Natural Physical Environment: Sustainability Issues
As such, Groupon probably does not have a large impact on the physical environment, for it does not engage in the production of goods (Wheelen, Hunger, Hoffman, & Bamford, 2015). However, it is stated that the benefits which Groupon brings its customers (both the merchants and the consumers) are based on the economy of scale, for the company permits to sell/purchase goods in large quantities to several consumers at the same time (Mourdoukoutas, 2011). Also, e-commerce means that less paper advertisement is printed (Odeniyi, Lawal, & Kareem, 2015). Therefore, it might be possible to state that the enterprise is, on the whole, sustainable concerning the natural physical environment, for the economy of scale, is generally beneficent for the environment because large-scale production uses lower amounts of resources when it comes to the means of production, and because less paper advertisement is produced (Strength).
Societal Environment (PEST)
Economic
The economic situation in a country has a considerable impact on the operations performed by e-commerce businesses because it affects the purchasing capacity of customers (Odeniyi et al., 2015). However, it should be noted that both during a crisis and a recession, e-commerce may gain large profits: during growth – because customers start buying more, during a contraction – because they need to save money, but still have to buy products and services (Strength).
However, Groupon cannot expand to very poor countries because the technologies which allow for e-commerce may not be available to a large proportion of the population there (Weakness).
Technological
The e-commerce business greatly depends on the technological environment, for it is based on technological innovations (Odeniyi et al., 2015). The rapid development of the Internet technologies allows for quick growth of e-commerce, and it permitted Groupon to develop rapidly in 2008-2010 (Wheelen et al., 2015); nowadays, technological advancements can be taken advantage of as well (Opportunity). Certain platforms developed specifically for Groupon, such as real-time mobile apps with subscription, allow Groupon to retain customers more effectively (Strength) (Odeniyi et al., 2015).
Political and Legal
On the whole, political factors do not have a major impact on e-commerce enterprises (Odeniyi et al., 2015); these businesses do not engage in manufacturing, and it is generally possible to make products cheaper or more expensive without substantial losses to the business (Strength).
However, legal regulations and taxes do apply, so the company depends on the legal situation (as practically any other businesses do). Nevertheless, the fact that the enterprise’s website is often localized (translated into the native language for a given country) often allows Groupon to take advantage of friendly legal policies (Strength) (Odeniyi et al., 2015).
Socio-Cultural
The social and cultural issues may have a strong impact on e-commerce businesses, for the latter have to adapt to the local culture and preferences (a possible Threat) (Odeniyi et al., 2015). However, Groupon was often successful in adapting to the local specifics; in particular, the fact that its website was localized in many countries greatly benefitted the enterprise (Strength) (Odeniyi et al., 2015).
Task Environment
The threat of New Entrants
There is a very high threat of new entrants in the e-commerce business. It is easy for new companies to enter this market because it often may not require large investments such as purchasing the equipment for manufacturing. Large numbers of new entrants were what led to a considerable fall in sales in 2011-2012 (Threat) (Wheelen et al., 2015).
Bargaining Power of Suppliers
Initially, Groupon used to collect money from buyers at the moment of purchase, whereas money could be returned to the merchant within 60 days, which was one of the factors that permitted the enterprise to grow quickly (Buchler et al., 2013). Nowadays, however, when there are multiple e-commerce companies, suppliers have much greater bargaining power and can choose other e-commerce organizations if they dislike the terms which are offered by Groupon (Threat) (Buchler et al., 2013).
The Threat of Substitute Products or Services
There are a large number of substitutes available in e-commerce; for instance, such companies as Google, Amazon, and eBay can easily provide customers as well as suppliers with alternative platforms to purchase goods if these agents are not satisfied with the terms that are offered by Groupon. Also, there are alternatives such as the traditional paper coupons, as well as sales in local shops and stores, which also provide customers (especially consumers, but merchants to a certain extent as well) with alternatives to e-commerce businesses such as Groupon (Threat) (Buchler et al., 2013).
Bargaining Power of Buyers
The buyers have a considerable amount of bargaining power in e-commerce because nowadays there exists a large number of such enterprises (Threat) (Buchler et al., 2013). Because of the wide availability of alternatives, clients tend to demand even better deals and the service of higher quality, which often means that Groupon has to comply with these demands or simply lose their customers; when losing consumers, Groupon also becomes less attractive for merchants.
Rivalry Among Existing Firms
It is stressed that there exist several major competitors for Groupon in the United States of America; these include Google Offers, Amazon, Living Social, and several others (Buchler et al., 2013). These companies have a large amount of power, are well-known among clients, and can be a serious threat for e-commerce businesses such as Groupon. It is stated that the emergence of the new firms and the new offers available from the already existing giants were what caused a considerable recession in Groupon in 2011-2012 (Threat) (Wheelen et al., 2015).
The 6th Force
It might be possible to state that there are no considerable complementary products that can have a major impact on the sales of Groupon. The only factor which can have a considerable impact on the success of e-commerce is the availability and affordability of computers and mobile devices for the wide population; these are necessary if the business is to be possible. However, Groupon simply does not have to expand to countries where such gadgets are not affordable for the population.
EFAS Table
References
Buchler, D., Downey, J. M., Goldstein, A., Kheyfets, A., Monitz, L., & Truong, T. M. (2013). Groupon: What a deal. Web.
Mourdoukoutas, P. (2011). Is Groupon’s business model sustainable? Web.
Odeniyi, O. A., Lawal, N. T., & Kareem, A. E. A. (2015). An appraisal of Groupon e-business model. International Journal of Scientific & Technology Research, 4(1), 291-297. Web.
Wheelen, T. L., Hunger, D., Hoffman, A. N., & Bamford, C. E. (2015). Strategic management and business policy: Globalization, innovation, and sustainability: Global edition (14th ed.). Harlow, UK: Pearson Education Limited.