Managing an innovative business, Andrew Mason faced atypical challenges, which influenced the course of Groupon’s development. One key decision was to refuse Google’s $6 billion buyout proposal, which resulted in Groupon’s lack of preparedness for answering the increasing internet based market that allowed many copies to attract parts of its market share. Another key decision of Mason was to go public, filling the paperwork for an Initial Public Offering of $750 million, which positions the company as a potential major internet based brand (McCuddy, in Nelson & Quick, 2013). The rapid expansion into international markets was yet another key decision that propelled Groupon as the global leader of the internet coupon market.
The decision of not selling Groupon to Google was an unprogrammed one, because Mason could not anticipate the consequences of this move, but could only hope to do better than Google’s $6 billion buyout offer (Ferreira, Erasmus & Gronewald, 2009). Similarly, becoming an IPO was also an unprogrammed decision, because the company faced a new situation that implied a considerable degree of risk (Ferreira, Erasmus & Gronewald, 2009). On the other hand, the international expansion was both a programmed and unprogrammed decision because it implied standardizing the administrative activities already applied in United States, but facing the risks of new markets’ responsiveness (Ferreira, Erasmus & Gronewald, 2009; McCuddy, in Nelson & Quick, 2013).
The decision to go public was likely a rational one, as it implied the intelligence to find the right opportunity, the design to develop new growth strategy, the choice of taking on a certain direction and the review of the company’s rapid growth (Turpin & Marais, 2004). On the other hand, the refusal to sell to Google and the international expansion demonstrate bounded rationality processes, as they denote satisficing analytical processes, without having full information on the outcomes (Turpin & Marais, 2004).
Groupon is an exemplary case of pure creativity, as it practically created a new market that rapidly progressed into a social trend. In addition, this business model also demonstrates intuition, as its strategic growth decisions were based on visions rather than analytical processes.
The attractiveness of the market is the essential aspect to consider when entering a competitive fray to become Groupon’s competitor. The total market share (the bargaining power of the consumers), the bargaining power of the supplier (the dynamic of the dealers), the existing rivalry, the substitute products and other new potential entrants are the five forces that I would consider for this situation (Porter, 2008).
References
Ferreira, J., Erasmus, A.W. & Grownewald, D. (2009) Administrative management. Cape Town: Juta & Company, Ltd.
McCuddy, M.K. “Groupon Case Study: Decisions, decisions, decisions” in Nelson, D.L. and Quick, J.C. (2013) Organizational Behavior: Science, the real world, and you. Mason: Cengage Learning.
Porter, M.E. (2008) Competitive strategy. New York: The Free Press.
Turpin, S.M. & Marais, M.A. (2004) Decision – making: Theory and practice. Orion. 20(2): 143 – 160.
