A case study my team and I did for Groupon.

1. GROUPON
Group Members:
David Green
Tiffany Gray
Frankie Miamen
Nicholas Foster
Tobi Coker

2. • General Economic Conditions
• Economic Recession
• Social Values & Lifestyles
• Couponing
• Discrete Consumer Spending
• Technology
• Mobile media
• Social Networking

3. Factor Threats or opportunity Impact
Political - Legal proceedings/ regulations 1.moderate
-Risk of trade due to environmental restrictions. 2. high
3. moderate
Economic -/+Economic Recession 1.high
Social + Estimated 5 billion cell phone subscriptions 1.high
globally.
(include demographic) 2.high
+ Couponing
3.moderate
- Low switching cost
Technological + Technological advancements in mobile apps. 1.high
- Increase competition internet retail/ ecommerce. 2.moderate
+ Advancement in the use of internet and mobile 3.moderate
devices.

4. • Market Size and Growth
 Slow Growth Rate
 E-Commerce Sales expected to have a growth rate of
9.6% from 2010-2015
 Expected sales from E-Commerce $279 Billion in
2015
• Buyer Needs and Requirement
• Consumers are more selective
• Economies of Scale

5. • Industry Driving Forces
• Emerging internet capabilities and applications
• Changing Societal concerns, values and lifestyles
• Industry Trends
• Mobile Media
 Conservative spending
 Daily Deals

6. • Rivalry: Strong
 Intense Competition
 Competitors offer better payment options to
merchants
• Buyer Bargaining Power: Moderate
▫ Consumer preferences are changing
• Supplier Bargaining Power: Moderate
▫ Merchants dissatisfied
▫ Merchants looking at competitors
• Threat of New Entrants: Moderate to Strong
▫ Amazon Local & Google

7. ▫Brand Name
▫Merchant Relationships
▫Marketing
▫Management
▫Location

8. Key Success Groupon Amazon Local Living Social Google
Factor/Strength Measure
Importance Strength Score Strength Score Strength Score Strength Score
Weight Rating Rating Rating Rating
Brand Name 0.1 10 1.0 10 1.0 8 .8 10 1.0
Merchant Relationships 0.3 5 5.0 7 2.1 8 1.8 7 2.1
Marketing 0.2 9 1.8 5 1.0 7 1.2 4 0.8
Management 0.1 5 .5 8 .8 7 .7 9 0.9
Location 0.3 8 2.4 5 1.5 9 2.1 5 1.5
Sum of Importance 1 7.20 6.40 6.60 6.30
Weights
Weighted Overall Strength 37.00 35.00 34.00 35.00
Rating

9. Strengths: Weakness:
#1 in the Industry Management
Large Subscriber Base Weak Business Model
Brand Recognition Cash Flow
Large Selection of Deals No Profits
Small Business Segment Niche Shady Accounting Practices
Aggressive Expansion High Marketing Costs
Opportunities: Threats:
More Local Markets in U.S. and Globally New Entrants
Improve Merchant Relationship Losing Merchant Confidence
Mergers And Acquisitions Low Switching Cost
Improving Stock Rating Intense Competition
GAAP Accounting Practices Easy to Imitate
Change in Management Maintaining Repeat Customers

10. Year Ended December 31,
GROUPON INC 2008 2009 2010
Form 424B4 (Restated)(1) (Restated)(1) (Restated)(1)
(dollars in thousands, except per share data)
Consolidated Statements of Operations Data:
Revenue (gross billings of $94, $34,082, $745,348, $330,079 and
$2,754,633, respectively) $ 5 $ 14,540 $ 312,941
Costs and expenses:
Cost of revenue 88 4,716 42,896
Marketing 163 5,053 290,569
Selling, general and administrative 1,386 5,848 196,637
Acquisition-related — — 203,183
Total operating
expenses 1,637 15,617 733,285
Loss from operations (1,632) (1,077) (420,344
Interest and other income (expense), net 90 (16) 284
Equity-method investment activity, net of tax — — —
Loss before provision for income taxes (1,542) (1,093) (420,060
Provision (benefit) for income taxes — 248 (6,674
Net loss (1,542) (1,341) (413,386
Less: Net loss attributable to noncontrolling interests — — 23,746
Net loss attributable to Groupon, Inc. (1,542) (1,341) (389,640
Dividends on preferred stock (277) (5,575) (1,362
Redemption of preferred stock in excess of carrying value — — (52,893
Adjustment of redeemable noncontrolling interests to redemption
value — — (12,425
Preferred stock distributions (339) — —
Net loss attributable to common stockholders $ (2,158) $ (6,916) $ (456,320

11. • Vision
▫ To continue to be the leading internet platform among daily
deal companies in the industry.
• Financial Objectives
 Improve stock rating
 Increase our revenue growth by 2-3%
• Strategic Objectives
 Overtake competitors in performance in the next 2-3 yrs
 Continue to be recognized as the industry leader

12.  Generic Strategy
 Focused Niche
▫ Local Markets
▫ Small Businesses

13. • Offensive
▫ Market share growth
• Defensive
▫ Retain market position

14.  Concentrate on capturing unoccupied or less contested
market territory
 Increase Locations
▫ Phase 1:
▫ Look at other competitors and see where they are located
▫ Phase 2:
▫ Begin to look at what consumers want in the local area
and also look into promising small business start up’s
▫ Phase 3:
▫ Establish relationships with merchants in the local area
and begin to market their business
▫ Phase 4:
▫ Continue to expand into various local cities and monitor
success

15.  Improve service with merchants
 Improve Merchant Relationships
 Phase 1:
▫ Survey and ask our merchants what they like and don’t like
about our company
 Phase 2:
▫ Implement various changes suggested by the merchants
and customers
 Phase 3:
▫ Monitor the results and ask merchants if they are pleased
with the changes made
 Phase 4:
▫ Continue to adjust and improve our relationship with
merchants as needed

16.  Improve Quality of Service
 Change Business Model
 Phase 1:
▫ Consult merchants about the coupon offers we advertise
▫ Consult merchants about their less popular items
▫ Customer Surveys
 Phase 2:
▫ Implement price changes to coupon offerings
▫ Promote less popular products or services
▫ Promote products and services customer want
 Phase 3:
▫ Continue to implement in all local markets
 Phase 4:
▫ Monitor results and adjust accordingly

17. Key Success Groupon Amazon Local Living Social Google offers
Factor/Strength Measure
Importance Strength Score Strength Score Strength Score Strength Score
Weight Rating Rating Rating Rating
Brand Name 0.1 10 1.0 10 1.0 8 .8 10 1.0
Merchant Relationships 0.3 6>8 5.0 9 2.1 8 1.8 6 2.1
Marketing 0.2 8 1.8 5 1.0 8 1.2 4 .8
Management 0.1 5 .5 8 .8 7 .7 9 .9
Location 0.3 8>9 2.4 5 1.5 7 2.1 4 1.5
Sum of Importance 1 8.20 6.4 6.60 6.30
Weights
Weighted Overall Strength 40.00 35.00 34.00 35.00
Rating

19. Groupon: International
”In the nine months ended September 30, 2011, we featured deals from
over 190,000 merchants worldwide across over 190 categories of goods and
services. Our salesforce of over 4,800 sales representatives enables us to
work with local merchants in 175 North American markets and
45 countries.”

20. September 30, 2011
Pro forma for
December 31, September 30, recapitalization
Assets 2010 2011 (Note 2)
(Unaudited) (Unaudited)
Current assets:
Cash and cash equivalents $ 118,833 $ 243,935 $ 243,935
Accounts receivable, net 42,407 109,852 109,852
Prepaid expenses and other current assets 12,615 111,856 111,856
Total current assets 173,855 465,643 465,643
Property and equipment, net 16,490 41,374 41,374
Goodwill 132,038 169,152 169,152
Intangible assets, net 40,775 50,141 50,141
Investments in equity interests — 45,194 45,194
Deferred income taxes, non-current 14,544 13,361 13,361
Other non-current assets 3,868 10,702 10,702
Total Assets $ 381,570 $ 795,567 $ 795,567
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 57,543 $ 40,345 $ 40,345
Accrued merchant payable 162,409 465,586 465,586
Accrued expenses 98,323 156,552 156,552
Due to related parties 13,321 260 260
Deferred income taxes, current 17,210 12,597 12,597
Other current liabilities 21,613 91,353 90,573
Total current liabilities 370,419 766,693 766,693
Deferred income taxes, non-current 604 4,788 4,788
Other non-current liabilities 1,017 39,719 39,719
Total Liabilities 372,040 811,200 811,200

21. Nine Months Ended
Year Ended December 31, September 30,
2008 2009 2010 2010 2011
Operating Metrics:
Gross billings (in
thousands)(1) $ 94 $ 34,082 $ 745,348 $ 330,079 $ 2,754,633
Subscribers(2) * 1,807,278 50,583,805 21,369,608 142,865,836
Cumulative
customers(3) * 375,099 9,031,807 4,623,267 29,504,314
Featured
merchants(4) * 2,695 66,289 31,190 190,795
Groupons sold(5) * 1,248,792 30,296,070 14,060,589 93,629,524
Average revenue per
subscriber(6) * $ 8.0 $ 11.9 $ 12.1 $ 11.6
Average cumulative
Groupons sold
per customer(7) * 3.3 3.5 3.3 4.2
Average revenue per
Groupon sold(8) * $ 11.6 $ 10.3 $ 10.0 $ 11.9
Cumulative repeat
customers(9) * 162,323 4,483,976 2,186,791 16,045,533
Number Percent Amount Percent
Existing
stockho 602,803,3 184,769,0
lders 28 94.5% $ 00 20.9% $ 0.31
New
public
investo 35,000,00 700,000,0
rs 0 5.5% 00 79.1% $ 20.00
637,803,3 884,769,0
Total 28 100.0% $ 00 100.0% $ 1.39

22. “We use free cash flow and consolidated segment operating (loss) income, or CSOI, as key non-GAAP financial measures. Free
cash flow and CSOI are used in addition to and in conjunction with results presented in accordance with U.S. GAAP and should
not be relied upon to the exclusion of U.S. GAAP financial measures.
Free cash flow, which is reconciled to "Net cash (used in) provided by operating activities," is cash flow from operations
reduced by "Purchases of property and equipment."
We consider CSOI to be an important measure for management to evaluate the performance of our business as it
excludes certain non-cash expenses. We believe it is important to view CSOI as a complement to our entire consolidated
statements of operations. When evaluating our performance, you should consider CSOI as a complement to other financial
performance measures, including various cash flow metrics, net loss and our other U.S. GAAP results.”
Year Ended December 31,
2008 2009 2010
Net cash (used in) provided by operating activities $ (1,526) $ 7,510 $ 86,885
Purchases of property and equipment (19) (290) (14,681)
Free cash flow $ (1,545) $ 7,220 $ 72,204