Groupon Rejects Google’s Offer!
Dec 4th, 2010 by chrischoi
Groupon, a Chicago company that was launched in Novermber2008, is a website that targets major geographic markets in the United States and Canada by offering daily coupons. Groupon works as an “assurance contract using ThePoint’s platform” which means that “if a certain number of people sign up for the offer, then the deal becomes available to all; If the predetermined minimum is not met, no one gets the deal that day.” This benefits both Groupon and the retail stores as it reduces risk for retailers by treating the coupons as quantity discounts as well as sales promotion tools.
Groupon’s success of earning $500,000,000 in gross revenue for 2010 was able to capture the interest of California based Internet Giant — Google Inc. Recently, Google has offered $6 billion to purchase this “Chicago daily deal setup;” however, Andrew Mason, the CEO of Groupon, believes that this company has the potential to sell for a higher price later on and thus rejects this offer.
Was this decision by the board of directors a good choice? My analysis shows that Groupon should have just taken the $6 billion dollars and ran because their business model is very simple and easily copyable. Moreover, I believe that Groupon’s board of directors is too naïve and greedy in their hopes of receiving more from this. By not making this deal, I feel that Groupon may not get this kind of opportunity again.