Case Study Description of Groupon India: A Management Buyout Decision
In early 2015, the chief executive officer and the management team of Groupon India, a subsidiary of U.S.-based Groupon Inc., faced a management buyout decision. Buoyed by a high growth rate and huge market potential in India, they wanted more India-specific product positioning and greater control over technology. They explored growth options available to the company, but faced the constraints of being part of a global conglomerate. The management team had narrowed its options to either starting a new venture or acquiring ownership of the subsidiary through a management buyout. How could they ensure they made the right decision? The authors Rajesh Panda, Madhvi Sethi and Pooja Gupta are affiliated with Symbiosis International University.
Swot Analysis of "Groupon India: A Management Buyout Decision" written by Rajesh Panda, Madhvi Sethi, Pooja Gupta includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Groupon Buyout facing as an external strategic factors. Some of the topics covered in Groupon India: A Management Buyout Decision case study are - Strategic Management Strategies, and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Groupon India: A Management Buyout Decision casestudy better are - – technology disruption, talent flight as more people leaving formal jobs, geopolitical disruptions, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies,
digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Groupon India: A Management Buyout Decision
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Groupon India: A Management Buyout Decision case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Groupon Buyout, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Groupon Buyout operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Groupon India: A Management Buyout Decision can be done for the following purposes –
1. Strategic planning using facts provided in Groupon India: A Management Buyout Decision case study
2. Improving business portfolio management of Groupon Buyout
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Groupon Buyout
Strengths Groupon India: A Management Buyout Decision | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Groupon Buyout in Groupon India: A Management Buyout Decision Harvard Business Review case study are -
Training and development
– Groupon Buyout has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Groupon India: A Management Buyout Decision Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Highly skilled collaborators
– Groupon Buyout has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Groupon India: A Management Buyout Decision HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Groupon India: A Management Buyout Decision firm has clearly differentiated products in the market place. This has enabled Groupon Buyout to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Groupon Buyout to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Groupon Buyout are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Low bargaining power of suppliers
– Suppliers of Groupon Buyout in the sector have low bargaining power. Groupon India: A Management Buyout Decision has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Groupon Buyout to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Groupon Buyout is one of the most innovative firm in sector. Manager in Groupon India: A Management Buyout Decision Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Groupon Buyout is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Groupon Buyout is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Groupon India: A Management Buyout Decision Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Groupon India: A Management Buyout Decision Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Strong track record of project management
– Groupon Buyout is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Groupon Buyout digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Groupon Buyout has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Successful track record of launching new products
– Groupon Buyout has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Groupon Buyout has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Diverse revenue streams
– Groupon Buyout is present in almost all the verticals within the industry. This has provided firm in Groupon India: A Management Buyout Decision case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses Groupon India: A Management Buyout Decision | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Groupon India: A Management Buyout Decision are -
Skills based hiring
– The stress on hiring functional specialists at Groupon Buyout has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Low market penetration in new markets
– Outside its home market of Groupon Buyout, firm in the HBR case study Groupon India: A Management Buyout Decision needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Groupon Buyout is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Groupon India: A Management Buyout Decision can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Groupon Buyout has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Lack of clear differentiation of Groupon Buyout products
– To increase the profitability and margins on the products, Groupon Buyout needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Groupon India: A Management Buyout Decision HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Groupon Buyout has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Groupon India: A Management Buyout Decision HBR case study mentions - Groupon Buyout takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Groupon India: A Management Buyout Decision, it seems that the employees of Groupon Buyout don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Workers concerns about automation
– As automation is fast increasing in the segment, Groupon Buyout needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High bargaining power of channel partners
– Because of the regulatory requirements, Rajesh Panda, Madhvi Sethi, Pooja Gupta suggests that, Groupon Buyout is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
No frontier risks strategy
– After analyzing the HBR case study Groupon India: A Management Buyout Decision, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Groupon India: A Management Buyout Decision | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Groupon India: A Management Buyout Decision are -
Creating value in data economy
– The success of analytics program of Groupon Buyout has opened avenues for new revenue streams for the organization in the industry. This can help Groupon Buyout to build a more holistic ecosystem as suggested in the Groupon India: A Management Buyout Decision case study. Groupon Buyout can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Groupon Buyout can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Groupon India: A Management Buyout Decision suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Groupon Buyout can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Groupon Buyout can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Groupon Buyout can use these opportunities to build new business models that can help the communities that Groupon Buyout operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Manufacturing automation
– Groupon Buyout can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Groupon Buyout can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Groupon Buyout can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Groupon Buyout is facing challenges because of the dominance of functional experts in the organization. Groupon India: A Management Buyout Decision case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Using analytics as competitive advantage
– Groupon Buyout has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Groupon India: A Management Buyout Decision - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Groupon Buyout to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Groupon Buyout can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Groupon Buyout can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Groupon Buyout can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Groupon India: A Management Buyout Decision, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Groupon Buyout can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Innovation & Entrepreneurship segment.
Threats Groupon India: A Management Buyout Decision External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Groupon India: A Management Buyout Decision are -
Regulatory challenges
– Groupon Buyout needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Groupon Buyout with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Groupon Buyout can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Environmental challenges
– Groupon Buyout needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Groupon Buyout can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Groupon Buyout.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Groupon Buyout can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Groupon Buyout needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Groupon Buyout in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Groupon Buyout can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Groupon India: A Management Buyout Decision .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Shortening product life cycle
– it is one of the major threat that Groupon Buyout is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Groupon Buyout high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Weighted SWOT Analysis of Groupon India: A Management Buyout Decision Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Groupon India: A Management Buyout Decision needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Groupon India: A Management Buyout Decision is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Groupon India: A Management Buyout Decision is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Groupon India: A Management Buyout Decision is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Groupon Buyout needs to make to build a sustainable competitive advantage.
