Beta Golf the Beta Group

Beta Golf

The Beta Group faced an interesting challenge regarding their "proprietary HXL golf club technology" (Katz, L. Sahlman, W. & Roberts, M. December 14, 2005). At issue was the decision to pursue the advancement of HXL along one of four avenues of "commercialization of the technology" (Katz, L. et al., 2005): licensing the technology, supplying the product, acquisition of an existing golf company, or starting a new golf venture. With "only minimal financial resources" (Katz, L. et al., 2005) deployed on HXL to that point, the founder of Beta, Bob Zider and his partners were casting a decision which would put substantially more Beta capital and resources at risk, and which violated the "single most basic tenet of business- know something about the industry; we don't know a damn thing about golf" (Katz, L. et al., 2005).

Which Business Model to Choose

"The business model is an architecture for converting innovation to economic value for a business" (Quick MBA.com. N.D.). Beta group's decision on the correct model of "commercialization of the technology" (Katz, L. et al., 2005) would be made in the context of the firm's existing business engineering structure; "a systematic approach to innovation with the development of a concept and business strategy through rigorous analysis" (Katz, L. et al., 2005).

Beta Group's choice is really one of eliminating options and proceeding with the remaining viable alternative, not a selection of the best choice from four exceptional opportunities. The logical starting point for this process is the acknowledgement of the partners that they have no knowledge of golf or the industry. Further, Zider contends "we hate businesses like golf. Investing in sporting goods goes against every principle we have at Beta" (Katz, L. et al., 2005). With that perspicacity there is no logic in the acquisition or start-up models.

The start-up is a disaster for a boutique firm which has an "investment process that develops ideas and concepts" (Katz, L. et al., 2005). Beta would play a huge role in the marketing, distribution, and branding of this new firm, and even with "the recruitment of a management team with significant experience in the golf industry" (Katz, L. et al., 2005) the risk of misdirection and misallocation of capital are too great. Additionally, the competition in the industry would prove troublesome to advance a fledgling company, despite the models of Callaway and Odyssey. The acquisition also has a similar problem, notably that Beta would be entering the industry as a competitor to existing club companies, and would have responsibility to "try to revitalize the brand by introducing a new product line which incorporated Beta's HXL technology" (Katz, L. et al., 2005). This option presents too much financial commitment, some 60 million dollars over three years to "revitalize a former leading golf brand" (Katz, L. et al., 2005).