CASE 14
Groupon, Inc.: Daily Deal or Lasting Success?
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i. Pros:
1. Make Groupon appealing to different types of
consumers.
2. Could increase number of different merchant
partners wanting to participate (more
luxurious type vendors).
ii. Cons:
1. Will require more sophisticated sales people.
d. Stability—not currently employed
i. Pros:
1. Stable business environment.
2. Mature market
ii. Cons:
1. Difficulty attracting top talent.
e. Growth—part of current strategy
i. Pros:
1. Increase profits and returns to investors.
2. Increase demand by investors.
ii. Cons:
1. Increase in costs.
2. Increase attractiveness of industry to
potential competitors.
3. Increased scrutiny of practices and results.
B. Recommended Strategy
1. Stability
a. The company has expanded rapidly and needs to
2. Leverage first-mover position in market
a. Groupon needs to differentiate itself from would–be
competitors in order to maintain its position in the
market.
b. Rather than trying to expand into new territory, they
should focus on maintaining current market share.
CASE 14
Groupon, Inc.: Daily Deal or Lasting Success?
d. Focus on mission of becoming the “operating system
for local commerce.”
3. Focus on local merchant partners rather than the “big
box stores.”
a. Trying to negotiate with merchant partners, who have
VII. Implementation
A. Organizational Structure:
1. Restructuring is necessary—current management team is
geared toward global expansion and growth. New strategy
would require more entrenched management team to work with
the existing markets and merchant partners.
B. Programs: Three (3) sets of programs should be developed and
implemented:
1. Customer Satisfaction survey to determine level of
satisfaction received from product usage. This could be an
internal team or an outside consultant performing this
2. Effectiveness of each product (deal) should be
analyzed in terms of the merchant. Groupon’s deals are
3. Due to Groupon’s growth specifically in international
markets, the firm needs to create a structured program to
adapt, create, and sustain a market presence in various
CASE 14
Groupon, Inc.: Daily Deal or Lasting Success?
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4. A specific set of guidelines with associated budgets
and schedules should be established for each program. As a
5. New standard operating procedures will need to be
developed for each program, as well as the governing of
each.
VIII. Evaluation and Control
A. A common information technology platform may not have the
capabilities to track, measure, and forecast current operations,
nor strategic factors. As Groupon’s sales continues to grow and
the dynamics of the customer base evolves so does the firm’s IT
systems. A substantial investment in IT will allow operations to
be accurately measured, thus allowing for improvement and greater
efficiency which is necessary for any growing profitable company.
1. Not specifically mentioned, however, a new IT
B. There was no mention of control measures, however, with the
recommended IT upgrade including such capabilities, this would
need to be a core part of the strategic plan moving forward.
1. Objective standards should be established and
2. Groupon’s sales and marketing staff should have
adequate freedom to think with an entrepreneur type mindset
3. An operations performance measurement governing board
should be created and assigned to track, compare, motivate,
CASE 14
Groupon, Inc.: Daily Deal or Lasting Success?
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Groupon, Inc.: Daily Deal or Lasting Success?
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CASE 14
Groupon, Inc.: Daily Deal or Lasting Success?
IX. Financial Analysis
CASE 14
Groupon, Inc.: Daily Deal or Lasting Success?
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CASE 14
Groupon, Inc.: Daily Deal or Lasting Success?
i Herb Greenberg, “The Worst CEO for 2012?” Market Insider, CNBC. April 12, 2012.
CASE 14
Groupon, Inc.: Daily Deal or Lasting Success?
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–3.97%
–3.71%
Preferred Stock Distributions
–6780.00%
Net Loss Attributable to Common
Stockholders
–
43160.00%
–47.57%
–145.82%
–23.19%
Net Loss per Share of Common Stock
Year Ending December 31
2008
2009
2010
2011
INCOME STATEMENT
Revenue (Gross Billings of $94, $34,
082, $745,348, and $3,985,501,
Respectively
100.00%
100.00%
100.00%
100.00%
Costs and Expenses:
1760.00%
13.71%
3260.00%
92.85%
62.84%
64.93%
–0.28%
Total Operating Expenses
107.41%
234.32%
114.49%
Loss from Operations
–
32640.00%
–7.41%
–134.32%
–14.49%
Interest and other Income (Expense),
Net
1800.00%
–0.11%
0.09%
0.37%
Equity-Method Investment Activity,
Net of Tax
Loss before Provision for Income
Taxes
–
30840.00%
–7.52%
–134.23%
–15.78%
Provision (Benefit) for Income Taxes
–2.13%
2.71%
Net loss
–
–9.22%
–132.10%
–18.49%
–1.65%
Less: Net loss Attributable to
Noncontrolling Interests
7.59%
1.14%
Net loss Attributable to Groupon,
Inc.
–
30840.00%
–9.22%
–124.51%
–17.35%
Dividends on Preferred Shares
–5540.00%
–38.34%
–0.44%
Redemption ofPreferred Stock in
Excess of Carrying Value
–16.90%
2.13%
Adjustment ofRredeemable
Noncontrolling Interests to
Year Ending December 31
2008
2009
2010
2011
CASE 14
Groupon, Inc.: Daily Deal or Lasting Success?
14-22
0.00%
78.23%
Assets
Current Assets:
Cash and Cash Equivalents
31.14%
63.28%
Accounts Receivable, Net
11.11%
6.13%
Prepaid Expenses and other Current
assets
3.31%
5.16%
Total Current Assets
45.56%
74.58%
Property and equipment, net
4.32%
2.92%
Goodwill
Intangible Assets, Net
10.69%
2.57%
Investments in Equity Interests
0.00%
2.85%
Deferred Income Taxes, Noncurrent
3.81%
2.60%
Other Noncurrent Assets
1.01%
5.08%
Total Assets
34.60%
9.41%
Liabilities and Stockholder’s Equity
Current Liabilities:
Accounts Payable
15.08%
2.31%
Accrued Merchant Payable
42.56%
29.35%
Accrued Expenses
25.77%
11.95%
Due to Related Parties
3.49%
0.01%
Deferred Income Taxes, Current
4.51%
4.33%
Other Current Liabilities
5.66%
8.14%
Total Current Liabilities
97.08%
56.08%
Deferred Income Taxes, Noncurrent
0.16%
0.42%
Other Noncurrent Liabilities
0.27%
3.99%
Total Liabilities
97.50%
60.49%
Commitments and Contingencies (See
Note 8)
Redeemable Noncontrolling Interests
0.78%
0.09%
Groupon, Inc. Stockholder’s Equity
Series D, Convertible Preferred
CASE 14
Groupon, Inc.: Daily Deal or Lasting Success?
14-23
Stockholder Receivable
–0.07%
0.00%
Accumulated Deficit
–109.93%
–39.38%
Accumulated other Comprehensive
Income
2.59%
0.73%
2.12%
–0.40%
1.72%