Groupon Case Study

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1. What are the key decisions that Andrew Mason has made during Groupon’s brief history? How have these decisions influenced Groupon’s evolution as an Internet-based business? First, having offers expire after just a few hours and, second, cancelling them if they do not attract a minimum number of buyers (the ‘group’in Groupon). A certain number of people need to buy into any given deal before it kicks in, or ‘tips’ in Groupon parlance. Once the deal tips—for example, 200 peoplehave purchased a $40 coupon for an $80 massage—the merchant and Groupon split the revenue roughly 50/50, and a group of customers has an unbeatable bargain. Given that a minimum number of people need to buy into a coupon deal before it tips, buyers eagerly spread information…show more content…
Managers select the first alternative that is satisfactory.2. Managers recognize that their conception of the world is simple.3. Managers are comfortable making decisions without determining all thealternatives.4. Managers make decisions by rules of thumb or heuristics. Bounded rationality assumes that managers satisfice; that is, they select the first alternative that is “good enough,” because the costs of optimizing in terms of time and effort are too great. Further, the theory assumes that managers develop short-cuts, called heuristics, to make decisions in order to save mental activity. Heuristics are rules of thumb that allow managers to make decisions based on what has worked in past…show more content…
Judged by its revenues and valuation at that moment, it was the fastest-growing company in history. But as its board members had warned, it wasn’t ready for the spotlight!. 5. Suppose you think the market for group-based on-line coupons has great potential, and you desire to enter the competitive fray. What factors would you consider in deciding whether to become a Groupon competitor? Make the amount small. Here’s an idea: Offer a $2 Groupon for $1. Plan something exciting and unique for those that get it. Ask them if it’s their first time with you and if it is reward that tiny Groupon with something extraordinary. Maybe make a special menu entirely for people who bought the $2 Groupon. Whatever it is, don’t just give a bargain, give an experience. Do something different. Or just buy a standard Groupon and throw money away trying to get new businesses. If the math I just showed you didn’t make sense then you might be the right type of business to offer a Groupon. Don’t worry about it too much though, your business will probably be closed soon anyway if you are that desperate that you’re willing to take 35% from bargain shoppers on the off-chance that it brings you substantial new

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