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Case Study: Groupon

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by

kristen goleman

on 5 February 2015

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Transcript of Case Study: Groupon

By: Kristen

Andrew Mason
Eric Lefkovsky
Former Boss
Internet Entrepreneur
Group + Coupon =
Discounts from Retailers
business decisions
programmed and non-programmed decision making
rational
bounded rationality
garbage can models of decision making
creativity and intuition
Requiring a minimum number of buyers before a deal is considered valid
6 billion dollar buyout offer
(2011)
Implementing a time limit on discounts offered
Increasing
profitability
for merchants
Creativity
Free Marketing
Can Groupon
differentiate themselves
from competitors/copycats?
Can Groupon sustain their
competitive advantage
for the long-run?
"Couponing"
Competitors
Intuition
Groupon
Situation Analysis
Group 10
Groupon changed the way customers purchase goods and services

Boundaries of audience and decision makers

Thrill
"Right now, Groupon has 80% of the market in its industry"
2. Living Social
3. Retail me knot.com
4. Coupons.com
11. ebates.com
14. gilt.com
Andrew Mason
+ drive customers
+ guarantee
+ bigger profit than others realize
+ succeed past the one year mark
University of
Chicago
Case Study 1 & 2 : non programmed decision making
Groupon
IPO of stock
Creativity
Individual Influences on decision making
Personality Factors
Breadth of Interest
High Energy
Self-Confident
Core Self Evaluation (Chapter 3)
High Self-Efficacy
Internal Locus of Control
High Self-Esteem
High Self-Monitoring
Creative Decision Process
Preparation
Experience From ThePoint Inc.
Incubation
how to utilize his Model
Illumination
"deal of the day" on his Blog
Verification
getyourgroupons.com
Recognize the problem and the need for a decision
Identify the objective of the decision
Gather and evaluate data and diagnose the solution
List and evaluate alternatives
Select Vendor
Identify goods and service
Establish tipping point
Determine terms of offer
Decision making at Groupon
exploit offer
receive customer participation
calculate number of consumer participants
does the number of consumers meet the tipping point
execute sale
stop
no
select the best course of action
Implement decision
gather feedback
follow up
In Result
Steps of follow when dealing with new vendors
Assigned teams to identify terms of contract per vendor
simple and efficient ways to deal with multiple vendors
Q2 of 2009 Groupon had 212 vendors
Q1 of 2011 had over 56,000 vendors
Creating Groupon
Rational Model-Mason had a logical, step-by-step approach to creating the company and having his ideas thoroughly sorted out
Getting a loan of $1million for startup
Obtaining a patent for his idea for Groupon
Establishing a headquarters in Chicago, IL
Finding vendors for startup
Denied the Google Buyout
Rational Model-the board of executives had rationally thought of their choices
Groupon ultimately rejected Google offer for 3 main reasons:
Google offered a $800 million breakup fee, wasn't good enough to Groupon
Investors believed Groupon had room to grow
Researchers said they could increase revenue tenfold by making better use of data
Obtaining Capital Through an IPO
Bounded Rational Model- Mason overestimated the IPO estimation of $750 million
He thought he could achieve more in the long run to outmatch Google's $6billion offer
Not rational decision making
Groupon stock achieved it for a short time
Their stock plummeted 24% in early 2012 and has been dropping ever since
References
Top 15 Most Popular Coupon Websites. (n.d.). eBizMBA – The eBusiness Knowledgebase. Retrieved September 29, 2013 from http://www.ebizmba.com/articles/coupon-websites
Anonymous, “Business: Groupon Anxiety; Online-coupon Firms,” The Economist 398(8725) (March 19, 2011): 70.
S. Ovide, “Quarterly Markets Review  IPO Market: Bubble Talk Surfaces in Web IPOs Led by LinkedIn, Quarter Saw Questionable Valuations; Analysts Avoid B-Word,” The Wall Street Journal (Eastern edition) (July 1, 2011): C8
Das and G.A. Fowler, “Groupon to Gauge Limits of IPO Mania,” The Wall Street Journal (Eastern edition) (June 3, 2011): A1.
Gustafson, F. (n.d.). What Is the Difference Between Programmed & Unprogrammed Decisions From a Business Perspective? | Chron.com. Small Business - Chron.com. Retrieved October 15, 2013, from http://smallbusiness.chron.com/difference-between-programmed-unprogrammed-decisions- business-perspective-25876.html
References cont.
Nelson, D.L, & Quick, J.C. (2013) Chapter 10: Decision Making by Individuals and Groups. In D.L
Nelson & J.C. Quick (Eds), ORGB3 (pp. 161-162, 164-165)
Podmolik, M. E. (2010). Andrew Mason: CEO, jester. No joke: Groupon chief is unpredictable,
Retrieved from http://www.articles.chicagotribune.com
B. Weiss, “The Weekend Interview with Andrew Mason: Groupon’s $6 Billion Gambler,”
The Wall Street Journal (Eastern Edition) (December 18, 2010): A15.
Case Study Overview
Full transcript