Global Business: What Would You Do? Case Assignment Groupon ✓ Solved

Global Business What Would You Do? Case Assignment GROUPON - Ch

Global Business What Would You Do? Case Assignment GROUPON - Chicago, Illinois

Groupon grew from a small local start-up to tens of millions of subscribers and hundreds of daily deals by using a group-buying, time-limited coupon model. The business model relies on daily email offers, a “deal tipping” mechanism (the discount activates only when a minimum number of buyers commit), targeted distribution, and revenue-sharing with local merchants. As Groupon scales internationally it faces intense local competition, cultural differences, choices about centralization versus local autonomy, and strategic entry-mode decisions (licensing, alliances, or wholly owned operations). The central case question: If you were in charge at Groupon, what would you do to expand and operate globally?

PART 1: Doing Business in a Global Economy — Analyze five global companies (3M, Lands' End, Intel, Starbucks, Yahoo) and answer for each: How global are they? Is a global strategy evident from their home pages? What benefits do they enjoy being global? What challenges do they face?

Write a paper addressing Part 1 (the five companies) and Part 2 (the Groupon case): provide analysis, a strategic recommendation for Groupon’s international expansion, and an implementation plan.

Paper For Above Instructions

Executive Summary

Groupon’s rapid growth stems from a viral, targeted daily-deal model that solves a marketing-demand problem for local merchants while monetizing network effects (Stone & MacMillan, 2010). To succeed globally, Groupon must combine centralized platform control with decentralized, locally empowered merchant relations and selective entry modes. The recommended approach is a transnational strategy: retain core technology and brand governance at headquarters, while granting country teams decision rights over merchant acquisition, local marketing, pricing, and cultural adaptation. Use strategic alliances or acquisitions in competitive or regulated markets, and licensing or franchise models in low-priority markets. This hybrid yields speed, local relevance, and risk mitigation (Bartlett & Ghoshal, 1989; Johanson & Vahlne, 1977).

Groupon business model and global challenges

Groupon’s value proposition: targeted distribution of deeply discounted offers that “tip” when a social threshold is reached, enabling revenue sharing and pay-for-performance advertising for merchants (Stone & MacMillan, 2011). Advantages include precise targeting, low upfront cost for merchants, and strong viral potential. Challenges in globalization include entrenched local competitors, cultural differences in coupon adoption, payment and delivery differences, legal/regulatory variation, and the cost of building local merchant relationships (Chao, 2011).

Strategic recommendation

Adopt a transnational (glocal) strategy: centralize elements that create scale and protect intellectual property (technology stack, global brand guidelines, data analytics, and customer platform) and decentralize functions that require local knowledge (salesforce, merchant relations, content copywriting, local partnerships). Centralized control ensures consistent platform quality and monetization; local autonomy ensures cultural fit and merchant trust (Bartlett & Ghoshal, 1989).

Entry-mode framework

Apply a market-specific entry-mode decision tree based on competitive intensity, regulatory complexity, and strategic value:

  • High-value and high-competition markets (e.g., China): pursue strategic alliances, joint ventures, or acquisitions of local daily-deal firms to gain market knowledge, payment integration, and merchant networks quickly (Dunning, 1988).
  • Medium-priority markets with manageable competition: establish wholly-owned subsidiaries with local management and sales teams to retain quality control and data capture.
  • Low-priority or remote markets: use licensing or franchising to scale with limited capital exposure while retaining contractual brand and platform standards.

Implementation plan

1) Organizational design: Create regional hubs staffed with local general managers who report to a global Chief International Officer; maintain centralized platform, legal, and product teams. Local teams control merchant sales, local marketing copy, and partnership management (Johanson & Vahlne, 1977).

2) Prioritization & sequencing: Enter markets by a score that weights internet penetration, smartphone adoption, discretionary consumer spending, competitor density, and regulatory ease. Target quick-win markets first (English-speaking, similar commerce culture), then invest in complex high-potential markets through alliances (e.g., partner with platforms that have local payment systems) (McKinsey, 2012).

3) Merchant relations & pricing: Keep revenue-share flexibility; offer trial periods and co-marketing to attract merchants. Train local sales teams in consultative selling and merchant performance analytics; use data-driven playbooks to improve repeat business (Stone & MacMillan, 2010).

4) Localization: Localize language, creative tone, deal timing, and payment methods. Retain a small creative hub at HQ for brand voice but hire local copywriters for market flavor (Chao, 2011).

5) Risk management and KPIs: Track metrics by market—CAC, merchant LTV, redemption rates, repeat merchant rate, and regulatory exposure. Use staged investment release tied to KPI gates.

Why this approach will work

The transnational strategy balances global efficiency (shared platform economics and data) with local responsiveness (merchant trust and cultural fit) and global learning (best-practice transfer across markets) (Bartlett & Ghoshal, 1989). Alliances and acquisitions reduce time-to-market in complex markets and mitigate competitive threats by leveraging local incumbents’ distribution and payment networks (Dunning, 1988).

Part 1: Comparative global analysis (3M, Lands’ End, Intel, Starbucks, Yahoo)

3M

How global: Highly global with operations and R&D across continents. Home page: global presence evident with links to country sites. Benefits: scale in R&D, diversified markets, global supply chain. Challenges: regulatory compliance, IP protection, and local competition.

Lands' End

How global: Moderate global retail presence and e-commerce shipping internationally. Home page shows shopping by country. Benefits: extended customer base and economies of online scale. Challenges: localization of sizing, returns logistics, and cross-border shipping costs.

Intel

How global: Global footprint in fabs, R&D, and sales. Home page highlights global innovation. Benefits: access to talent, diversified demand, and proximity to OEMs. Challenges: export controls, IP leakage risk, and geopolitical supply-chain risk.

Starbucks

How global: Extensive global retail footprint and a standardized but locally adapted menu. Home page highlights international locations. Benefits: brand scale, real estate expertise, and supply chain efficiencies. Challenges: cultural menu adaptation, labor and regulatory differences.

Yahoo

How global: Historically significant global presence but varied market strength; country portals visible on homepage. Benefits: diversified audience and ad revenue streams. Challenges: local competitors, regulatory and content moderation differences, and data-privacy laws.

Conclusion

Groupon should pursue a transnational model: centralize core tech and brand governance while delegating market adaptation and merchant relations to empowered country teams. Use alliances or acquisitions in complex markets, wholly owned units in strategic markets, and licensing in low-priority regions. This hybrid approach balances speed, adaptation, and control to compete effectively against local rivals and scale internationally (Porter, 1990; Johanson & Vahlne, 1977).

References

  • Stone, B., & MacMillan, D. (2010). Groupon's $6 Billion Snub. Bloomberg Businessweek.
  • Stone, B., & MacMillan, D. (2011). Are Four Words Worth $25 Billion? Bloomberg Businessweek.
  • Chao, L. (2011). Taobao to Launch Local Deals on Group-Buying Website. The Wall Street Journal.
  • Johanson, J., & Vahlne, J.-E. (1977). The Internationalization Process of the Firm. Journal of International Business Studies, 8(1), 23–32.
  • Bartlett, C. A., & Ghoshal, S. (1989). Managing Across Borders: The Transnational Solution. Harvard Business School Press.
  • Dunning, J. H. (1988). The Eclectic Paradigm of International Production. Journal of International Business Studies, 19(1), 1–31.
  • Porter, M. E. (1990). The Competitive Advantage of Nations. Free Press.
  • McKinsey & Company. (2012). Going global: Local adaptation as a growth strategy. McKinsey Insights.
  • eMarketer. (2012). The rise of daily deals and local commerce. eMarketer Report.
  • Statista. (2012). Groupon – Number of Subscribers and Market Statistics. Statista Online Database.

Related Assignments