INVESTMENT DECISION

Groupon's Share Initial Public Offering (IPO): Investment Decision



Groupon's Share Initial Public Offering (IPO): Investment Decision

Overview of Company Operations

Groupon is an internet coupon company, specialized in discount coupons offerings. It is in the spotlight with an IPO launched; strong investor interest in IPO would enable the Groupon to sell up to 34.5 million additional shares to raise a total maximum of $ 621 million. Groupon occupies the enviable position in the market that reached approximate 1 billion dollars in sales within eighteen months (Klammer, 2004). Many investors are sceptical about the business model of Groupon and its ability to generate long-term benefits and revenue growth.

Strengths and Weaknesses of Groupon's Strategic Position and Business Model

Main strength of the Groupon's strategic position lies in its contribution to the reputation of the trader by giving visibility from advertising around a tempting offer. Groupon's business enables the trader to attract and retain new customers by the quality of the offer. Strategic position of Groupon has been enhanced due to the fact that consumers with higher education levels and knowledge of computers and the internet are more likely to make online purchases (Grant, 2010). The customer wins a substantial discount on the purchase of any products or services advertised on the website of Groupon. These discounts enable coupon holders to get reductions between 30% to 50% market value of a product or service.

Groupon's strategic position strength lies in competing with emerging competitors based on the value of products provided to customers (Lucas, 2005). Coupon prices provided by Groupon for goods are lower than that of traditional retail stores because of the traditional costs associated with operating physical stores elimination. Under Groupon's strategic business model, Groupon earns a commission of 50% of the cost of each bid on the site, so does the liaison ...