Groupon, Inc.: Company Analysis
Groupon, Inc. was launched in 2008. The United States deals that are daily experienced the annual average growth to 332% over five years. These sales had reached three billion by 2013 with again rising to five and a half billion dollars in 2016. This internet commerce is headquartered in Chicago, Illinois. This company is the operation of linking merchants and consumers across three market segments. These three market segments include North America, Europe (Middle East and Africa), and the rest of the world (Li, Hui and Shen, Qiaowei and Bart, Yakov, 2016). The following analysis reviews the company and provides insights on the performance of internal and external corporate aspects of this company.
- Current Situation
- Past Performance
Groupon focuses on the concept of prepaid experiences at a discount. The shares of this company of drastically decreased 41.8% in 2018. There are various concepts that are turning for the worst after the consistency of gains year to year. In an article by Rick Munarriz covering the decline:
A lot of things are going wrong for Groupon after back-to-back years of gains. Investors have tired Groupon’s gradual fade, as year-over-year revenue has now declined for 11 quarters in a row. It has fallen short of Wall Street’s revenue targets in each of the past two financial reports, and recently it warned that it won’t meet its earlier free cash flow goal of $200 million for 2018. Groupon’s on sale, but as anyone with an expired Groupon voucher knows, sometimes even a big discount isn’t enough (Munarriz, 2018).
The stock rose in 2016 and 2017. But, declining revenue is problematic. Groupon vouchers are simply not as popular as when they initially came out.
- Strategic Posture
The mission of Groupon is to be the daily habit in local commerce, as stated in their company website;
Groupon (NASDQ: GRPN) is building the daily habit in local commerce, offering a vast mobile and online marketplace where people discover and save on amazing things to do, see, eat, and buy. By enabling real-time commerce across local businesses, travel destinations, consumer products and live events, shoppers can find the best a city has to offer. Groupon is redefining how small businesses attract and retain customers by providing them with customizable and scalable marketing tools and services to profitably grow their businesses (Press, N.D.).
The objectives that are the values of Groupon including community, ownership & performance, inspiration, respect, integrity, & inclusion, and customers. Community involves the aspect of building great neighborhoods. The success of local businesses are the base of the unique spaces of neighborhoods. It’s the combination. Building communities ventures into the process of the economic impacted that is through volunteer efforts and social responsibility focus to make a greater difference (Press, N.D.).
Ownership and performances is the solution of thousands of business owners that take a perspective on their own through success and failure for their business. To be able to succeed, they need their innovative creation.
Inspiration is to simply make life less boring. This means for customers to be shown amazing opportunities outside their doors. As for merchants, it means reaching success and making their lives easier.
Respect, integrity, & Inclusion is the concept of solving problems the right way. Groupon is not trying to just win but win in the right way by celebrating difference to leading to a bigger win. They work across the company to success and invite diverse perspectives to ensure challenges are open and honest (Press, N.D.).
Groupon is a two-sided market place. The company makes money by selling local and travel services and goods. The value position stated on a website article, this company is attracted by customers and merchants that would have missed an opportunity. Customers gain on savings and discounts that would not have been able to be discovered by anyone else or anywhere else.
The strategies are categorized into Local (service), Goods (product), and Travel (service). Discounts are different in exchange for local customers to local merchants. To be assessable to customers, there are two ways of access, the website, and the mobile app. Enhancing the customer experience and the international potential are strategies that are maintained through this company (. ).
The Groupon Refund policy gives customers peace of mind for the experience of new opportunities that they hadn’t considered before. According to the website, “If a customer uses his or her Groupon before the promotional value expires, takes a Getaways trip, or attends a GrouponLive event and is disappointed by the experience, they will work together with the customer and the merchant to make the situation right. To be eligible for the Groupon Promise, the customer must contact Groupon within 14 days of the Groupon redemption. (Merchant, G., 2019).
- Corporate Governance
- Board of Directors
The board of directors are as follows: (Groupon Investors, n.d).
- Rich Williams - CEO and Director since November 3, 2015
- Eric Lefkofsky - Co-founder and Chairman since November 3, 2015
- Theodore Leonsis - Lead independent director since November 3, 2015
- Michael Angelakis - Director since April 2016
- Peter Barris - Director since January 2008
- Robert Bass - Director since June 2012
- Deborah Wahl - Director since October 2017
- Ann Ziegler - Director since June 2014
- Top Management
The leaders of Groupon include a variety of officers that work very hard for Groupon. The Chief Executive Officer, Rich Williams, has served as this position since November of 2015. He held marketing leaderships roles at Amazon and spent years in leadership positions in sales, marketing, and Experian (Board of Directors, n.d.).
The Senior Vice President of Human Resources, Alison Allgor has served this role since August of 2015. She has experiences with Amazon and the Board of Directors for Country Doctor Community Health Centers (Board of Directors, n.d.).
Sarah Butterfass is the Chief Product Officer for Groupon since September of 2018. She is the company’s global product organization in developing the future of the Groupon experience for customers and small businesses across the mobile web.
Aaron Cooper is the President for Groupon In North American since July of 2017. He held a variety of leadership positions at Orbitz and optionXpress (Board of Directors, n.d.).
The General Counsel and Corpate Secrety for Groupon is Dan Drobny. He has served this position since July of 2014. Drobny oversees the entire global legal function of Groupon (Board of Directors, n.d.).
Steve Krenzer is the Chief Operating Officer since November of 2017. He is the oversight of the global marketing and global operations of Groupon (Board of Directors, n.d.).
The Chief Marketing Officer of Groupon is Craig Rowley since March of 2019. He oversees the development of the Groupon brand and global marketing operations across five offices around the world (Board of Directors, n.d.).
Anita Samojednik is the President of International for Groupon. She oversees all facets of the company’s business and operations outside of the United States (Board of Directors, n.d.).
Melissa Thomas serves as the Senior Vice President, Chief Accounting Officer, & Interim Chief Financial Officer since June of 2017. She oversees Groupon’s worldwide financial reporting and treasury functions (Board of Directors, n.d.).
The Senior Vice President and Head of Global Operations of Groupon is Barbara Weisz. She joined the company in January of 2010 and oversees Groupon’s worldwide operational functions (Board of Directors, n.d.).
III. External Environment
- Natural Environment
- Physical Resources
What started off as an online coupon purchase website evolved into an e-commerce marketplace with a number of various physical locations. The first type of this physical resources was created in 2012 in Suntec City Mall in Singapore (Seng, 2012). At this store, customers are able to buy products, redeem products, and exchange products.
World Wildlife Fund was partnered by Groupon in 2012. The company did so to protect black-footed ferret from deadly diseases. On the website, it is stated;
In August 2012, Groupon and WWF teamed up to raise funds for the endangered black-footed ferret. As part of its Grassroots program, Groupon featured WWF for one week as its Great Cause “deal,” where a $10 donation would purchase one vaccine to protect a black-footed ferret from deadly disease. Over $11,570 was raised resulting in the purchase and administering of over 1,000 doses of canine distemper vaccine, enabling WWF and partners to continue to protect this highly endangered species and safeguard their future existence in America’s Northern Great Plains (Groupon, 2019).
Groupon invested into funding WWF. Groupon expanded into local communities across the globe. The WWF is dedicated to delivering science-based solutions. These solutions preserve diversity and abundance of life on Earth (Carlin, 2013).
- Societal Environment
The global economic performance is dependent on the sales and profitability of the company. Groupon is starting a roadshow. Through social media, there will be online offers at local locations. On an online article, “Groupon started with a nifty idea. Its website offered a “daily deal” whereby consumers could buy a product or service very cheaply if a minimum number of people signed up. People would nag their friends to come to the same bar or shop. The merchant would get new customers. Groupon would take a cut (The Dismal Scoop on Groupon, 2011). In other words, Groupon is allowing their coupons to be more marketable to initiate the profits.
In two years, the company has grown to what could’ve been on a simple spreadsheet to one that needs a system to cover the globe. With technology advancing, the convenience of this service is at an easier convenience to consumers. (Dignan, 2011).
The technology of a smartphone allows for virtual coupons. It has enabled online platforms to improve shopping experiences. This leads the growth of the company.
Among different parts of the world, the political and legal environment varies. The alternating landscape is presenting mix fortunes. There are issues of anti-trust laws gaining in North America between the West and the East. There are still restrictions on FDI in India. This causes the limitation of the development of supply chains expanding by retail distributors (Groupon, 2019).
Because of technology advancing, there is a societal acceptance for the cultural shift towards dependency on technology. Limitations in technology access in developing countries are slow in sales. There is a steady fast growth into the use of technology to meet day-to-day needs including shopping.
- Task Environment
- Threat of New Entrants
The use of internet and technology to connect merchants to customers across the globe is the business model of e-retail. New entrants threat is very high. The deal provider brings in new customers which would not be as popular for small local businesses. This also creates repeat customers when there is a good experience. There are over two hundred deals in the United States alone. This type of market allows small businesses to be recognized (Karnan, 2012).
- Power of Buyers
There are various numbers of deals for customers to choose from. The customers that deal providers to bring in numbers to allow repeat buyers for small local business are the buyers. They can shop around online and in person for the best deal on the market. The power of buyers is very high.
- Threat of Substitute Products
There are many deals and providers. This leads to the threat of substitute products as very high. There are various small local establishments that compete and are global. The substitute products create competition with discounts and other factors.
- Power of Suppliers
Small local business are the suppliers and they have a middle range power in this market. They do not entrain the ability and infrastructure to reach customers. Groupon does this so they depend on the idea providers to make the deal upon themselves. There are low switching costs with allows moderate merchant power.
- Rivalry Among Competitors
There is a high rivalry among competitors because of many deal providers. Groupon is against various companies that have the similar mission. Groupon is the key competitor.
- Power of Other Stakeholders
There are web hosting companies as key competitors with Groupon. Governments regulate their manners in e-retail. Their businesses operate legal and regulatory teamwork’s. Webhosting companies determine the success as well as the satisfaction of customer’s experience through technology.
- Internal Environment
- Corporate Structure
The corporate structure is as follows:
-Chairman: Eric Lefkosfsky
-Lead Independent Director: Theodore Leonsis
-Director: Michael Angelakis
-Director: Peter Barris
-Director: Robert Bass
-Director: Deborah Wahl
-Director: Ann Ziegler
On the website:
Rich Williams has served as our Chief Executive Officer and member of our Board since November 3, 2015. Prior to this role, Mr. Williams served as our Chief Operating Officer since June 2015 and President of North America since October 2014. He joined the Company in June 2011 as Senior Vice President of Marketing. Prior to joining Groupon, Mr. Williams served in a variety of marketing leadership roles at Amazon.com, Inc. (NASDAQ: AMZN) from January 2008 to June 2011, most recently as the Director, Paid Traffic leading global advertising. Prior to joining Amazon, he spent nearly seven years in sales and marketing leadership roles at Experian plc (LSE: EXPN), a global information services company. Mr. Williams brings to the Board his substantial experience gained from leadership positions in sales, marketing, and operations at Groupon and several publicly traded companies in the e-commerce and information services industries (Board of Directors, n.d.).
- Corporate Culture
In any workplace, great people need to be hired. Groupon hires a successful team to challenge employees for new opportunities. In an online article:
In 2007, Andrew Mason helped found The Point, a tipping-point-based collective action website dedicated to getting people together to accomplish a goal. The following year, The Point gave birth to Groupon, a site dedicated to advertising local businesses by offering deals for a limited time. The world’s first Groupon was a deal for Motel Bar, located just downstairs from the Groupon office in Chicago, Illinois. After that first deal, businesses across the city caught on (The History of Groupon).
Andrew Mason strived for the appropriate corporate culture.
- Corporate Resources
Groupon continued to run deals for larger businesses. Deals came and went. By the end of 2009, Groupon spread to 28 cities in the United States and even reached international markets because of their strategies (The History of Groupon).
Groupon relies on their marketing to obtain customers that return and also to promote various locations in the area. Marketing analytics are used to help increase efficiency in marketing in North America. This allows this approach to spend and also maximize the lifetime value of its customer base.
Notwithstanding the decline in the performance of Groupon financially, they still remain strong fundamentals financially. They measured their performance based on revenue, gross profit, adjusted EBITDA, and free cash flow. The product revenue reserved from direct sales reports on gross basis. Over recent time, the company reporting decline revenue levels. The decline is due to unstainable discount rates that merchants have seen to switch deal partners.
Groupon focused on investment for the growth in R&D. Groupon will continue to invest in product and technology. That is because it improves customer experience worldwide.
- Operations and Logistics
Groupon has downsized and exclude some activities to customers and merchants due to this category. There is the introduction of Groupon stores. This allows merchants to handle the logistics of the company. This can also improve operating efficiency.
- Human Resources
Because of the Groupon expansion, there is a large number of employees. There are over six thousand employees (Groupon Annual Report, 2018). The employees fall into the categories of sales representatives, corporate representative’s operational representatives, and customer service representatives.
- Information Systems
Groupon is an online establishment. They rely on data to dictate the metrics in decision making. It is a third-party service to allow and introduce new experiences to customers and merchants. There are systems that are used to keep personal data confidential information. There are secure systems from cyber-attacks as well.