Case Study: Groupon

In October of 2008, the company known as “Groupon” was born with its first deal to the consumer populous. Groupon is an online service that brings merchants and consumers together by offering products at discount prices, and it does this through the use of smartphones, tablets, and internet services. The efforts put forth by Groupon, demonstrate the strategy of a “learning organization” that is willing to learn what their consumers want and need from an online consumer service. Groupon’s use of strategic flexibility has been vital in the amount of return consumers that they have experienced in recent years. According to Groupon’s public fact sheet, “91% of customers say they are likely to buy again from Groupon in the next 60 days” ("Groupon …show more content…
Essentially, Groupon masked their losses by using “metrics such as adjusted consolidated segment operating income, free cash flow, and gross billings, rather than net income” (Wheelen et al., 2015). Using these metrics, Groupon showed profits which caused them to face “five federal class action securities complaints, and six federal and two state stockholder lawsuits”, which caused a loss in investor confidence towards Groupon. This lack of confidence could have to be beneficial to Amazon and Living Social’s relationship. Living social is an online competitor of Groupon that offers the same product base; however, Living Social has a large company known as “Amazon” that is backing them financially which enables Living Social to have some breathing room in their day-to-day operations. Living Social, with this backing, is cutting away at Groupon’s profit margin every year by taking their consumers and potentially their merchants. Having these means of investors makes them more competitive in the industry by enabling them to take on larger ventures that would otherwise be