The term business model gained popularity due to “the explosive growth of new ventures sparked by the internet”1 and is often erroneously used “to glorify all manner of half-baked plans”.2 Strategy is another “buzzword” that is often mistakenly used interchangeably with business model. There are numerous differences between the two but the defining characteristic is that a “business model is independent of competitors and the current state of the market”,3 focusing inwardly to describe, “as a system, how the pieces of a business fit together”.2 Strategy focuses on performance, looking outwardly at the industry, analyzing the current competition, future competition, suppliers and customers, and answers the key question “how you will do better than your rivals.” 2
Analyzing Groupon’s business model and strategy will give insight into how they need to focus efforts in an attempt to rebound from a recent downturn. Focusing on how they are looking inwardly to restructure the business model rather than outwardly towards a shift in strategy, will emphasize the role that both concepts play in creating and maintaining superior performance.
Groupon is a social commerce website connecting buyers and sellers with “deal-of-the-day” coupons through emails, apps and social media. Launching in Chicago in 2008, they quickly expanded to New York, Boston and Washington DC. By 2010 the company served over 250 markets in 35 countries. A first mover advantage and a simple business model of linking buyers and sellers while keeping a percentage of the transaction proved successful for Groupon early on, but recent struggles to maintain a competitive advantage have resulted in drastic changes to Groupon’s business model...
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...lly be the digital storefront where people start any online shopping trip”.7 These trends show Groupon moving away from the original business model of “push” (daily deals sent to consumers) to “pull” (a portal to search for deals),8 and it appears they are about to attempt a nearly impossible feat by going into direct competition with industry giants Amazon, eBay, Expedia, and Google.
1 What Managemnt Is: How It Works and Why It’s Everyone’s Business
2 Why Business Models Matter
3 Difference Between Business Model and Business Strategy
4 From Strategy to Business Model and to Tactics
6 Groupon Still Groping For A Viable Business Plan As Stock Crashes
7 Groupon Tests Out a Staples Competitor, Groupon Supplies
8 Groupon Struggles to Find a Winning Strategy
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