Abstract
This is a case of Groupon, an internet or e-commerce based business established in November 2008 by a businessman named Andrew Mason. This man allegedly had only a million dollars to start the business—which came from business partner, Eric Lefkovsky. After its first half decade of operation, Groupon’s growth has been largely compared to the spread of a wildfire, thanks to the attractive benefits it offers for local businesses and retailers, as well as the consumers of the products of such businesses alike. The objective of this paper is to present a case, which is guided by a series of questions, related to the growth and management, and decision making processes of and their influence on Groupon.
- 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 and foremost, we can already safely assume that even before Groupon was established, Andrew Mason already thought and actually systematically planned of a way to attract customers and stakeholders into participating into the grand money-making machine that is in reality a business that is Groupon. There is no way for a man like him to have been able to turn a million dollars of capital into something so big, for even Google, one of the biggest players in the internet industry, to be willing to acquire the company for a 6 billion USD worth of check. The most influential decision that Mason made that led to the rapid increase in popularity and size of Groupon as an internet-based business is his decision to involve not just one stakeholder into the marketing scheme and other business processes but as many stakeholders as possible . Most of the time, typical companies would only tend to involve the customers in their marketing scheme. This may be logical for businesses that operate in a linear type of way but it appears that Mason did not want his company to be of that kind and so he programmed a marketing scheme that not only involves the buyers but also the sellers into his grand business game. Of all the decisions he made for the company, this one must have contributed a chunk in the company’s success story.
- How would you describe decisions identified in your response to question 1 in terms of programmed and non-programmed decision making?
Basically, programmed decisions are “decisions that the business manager or director has already made or encountered in the past” while non-programmed decisions are “decisions that the business manager or director makes that involve scenarios that are new, novel, or un-encountered for which there are no proven answers to be used as a guide, under which circumstance, the manager must make a decision that is unique to the situation and results in a tailored solution” . The chosen decision identified as the answer in question number 1 appears to fit the very definition of a non-programmed decision making. Mason’s decision of creating an online business platform that involves not only the customers in a linear relationship but also the local retailers and businesses as also an integral part of the Groupon’s primary business operation (selling business coupons to groups of customers) is not only a novel but also a unique one. In fact, Groupon is one of the pioneers and first in its class of companies to offer such kind of deals to local buyers and local shops and retailers alike.
- How would you describe these decisions in terms of rational, bounded rationality, and garbage can models of decision making?
The reference decision which also happens to be the answer in question number 1 can b classified as a decision that can be best explained by the bounded rationality model of decision making. Bounded rationality is a premise of organizational decision making that suggests that an individual’s rationality is primarily limited by the information they have, the cognitive limitations of the mind, and the limited amount of time he has to make a decision out of those things he has and knows . Mason’s business model was the first in its class. The factors and variables involved in his pioneering business model were actually widely available to any other business-minded and financially-capable individual who wanted to start a business long before the establishment of Groupon but it was not until Mason initiated the implementation of such business model that people realized that such mixing of factors and variables can be a viable and feasible business scheme that actually generates profits, on a long term basis at that. This perfectly describes how the concept of bounded rationality fits Andrew Mason’s decision to make (not turn) Groupon a group-based coupon-buying business from the very start.
- How, if at all, has creativity and intuition played a role in the decisions to found and rapidly expand Groupon?
As mentioned earlier, it is the business model that Groupon has that makes it unique and astonishingly profitable, not to mention that it is also the very same thing that enabled it to grow fast like a wildfire . Creativity and intuition can be described as keys to the unraveling of a business model that has never been unraveled before. They are the real ones that actually broke the binds of rationality as explained in the bounded rationality business model. They enabled Mason to think outside of the box and create the unique revolutionizing scheme that is being used to further fuel Groupon’s growth now.
- Suppose you think the market for group-based online coupons has great potential, do you desire to enter the competitive fray? What factors would you consider in deciding whether to become a Groupon competitor?
If I am to be given an opportunity to create an online business with a practically uncompetitive and meager amount of start-up capital, I would choose to do it the way Andrew Mason did it when he was planning to start Groupon, his company, up. I would not want to dive in into the group-based online coupon market without a novel idea because that would only make the company that I would start a copycat. Would I be able to make a unique business idea or preferable an entirely new model, then I would rather use that as an opportunity to pioneer an entirely new market segment myself just like what Mason did. The main factor that I would consider in making such decision is the originality, followed by profitability, and feasibility of the idea.
References
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