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Case Study: Groupon
Transcript of Case Study: Groupon
Group + Coupon =
Discounts from Retailers
programmed and non-programmed decision making
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
Implementing a time limit on discounts offered
Can Groupon sustain their
for the long-run?
Groupon changed the way customers purchase goods and services
Boundaries of audience and decision makers
"Right now, Groupon has 80% of the market in its industry"
2. Living Social
3. Retail me knot.com
+ drive customers
+ bigger profit than others realize
+ succeed past the one year mark
Case Study 1 & 2 : non programmed decision making
IPO of stock
Individual Influences on decision making
Breadth of Interest
Core Self Evaluation (Chapter 3)
Internal Locus of Control
Creative Decision Process
Experience From ThePoint Inc.
how to utilize his Model
"deal of the day" on his Blog
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
Identify goods and service
Establish tipping point
Determine terms of offer
Decision making at Groupon
receive customer participation
calculate number of consumer participants
does the number of consumers meet the tipping point
select the best course of action
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
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
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
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