Groupon: Organization of the Business - Essay Example

XXXXXXXXX XXXXXXXXX XXXXXXXX XXXXXXXX XXXXXXXXXX Organisation of the BUSINESS INTRODUCTION. The organisation name is known as Groupon. It was first established in 2008.Groupon features any deal of the best stuff to do, buy, eat and see. The company’s philosophy is we treat our customers the way we like to be treated. It is a day of the day company that features each of its market it serves. It works as an assurance contract. Groupon makes money by keeping almost half of the customers pay to a coupon. The company entails small buyers who are disorganized with Groupon which is structured and so this enables local retailers to find there buyers. Each day groupon Emails at its member’s one unbeatable offer on something great to do in the any of the cities it’s located. It offers consumers great values by guaranteeing business a minimum number of customers, if a certain number of people sign up, then everyone gets the Groupon offer. If that minimum isn’t reached then no one gets the offer. Types of services in Groupon are: Restaurant meals Beauty care Entertainment. Media Politics The business process starts with the business owner or the retailer. The business owner will agree to provide his primary products or services at a set discounted price compared to retail value. Then the local daily deal is displayed at Groupon website. Then buyers will pay for the deal. If a certain number of people sign up for the offer, then the deal becomes available to all, if predetermined minimum is not met no one gets the deal that day. Goupon then collects the payment if the deal is valid and splits the revenue with the seller. Because groupon model encourages first time customers to partitioned business by offering services at 50 percent less than retail prices, the business owner will experience low or negative profit margins when they offer discounted products and services. They then have to set a ceiling on the amount of vouchers issued to limit their loses. Goupon gives half the payment to the seller and remains with the other half. This is how Goupon earns its revenue from the sales it acquires daily and the payment to the seller is broken down into instalments over life cycle of a deal loading Groupon with negative working capital. The Groupons mission is to become the operating system for local commerce. The business strategy has been discovering a business model that brings the power of the internet to local commerce .the business model has allowed the company to connect with millions of consumers and hundreds of people. COMPETITORS. Buywithme it is a premier group buying website where leading merchants offer exclusive limited time offers to members. Amazon-it is a multinational electronic commerce company. Google-they also make their own offer “Google offer” Dream walk-it is an app for businesses and brands who really connect with consumer. And many others such as Atcost.com, YIPIT, Dealradar.com 8 coupon and livingsocial are competitors of Groupon. Groupon has a number of contributions by facilitating trade and benefiting its seller and buyers. First by facilitating trade it brings together small sellers and individual buyers. This is where small retailers like pizza sellers meet with individual buyer to sell their products. By facilitating trade it enable the individual consumers have a wide selection of daily deals to choose from. Anyone can chose from different types of products and services depending on his or her needs. By facilitating trade it gives small business visibility to large audiences locally. It has also benefited the sellers by enabling them have a wide exposure to different customer and also the amount of his customers is increased rapidly. Also the sellers engage in high trial rates as compared to traditional advertising. It has also benefited buyers by giving them large discount rates up to half the price of product. This in turn gives them opportunity to try out services and products that are usually expensive. Also it has enabled a wide selection of deals that are available daily. Objectives of Groupon Raise awareness of our facility within the market and find new market niches in order to grow to a bigger market. Develop a customer retention program for all Groupon deal purchasers to encourage a second visit Retain the ability to upsell any customers who booked through Groupon. The primary goal of Groupon is to become a major commerce platform and end to end solution provider to local merchants. Groupon faces a series of challenges mainly stiff competition from many companies e.g. Google,Amazon,Yipit and livingsocial.This has reduced the rate of sales thus reducing its revenue. Also their business model can be easily copied by other companies. The idea of sending emails to offer service and products can be easily duplicated.as a result the company is forced to create a certain section called the Groupon Goods that sells a wide range of products but it then faces competition in selling of non-daily products and services by companies like Amazon. Its business model is unsustainable as it relies on benefits associated with a larger number of consumers buying a certain product and if not then the deal is cut.it relies on the economies of scale the larger the production scale, the lower the per unit product cost. This shows that the company has little bargaining power with the product retailers and there are no barriers of entry to protect its business from competition. RESEARCH OF TECHNOLOGY TRENDS In this era of constant change organisations are forced into a pressure to optimize performance and maximize social media results. Organisations today are faced with profound questions with a wider variety of choices, Companies like Groupon will need to examine what is best and fits its customers. EMERGING IT TRENDS THAT CAN BE ACQUIRED As to my research I noticed that cloud computing was important in the acquiring good results if it were implemented in the Groupon. Groupon suffers from many different kinds of problem and mostly they can be solved by introduction of cloud computing system and also use of Email marketing. Cloud computing system This is a form of technology in which hardware and software are stored in the internet rather than ones local computer. The shift from traditional software models to the Internet has steadily gained momentum over the last 10 years. Cloud computing promises new ways to collaborate everywhere, through mobile devices. With cloud computing, one eliminates all his local problems because you’re not managing hardware and software and so that’s the responsibility of an experienced vendor like salesforce.com. The shared infrastructure means it works like a utility groupon will only pay for what it needs, upgrades are automatic, and scaling up or down is easy. Cloud computing is a methodology that offers network services over the Internet. There are many advantages of cloud computing Easy Storage and Maintenance-the responsibility of of storing, maintaining, and processing the information on the software is outside of the company. Any problems can be dealt with at once and quick this then means it is very easy to maintain. Improve Internal Communications - Everyone, once logged in, can view the same information, ensuring consistency and improving internal communications greatly. While ensuring that the customers of groupon can interact with each other. Better use of resources-Tradition computing requires that each individual computer is installed with software that is agreed upon by the company. The software functions independently on the network, and so, too, is its maintenance. This requires time, energy, and cost, as groupon has had to hire IT staff and even, this increases cost as groupon has to maintain the software in their prime computers. When cloud computing system is introduce, the software is Web-based, and requires only Internet access and a Web-browser. No heavy lifting work is required of the hardware or software of the individual computer work station, therefore relieving many IT duties that would have been handled by the company. Accurate, Real-Time Information- cloud computing solutions also ensure that the data is accurate and current. Web-based solutions focused on CRM store and monitor all the activity of individual customers, MOSTLY DOES it is done quickly. This means that any permitted employee or executive can retrieve data on-demand and compile reports that accurately reflect the most up-to-the-minute information. Improved sales of the company-sales and marketing departments have real time and accurate information that is readily available with which to more rapidly begin formulating sales and marketing strategies. Enables one to understand his Customer -Because the marketing and sales department have access to accurate and current information, this information can be easily analysed, and opportunities for growth are available through using strategies that are specifically tailored to meet the specific needs and interests of different customers. Improve Customer Relationship Management-since customer can be specifically dealt with according to their needs and since those customers are allowed the opportunity to personalize their buying exchanges with the business, this wholly improves customer relationship management, which is crucial to a business’s success in today’s marketplace. Less operational issues-Utilizing standardized services can significantly reduce issues and defects. This increases business continuity and reduce time spent on operational issues, focusing more on the things that matter. Cloud computing allows you to deploy the same service or topology of services repetitively, with the same result every time. Cutting out the administrative work associated with manually keeping information current can allow for time being spent elsewhere, like tracking sales leads. DISADVANTAGES OF CLOUD COMPUTING Because cloud processing is still a new trending issue in IT then this means that it will be experiencing change and so it brings up room of enhancement, this in turn makes the company lose data because of upgrades of the computer system. A cloud system can sometime go down and this will waste time in repairing because one cannot access the system until there is internet and the computing system works properly. There is cost incurred while using computing system. It is also not that free. Groupon has to pay an amount each month. It is also time consuming when using cloud computing because it take allot of time to transfer a large amount of data into or out of a cloud environment. One also has to learn about how to interact all the hardware equipment’s such as secure access systems, e-mail, mobile devices, and portable storage, printers and things might bring the company problems Email marketing It is a business practice of sending emails to customers in an aim of selling ones products. Groupon has to track down its customers who visited the site and send e-mails of unbeatable offers they have.This ensures that the customers will be regular visitors as they will be getting information of what good deals groupon offers to them.this will retain them and help groupon increase its sales. ADVANTAGES OF MARKETING a) it is cost effective-It is cheaper than direct marketing b) Helps in tracking of data-one is able to know the people who log in using email links and thus promote sales c) E-mail marketing can be automated according to how one sets the time intervals.it doesn’t require labour. Porters` five forces Analysis is important in analysing a business company. This is indicated by determining competitive power in the Groupons situation. With clear understanding of where the power lies, one can take fair advantage on the situation of strength and avoiding wrong steps. Porters five Analysis are namely. SUPPLY POWER There is a big number of suppliers in the Groupon market. Over 500 companies that perform the same daily deal business with good offers. Suppliers stopped using groupon because it focused on a large amount of goods and services because it had a large discount. The idea of low profit margins to the suppliers or retailers of about 25% of the original price demoralizes them. It only worked when there were excess goods by the sellers. Too many wrong customers are attracted to the business as most buyers will only go for the deal because it was cheap and will never come again next time because they never had interest in it. This includes lower tips on average and a lower rate of tipping. Suppliers also knew that their brand names will be diluted because their expensive offers were being got at a cheap and this made many customers loose taste in many of the products. THREAT OF ENTRY There is no barriers of entry to the business as its business model is easy to implicate. Any business could find it way to the market that provided day to day daily business. This has really affected Groupon ac it faces stiff competition. The introduction of such businesses to the market is quite east and so this has really increased the number of competitors into the market. BUYER’S POWER It has enabled the buyers have a large range of products and services because groupon is responsible for the giving different offers. The buyers have also benefited from cheap great deals acquired. A buyer could get a deal for half the price and if the amount of people who are in the deal are as per the minimum then the buyers enjoy the offer. There is higher buyer power because all buyers may want something that is cheap and of good quality. The buyers have the ability to substitute their products if they feel one product is cheaper than the other on the groupon site. The buyers are normally many as the companies relies on economies of scale. COMPETITIVE RIVARY There is very low customer loyalty because customers get this offers once in a while because most of the retailers get frustrated and get out of the groupon co-operation. There are many competitors in the market. Like up to 500 companies who offer day to day daily offers daily. Introduction of many competitors increased the cost and this made Groupon to reduce in their amount of sale. CHALLENGES OF CLOUD COMPUTING In cloud system one should be able to choose a cloud company that is secure and protects the personal information of its customers according to particular state laws. One then has to purchase insurance for recovery of actual damages and attorney’s fees. Groupon should negotiate the terms of a service contract with a cloud computing service provider that meets its business continuity needs, such as ensuring that protections are utilized including, for example, encryption, firewall and password protection technologies. CHALLENGES OF EMAILMARKETING It is difficult getting messages delivered through different internet service providers,corporate firewalls and web mail systems. PEST ANALYSIS POLITICAL CHANGES Political changes are closely tied up with legal changes. Laws are continually being made and it is the work of the organisation to sight new laws in order not to break them. Such laws as consumer protection laws which assist consumers in maybe privacy of their information. So Groupon should consider knowing the type of products it offers, if they are according to the law. SOCIAL CHANGES Groupon as its own is a social related company that has allowed consumers to interact over the social sites like Facebook. It’s the work of groupon to effectively advertise its products in social sites where people interact. Groupon should effectively advertise in the online networks that are attractive to groupings customers. TECHNOLOGY CHANGES There are many technological changes and so Groupon has to be keen not to use outdated technologies. With the rate of new technology, it is becoming cheap to use certain technology that are new to the world. Economic change Groupon has to locate a way of closely monitoring its cash flows automatically as it enables them see a change very quickly in its sales and be able to correct them in terms of any problems. As seen in the report groupon suffers stiff competition because its marketing model is simple to implement. Groupon has to find ways in which it will enhance its sales. Using of new technology trends like cloud computing will certainly reduce its operational costs and so increase its profits. Strategies like this will increase its market and eventually get back to where it belongs. REFERENCE http://tomuse.com/daily-deal-sites-groupon-disadvantages-local-business-advertising/#ixzz2PP6PsSAB http://www.superb.net/blog/2013/03/04/top-9-disadvantages-of-cloud-computing/ http://suite101.com/article/pest-analysis-and-your-ebusiness-a97980 http://www.forbes.com/sites/panosmourdoukoutas/2012/08/14/groupons-problem/ http://www.minyanville.com/trading-and-investing/personal-finance/articles/groupon-grpn-facebook-fb-ipo-groupon/11/21/2012/id/46036?refresh=1 http://www.forbes.com/sites/ericsavitz/2012/10/23/gartner-top-10-strategic-technology-trends-for-2013/ http://en.wikipedia.org/wiki/Cloud_computing http://www.forbes.com/sites/ericsavitz/2012/10/23/gartner-top-10-strategic-technology-trends-for-2013/ https://www.google.co.ke/search?q=how+cloud+computing+works+pdf&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a https://www.google.co.ke/search?q=types+of+IS+strategies+for+online+marketing&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a ^ "Getting To the Bottom of The Crazy Yahoo-Groupon Rumors". 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