A. Current Performance Groupon had established major growth rate from the years 2009 to 2011, with an astonishing rate of 380%. They managed to accomplish these amazing numbers by acquisitions of international firms and also by entering new markets like Asia, Europe etc. What has caused Groupon stock price to plunge is their fluctuation in operating cost, $1.8 billion in 2011 an increase of 151% from 2010. Groupon marketing expenditure erupted out of control from one year to the next, in 2009 Groupon's marketing expense were $5.1 million and that's 285.6 million less than 2010, and tripled the following year. The company's numbers had tremendously decline since its initial IPO of $700 million second highest for a website since Google. Groupon with a net loss of 113.9 million for 2011, have been able to shrink their Net loss to 5.1 Million for 2012. The stock price dropped 84% from $26.11 to $4.15 in 2012. Currently we can estimate the company to have weaker performance from previous year, current quarterly trends indicate so. Company is cutting cost by releasing employees and shrinking departments to appeal more profitable for its stockholders, investors and also to reduce cost. The return on investment is gathered by gained from investment minus cost of investment over cost of investment. Groupon's market share had exploded since it became public and key acquisitions, leaving many of its competitors in the dust. Current market share is 59% in North America. B. Strategic Posture Groupon's purpose is to maintained local merchants well connected with consumers by offering discounted products and services. Mr. Mason CEO of the company stated that Groupon's mission is \"to become the operating system for local commerce\". Groupon current objective is to grow the amount of users of their services both consumers and merchants. Current strategies in play for meeting their objectives are online advertising, referral programs, affiliated marketing to attract new users. They also put much effort into retaining and maintaining exceptional customer service with their merchants. Groupon helped its merchants by offering them tools to help reached target consumers, and also they listen to feedback from their merchants. Groupon is also investing in technology integration for their services for easy interaction via smartphones and tablets. They made some acquisition of technology companies to re-enforce and adapt any changes in the environment. Groupon has a mission of product innovation that allowed them to explore and experiment. Since 2011 they launched products to increase tractions in its marketplace. Groupon has developed strategic alliances to grow its international presence with acquisitions and local partners. Develop partnerships with large companies like EBay, Microsoft, Yahoo, and Zynga to offer Groupon deals in their website, trading a % of their revenue for a higher volume of users. II. Corporate Governance A. Board of Directors Corporate governance for Groupon was established in the fall of 2011 by 8 members of the board of directors. The board of directors closely monitors the actions of top management to make sure stockholders interest is taken as number one priority. The first member of the board of directors and also an executive chairman for Groupon is Eric Lefkofsky. Mr. Lefkofsky is a co-founder of Groupon making him an internal director. Also serves as a director for a few firms like Echo Global Logistics, Lightbank and as well director for Children Memorial Hospital a very well known and respected medical institution. Peter Barris an additional director for Groupon has obtained an electrical engineering bachelor degree. Mr. Barris joined New Enterprise Associates and in 1999 became managing general partner, led investments in over 20 information technology companies that completed successful mergers an have gone public. Peter is an external director for Groupon, with over a decade with GE and even reaching vice president position. Mr. Barris is a founding member of Venture Philanthropy Partners in Washington D.C allowing him to raised funds for important causes. Mellody Hobson a president at Ariel Investments a Chicago company is on the board of directors for Groupon. Mellody is also well known in American television as she gives financial advice and educational talk on money management tools. Ms. Hobson also a director for several civic organizations like The Field Museum, Chicago public education fund, and Sundance Institute. Mellody has an AB degree from Princeton international and public affairs giving her qualifications that benefit Groupon's entering new markets. Brad Keywell a member of the Groupon's board of directors since the company emerged. Brad is a cofounder of Medibank LLC, and serves in the board for a few other firms. Ted Leoniss a great asset for the board of directors at Groupon with over a decade of experience in global Internet services at AOL. Internal director Andrew Mason the founder of The Point that later became Groupon and CEO since inception originally a software developer. Daniel Henry a key addition to the board of directors for Groupon is a master in finance with the title of Chief Financial Officer for American Express since 2007. Mr. Henry is also in the Audit committee, with these types of skills Groupon can keep mindful to having transparent books and eliminating incriminating mistakes in the accounting department. Like Mr. Henry, Robert Bass is an addition to board of directors for Groupon with accounting expertise that is much needed to maintain a successful and well-run company. Mr. Bass also involved in Americas Institute of Certified Public Accountant, and also for New York State and Connecticut certified public accountants. Robert with all his experience is a perfect member of the Audit committee. B. Top management Groupon's top managers include 8 members that are Andrew Mason, Jason E. Child, Joseph M. Del Petro II, Jason D. Harinstein, Jeffrey Holden, David R. Schellhase, Brian J. Schipper, and Brian K. Totty PHD. Mr. Mason the founder of Groupon is the Chief Executive Officer also for the company with a background in computer programming and the perspective of a creator an adding to that with a Bachelor degree in Art. Mr. Child has been the Chief financial Officer for Groupon since 2007. Jason Child has over 7 years of experience as CPA in one of the largest accounting firm in the country named Auther Anderson. Mr. Child has also prior experience in Amazon as Vice president of Finance for international departments that served Germany, and Asia. Joseph M. Del Petro II, with a bachelor degree in science is the Chief Accounting Officer for Groupon since 2011 a very important role. He also served as Groupon's Global Controller from January 2011 to April 2011 and also prior to that he served the same position for Echo Logistics Inc. Also held the position of controller for InnerWorkings INC from 2006 to 2009. Jason D. Harinstein, is the Senior Vice president of Corporate Development for Groupon since 2011. With prior 6 years' experience at Google, Inc from 2005 to 2011 as director of corporate development. Adding value to Mr. Harinstein background is the fact he worked as an equity analyst for Deutsche bank but only focused on internet search, ecommerce, and gaming companies. Education level is a master's in Business Administration added with BS degree in Arts and economics. Jeffrey Holden, is Vice President of Product Management for Groupon since 2011. The initial introduction happened when Groupon attained Pelago, Inc. Jeffries company that he founded and executed CEO duties. Mr. Holden gains international experience several years at Amazon as a Worldwide Discoveries, also senior Vice president, and consumer application. In 1997 Mr. Holden started at Amazon as Director of the Supply chain optimization has a BS and MS in computer science. David R. Schellhase, serves as a General consoler for the company. With Juris Doctors degree from Cornell University, and a BS in Arts he was able to become independent consultant for legal matters. As well served as a vice president for salesforce.com from 2004 to 2010 a website company. Brian J. Schipper, is the vice president of Human resources department at Groupon since 2011. With a lengthy history in human resources, coming from Cisco systems, Microsoft, Compaq, and vice president at Pepsi. Mr. Schipper has graduated with both a BS and MS in business administration. Brian K. Totty PHD, is the senior vice president of engineering and operations since 2010. With a PhD in computer science, Dr. Totty has Chief Executive Officer experience since he was the CEO for Ludic Labs, Inc where he developed software applications. He was the co-founder and Senior VP of research and development for Inktomi corp. from 1996 to 2002 Review of Mission and Objectives Yes, the present mission and objectives are relevant considering the main strategic elements and issues. Groupon owns 59% of the market share in its field. This is a very good percentage for any enterprise in its industry. It implies that the company dominates more than half of the market share in its industry. Regardless of the shortcomings that the enterprise has encountered, it had managed to make improvements here and there. For instance, 36% of its total earnings in 2010 grew to 60.0% by 2011. Part of its strategies incorporates maintaining and retaining exceptional customer service with their merchants. This is a very sound strategy, and it may be part of the main reasons the firm dominates more than half of the market share in its industry. I do not think that the objectives and mission of Groupon should be changed owing to the fact that they are sound. For instance, investing in technology integration for their services for easy interaction through tablets and smartphones is a smart idea considering the current technology. These are devices that most individuals own, meaning that the firm will be able to reach its customers and merchants more easily. Another impressive objective is developing partnerships with giant corporations like Microsoft, EBay, Zynga and Yahoo to provide it with deals in their websites, trading a percentage of their earnings for a higher volume of users. This is a very sound strategy owning to the fact that these companies it intends to develop partnerships with are very influential, and on the off chance all goes well, Groupon will definitely boost its sales, performance, and overall revenue. Groupon's strategies, objectives and mission are sound for now. The enterprise does not require any changes in this area, and it is heading on the right track. Strategic Alternatives 1. Concentrate on capturing unoccupied or less contested market territory .1 Increase Locations - Look at other competitors and see where they are located - Begin to look at what consumers want in the local area and also look into promising small business start up's. - Establish relationships with merchants in the local area and begin to market their business. - Continue to expand into various local cities and monitor success. 2. Improve service with merchants .1 Improve merchant relationships - Survey and ask our merchants what they like or don't like about our company. - Implement various changes suggested by the merchants and customers. - Monitor the results and ask merchants if they are pleased with the changes. - Continue to adjust and improve our relationship with merchants as needed. 3. Improve Quality of Service .1 Change Business Model - Consult merchants about the coupon offers we advertise - Consult merchants about their less popular items - Customer Surveys - Implement price charges to coupon offerings - Promote less popular products or services - Continue to implement in all local markets - Monitor results and adjust accordingly 4. Deal Management Consulting Services .1 Advise the businesses on how to best structure and operate a deal. - Cap size - Number of employees - Up-sell - Follow-up 5. Target specific customers .1 Filtering Mechanism - Provide a feedback platform to both businesses and customers - Block particular customers or take corrective measures against businesses (i.e. customer calls a business for a question and they offer to give you the same price if you pay them directly and not through Groupon) - Identify best businesses and build stronger long-term relationships Groupon Strategic Audit External Environment Opportunities & Threats Societal Environment Economic Technological Political-legal Sociocultural Regional Demographics Economic Opportunities Expanding international segment Strong growth in emerging markets 36% of total revenue in 2010 - grew to 60.6% by 2011 Uncertain economic conditions Increased consumer demand for coupons Merchants searching for ways to attract customers Threats Unfavorable exchange rates Unfavorable rates when repatriating international revenue Avoid repatriating international revenue, e.g. foreign owned subsidiary Technology Opportunities Consumer technology adoption expanding potential customer base 26 million smartphone app downloads Lower priced tablets and smartphones Technology adoption improving distribution Widgets on smaller web sites Online affiliates E-mail/website/mobile apps Social networks Using targeted advertising, and GPS in phones Planned merging of segmented information technology program Threats Online security issues Scalable commercial technology to protect and maintain data systems Political-Legal Opportunities Threats Regulation Evolving regulation of Internet business Credit Card Responsibility and Disclosure Act of 2009(CARD) Digital Millennium Copyright Act(DMCA) Personal data, gift certificate/card regulation Litigation Restatement of earnings 5 federal class action securities complaints 6 federal and 2 state stockholder derivative lawsuits Other litigation problems Intellectual property infringement Violation of Credit Card Accountability, Responsibility and Disclosure Act State Laws regarding gift cards, stored value cards, and coupons Perceived future lawsuits Socio-Cultural Opportunities Coupon users have higher than average income Online coupon acceptance Higher than average male coupon participation 40.2% of Groupon users were between the ages of 18-34 Demographic more comfortable with online shopping, internet, and mobile applications Threats Offensive advertisement Ethics concerns Groupons for alcohol and health services Task Enviroment High Importance Forces Threat of new entrants(T) Recent entrance of Google and Amazon into market \"Many of our current and potential competitors have longer operating histories, significantly greater financing, technical, marketing, and other resources than we do, and larger customer bases...\" -Groupon annual report Threat of substitutes or services(T) Wide variety of substitutes Traditional coupon/ discount services, newspaper, media outlets. Copycat and niche firms using same business model Rivalry among competing firms(T) Microsoft/Yahoo affiliated with Groupon, Amazon with Living Social Rejects US $6 billion acquisition offer from Google in 2010 Google entered market in 2011 Relative power of Unions, Government, etc.(T) Due to financial restatements/ legal issues Federal and State agencies have an ability to affect future operations Industry trend to expand globally(O) Living Social operates in 25 countries Majority of Groupon revenue and sales force from international markets Medium Importance Forces Bargaining power of merchants Large number of merchants trying to attract customers(O) 45% say they acquire more customers 80% happy with daily deal companies 53% market share in NA market Threats Some merchants unhappy With general model (low return rate, heavy discount) Appearance of fee-splitting kickback for referrals Ethical complaints Relative power of Unions, Government, etc.(T) External agencies don't seem hold too much power over firms in daily deals market Governments enforcing standard business practices and laws can affect business Low Importance Forces Bargaining power of buyers(O) Concept of \"tipping point\" empowers buyers and expands their bargaining power The \"Groupon Promise\" minimizes risk to consumer