THE COPPERBELT UNIVERSITY

SCHOOL OF BUSINESS

NAME : DANIEL DAKA

SIN : 16103068
COURSE CODE : BS 450
PROGRAMME : BAC
LECTURER : DR. MWIYA
TASK : ASSIGNMENT 6
ILLUSTRATION : GROUPON
SIMILARITY INDEX :0

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Contents
1.0 Background and Introduction ........................................................................................................ 3
2.0 FRAMEWORK ..................................................................................................................................... 4
2.1.0 VRIO Analysis ............................................................................................................................. 4
2.1.1 Value .......................................................................................................................................... 4
2.1.2 Rare............................................................................................................................................ 4
2.1.3 Inimitability .............................................................................................................................. 5
2.1.4 Organization Support ............................................................................................................ 5
3.0 Assessing Groupon using VRIO criteria ..................................................................................... 6
4.0 If you were the new Groupon CEO ............................................................................................... 6
5.0 Recommendation and Conclusion ............................................................................................... 6
5.0 References .............................................................................................................................................. 8
6.0 SIMILARITY INDEX .................................................................................................................................. 9

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1.0 Background and Introduction
Groupon is the website company incorporated in November 2008 in Chicago, America by
Andrew Mason and his team to target on collective acquisition influence (power). The
company experienced rapid growth between 2009 and 2010 such that it had its presence
felt in more than 149 trading places locally and about 105 international recognition in the
markets. Groupon could also boast of having about 900 deals daily, 75 million subscribers
in 47 nations and with more than 7 thousands employees (Forbes.com, 2016).

In December 2010, the company had received a bid from Google Inc to buy it at $6 billion
which Groupon rejected. This made the rising and growth success for the company to be
more evident. Groupon business model is of this type, “when one or two people access
and signs for the service (deals) automatically, everyone can access it on the website.
However, the condition is that no one can receive a deal in day if the predetermined
minimum is not achieved (Groupon.com, 2016).

The company mission is simplified to see to it that they provide a product or services that
themselves would love to see, purchased and use at affordable price. This objective is
fulfilled by three basic beliefs which includes: looking forward to offer services or products
that its workers can love to buy and use; the belief that customers or users of the product
or a service love the company and its offering if they believe that there are no any other
unknown terms or factors that can in danger their experience and lastly, the company’s
commitment to meet its customer needs at all cost (Groupon.com, 2016).

Groupon continued to expand through acquisitions of working domestic deals website

which were not new in the way they worked to people in the domestic markets. All that
Groupon did was to bring them under the name Groupon. Some of the companies which
Groupon acquired includes: Groupsmore; City Deals; Clan Descuento; Darberry etc.
allowing each of these firms to have a piece of the pie in the market to become
multinational enterprise (Edelman, 2016).

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Therefore this research focuses to answer three questions asked under this illustration
using VRIO analysis and offer a recommendation based on this approach.

2.0 FRAMEWORK
2.1.0 VRIO Analysis
This is a tool used to analyze the firm’s internal capabilities and resources in terms of
value, rare, inimitability and organization support to check if the organization has
competitive advantage in the industry or market (Ross, 2019).

2.1.1 Value
The resource is considered of value to organization based on the value it provide to the
organization and also how it is viewed by buyers. But it must be mentioned that having
valuable resources which is not rare and inimitable by the organization is not important
because it only leads to competitive parity (Gerry Johnson, 2016).

For instance, in the case of Groupon its international presence in more than 46 countries
can be considered valuable when it comes to its desire or attempt to grow big in size,
deals and retaining the market share. Despite many international contenders, Groupon
has made and establish its name in the mind of many people because of the quality of
services and offers. In addition, Groupon’s strengths against its competitors is linked in
how the users match Groupon’s enormous worldwide presence based on quality and
consistence, for competitors to achieve this, much investment and assets is needed.
Furthermore, Groupon provide uncounted distinguished and fulfilling offerings that many
of its competitors don’t provide (Bils, 2016).

2.1.2 Rare
This simply means having resources that are not easily acquired and are not common to
different competitors. When a resource is both valuable and uncommon, it provides the
company with competitive advantage. But is worth noting that competitive advantage
earned by only having valuable and rare resource without being inimitable cannot stand
a test of time (Ross, 2019).

For instance, Groupon rapidly expanded, shock the market but not long after that other
different but similar products and services started to saturate the market by other

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providers. The service seized to be rare and other players could provide similar products
and services (Chen, 2015).

Do you agree to Andrew Mason refusal that the Groupon’s resources are
inimitable?

2.1.3 Inimitability
This is where a resource is hard to acquire by another organization. Some of the functions
that facilitate for inimitability are: expensiveness of the resource; legally protected
products or services by copyrights, patents and trademarks. When a resource possess
all the three competitive advantage, valuable, rare and inimitability with organization
support, the organization is well positioned in the markets than its competitors when it
comes to completion in that market or industry (Jiang, 2014).

In relation to Groupon, I agree that the company was not easily imitable for the fact that
the process of being in position to provide deals required a lot of complex activities to
work in one direction. For instance the company had reached the level of working
international, having operations in more than 46 countries with over 10000 workers. In
addition, though providing competitive parity, Groupon had advanced technology at that
time which was obtained through acquisition was another blue ocean working in favor of
the company. The evidence of Groupon’s exceptional inimitable resource can be linked
to Google’s attempt to purchase the company which was rejected. Amazon also and other
copycats were forced to leave the market in 2013 for failure to outsmart Groupon because
its inimitable resources then (Agrawal, 2015).

But with time, all this advantages of inimitability cannot stand a test of time, players can
easily acquire and imitate the business model of Groupon.

2.1.4 Organization Support

This is where the organization puts systems, structures and process to capture value from
a resource that possess the characteristics such as uncommon, high value and not easily
copied by competitors to gain competitive advantage in the market. For sustainability of
long term competitive advantage in the industry or market, organization facilitate
competitive advantage to the company (Bils, 2016).

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For instance, Groupon’s rapid growth and expiation in a period of 3 years is evidence of
organization support to see to it that the name of the company (Groupon) receives a
global recognition. Acquisition of other local websites companies like Darberry are all
proofs of Groupon long term objective support to safe guard its valuable, rare and
inimitable resources by continuing exciting its client and retain them (Agrawal, 2015).

3.0 Assessing Groupon using VRIO criteria

Value Rare Inimitability Organization support impact on competition

No _ _ no Competitive disadvantage

Yes no _ _ competitive parity

Yes yes no yes temporary advantage

Yes yes yes yes sustained advantage

The complexity of operation and the huge number of employees of about 10,000 in 46
countries makes it hard for a new entrant to reach at the level where Groupon is. The
other competitive advantage that has contributed the company success is technology,
though it cannot considered to be rare because it can easily be acquired by another
company (Agrawal, 2015).

4.0 If you were the new Groupon CEO

As the Groupon new CEO, much of attention will be to look beyond the current company’s
strengths in terms of capabilities and having rare and inimitable resources but searching
for opportunities to continue to gain competitive advantages as competition intensify. In
addition, customer base can be another area of concentration, where more services and
value have to be added to make users happy. Furthermore, continuous interaction with
the users is another way of keeping the customers, users have to remain connected to
the service before and after the service to get the feedback on their experience
(Adebowale, 2015).

5.0 Recommendation and Conclusion

From the resource based and VRIO analysis evaluation of the company such as Groupon,
it is imperative for those charged with the responsibility of managing the organization to

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be always mindful of whether the company possess the resources and capabilities for
achieving and sustaining competitive advantage.to make sure that such a mission is
achieved, managers have to ask and answer questions such as ‘how’ or ‘to what’ extent
are resource and capabilities rare, valuable, inimitable and receiving organization support
ranked in the industry or market based on competitive advantage.

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5.0 References
Adebowale, T., 2015. An appraisal of Groupon E-busisness model. International Journal of Scientific &
amp; technology Research, Volume 08, p. 297.

Agrawal, G., 2015. Venturebeat.com. [Online]

Available at: http://www.venturebeat.com/2015/05/08/why-groupon-now-wont-work
[Accessed 10 June 2020].

Bils, R., 2016. pricing in a customer markets. Qurterly Journal of economics, 4(104), p. 718.

Chen, c., 2015. Predicting the success of groupon buying auctions via classification. Knowledge based
system , 09(89), p. 640.

Edelman, J., 2016. To Groupon or not to Groupon. the profitability of deep discounts-Harvard Business
School, Volume 02, p. 15.

Forbes.com, 2016. Forbes.com. [Online]

Available at: http://www.forbes.com
[Accessed 10 June 2020].

Gerry Johnson, R. W. K. S. D. A. P. R., 2016. Exploring Strategy. In: Exploring strategy. Australia: Pearson
ltd, p. 829.

Groupon.com, 2016. Groupon.com. [Online]

Available at: http://www.groupon.com
[Accessed 11 June 2020].

Jiang, D., 2014. Optimal strategy for selling on Group-buying website. journal of industrial Engineering
and management, 4(7), p. 56.

Ross, e., 2019. strategicmanagementinsight.com. [Online]

Available at: http://www.strategicmanagementsight.com/VRIO-analysis
[Accessed 11 June 2020].

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6.0 SIMILARITY INDEX

2020 13 BAC Daniel Daka 16103068 BS450 Assignment 6

June ORIGINALITY REPORT

0 %
SIMILARITY INDEX
0% 0% 0%
INTERNET SOURCES PUBLICATIONS STUDENT PAPERS

PRIMARY SOURCES

Exclude quotes On Exclude matches < 1%

Exclude bibliography On

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