beta Group exist?

  2. What economic function does it serve?

  3. What is the business model for Beta? What does this tell us about translating innovation into value?

  4. What is a sensible development plan for the HXL technology? Of the various choices for exploiting the technology, which would you choose? Why? In what order?

  5. Given the response from Callaway, what should Zider and Krumme do next?

  6. What would happen to this project if it were developed inside an existing industry competitor?

  7. What would a venture capitalist do with Beta Golf?

Case Analysis for Beta Golf Case Solution

1. Why does Beta Group exist?

In 1983, Zider founded the Beta group. The purpose behind the exitance is to apply and develop a systematic approach toward innovation. Zider has worked for Boston Consulting Group (BCG), and he realized that large companies don't focus on much of innovations, and he realized that they are a lot of industries that need attention in terms of R&D and investment. Zider termed this the "innovation gap ."Most companies are more focused on managing their employees and resources. They are not as focused on innovation as they should be. Zider also observed the usually venture capitalists were rarely funding research and development projects, and because of this, they have ignored many industries that require a significant amount of investment in terms of R&D. Currently, VCs are investing in ideas with low risk in terms of technology and high market growth and usually, the technology development occurs before the VC enters in a project. Beta Group was founded to foster a systematic approach that, according to Zider, is "Business Engineering ."Through rigorous market analysis, the development of a concept is referred to as business engineering. Zider wanted to come up with something which not only could develop the concepts and ideas but could also test and implement them. The idea behind the Beta group is not just to develop venture capital but to help new ideas with implementation. The idea is to help and nurture new ideas, make business plans according to the idea, look for key operating officers who are capable of doing the job, manage finances and actually prepare small companies for operation. 

To establish a Beta group, Zider recruited one of his partners from BCG and also raised $300,000 from BCG and also a donation of $1.5 million. For BCG, it's a great opportunity to receive equity on Beta's projects. The beta group came into existence because of these multiple reasons, which are mentioned above.  

2. What economic function does it serve?

Beta Group's main function is to help small companies to implement their ideas. The company helps startups with marketing plans, finding the right resources, and managing their financials. The beta group manages everything that can help the company to come into existence. The company realized that VCs usually rarely invest in R&D, and because of this, many industries are being ignored, and these industries seem to have a lot of potentials. The beta group identified this gap in the market, and their purpose is to help companies with R&D. Also, the Beta group has identified that VCs are investing in only those companies that have low risk in terms of technology, and they enter into the project much later, they enter when the technology development has been done already. Beta Group has helped small companies from the beginning since the idea was generated. 

The beta group is an investment process that not only helps the companies to come up with innovative ideas but also, they help them with testing that idea and implementing the idea. Beta group’s concept is to help small companies with R&D. Zider’s approach is to help startups in a systematic way, and he termed this approach "Business Engineering" the company is also focusing on increasing the profitability of an investment, ensuring that investment has been made in the right business idea and also Beta group works towards the minimization of risk associated with any business idea. The operating operations of Beta group are different, and they distinguish the company’s investment strategy. The company is coming up with a new concept, and this will help the overall economy also. Also, to run the company smoothly, the company has enough money. They have received an investment of $300,000, and also, they have received a donation of $1.5 million. 

3. What is the business model for Beta? What does this tell us about translating innovation into value?

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