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Welcome to the Fall 2012 MB107 Executive Presentation Orientation Find your team number and sit together with your tea

Welcome to the Fall 2012 MB107 Executive Presentation Orientation Find your team number and sit together with your team. We’ll get started soon!. Orientation Meeting Agenda. What is Company X? Who’s who in the MB107 Program What is the Executive Presentation? Dry Run and EP Specifics

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Welcome to the Fall 2012 MB107 Executive Presentation Orientation Find your team number and sit together with your tea

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  1. Welcome to the Fall 2012MB107 Executive PresentationOrientationFind your team number and sit together with your team. We’ll get started soon!

  2. Orientation Meeting Agenda • What is Company X? • Who’s who in the MB107 Program • What is the Executive Presentation? • Dry Run and EP Specifics • Analysis and Strategy Development • Financial Target: Economic Logic and Financial Estimates • Team Dynamics & Project Timeline • Student Perspective • Semester Timeline

  3. 10 hints about the firm… • It employs nearly 13K people and has 38 million customers worldwide. • The majority of its sales are international. • It boasted sales of $1.1 billion in the first six months of 2012. • Companies have (unsuccessfully) offered them buy-out money of $2 billion, $3 billion, and even $6 billion! All bids were turned down. • It’s name is a portmanteau. • It’s been called a “toddler” firm, around only since 2008 and public only since last November. • It’s an internet firm, leveraging the power of social networking. • Many view it as a friend to small business – bringing more customers to the doors of local merchants. • Still, others criticize it for hurting small business. • Its CEO is one of the youngest in the industry. He graduated from Northwestern as a music major in 2003.

  4. MB107 Executive Presentation You are now “junior executives” working for Andrew Mason, CEO of Groupon. What will you do to move this public firm forward over the next three years?

  5. Groupon’s business model A Groupon [is] an online coupon that allow[s] a consumer, upon subscribing to Groupon.com, to purchase a specific service from a local business at a discount rate of 50% to 90% off the regular price.” (Chatterjee, O’Keeffe, and Streiff, 2012, p. 1)

  6. How it works • Groupon’ssales force works with local merchants in over 40 countries and numerous cities to put together deals on leisure, entertainment, recreation, and even novel experiences • Creative writers and copy editors write and design the offers guided by an inch-thick manual • They send “deal of the day” offers to thousands of subscribers in their free daily email, Facebook, or Twitter feed • Grouponcollects the money as an agent for the local merchant (called gross billings) • Groupon and the local merchant usually have a 50/50 split of revenues, but some merchants negotiate better terms • In all, Groupon leverages the power of collective purchasing. Once there are enough subscribers wanting the coupon, the deal is “on”. Thus, it’s called Groupon! • (sources: Gupta, Weaver, & Rood, 2011; Radcliffe, Stein, and Gottschalk, 2012)

  7. Other products • Groupon Now! offers are for only a few hours and taps into customers’ desire to purchase from smartphones (through a partnership with Nokia using Nokia Maps app) • Groupon Getaways are for travel deals – through a partnership with Expedia • Groupon Live for entertainment deals – through a joint venture with Live Nation • Groupon Goods offers provide discounts on goods • These are mostly direct sales where Groupon is the merchant of record (versus Groupons in which Groupon is the 3rd party agent selling on behalf of the local merchant) (sources: Radcliffe, Stein, and Gottschalk, 2012; www.seekingalpha.com, “Groupon’s cheap valuations”, 9/7/12)

  8. Your job? You must come up with a strategy to move Groupon forward in the next 3 years. The Bottom Line? YOUR TARGET IS TO ADD 10% TO THEIR OPERATING PROFIT BY YEAR-END 2015

  9. MB107 Faculty Coordinator – Professor Caroline D’Abate MB107 Faculty – Professors Hamilton and Tancredi-Penman MB240/316 Coaching and Leadership Faculty – Prof.Tancredi-Penman MB107 Staff – Nancy Walker, Rebecca McCourt ‘14, Tyler Orfao ‘13 MB107 Coaches – Enrolled in MB240/316 and Volunteer coaches Management and Business Faculty – Experts are available Seek them out for specialized questions (marketing, financials, presentations,…) Reference Librarian – Barbara Norelli, Social Science Librarian http://libguides.skidmore.edu/MB107 Who’s Who in MB107 Program

  10. Outcome: Strategic Plan for Groupon • Strategic recommendation • Financial analysis & projections • Detailed plan for marketing, operations, • and implementation • Briefly describe what other options • you considered and why your chosen • strategic path is the right course of action • Formal and Professional Presentation • Your Role: Junior Executives of Groupon • Your Audience: Senior Executives from Groupon (actually executives from across the country and various industries) • Presentation Format: • -Formal Presentation 20-25 minutes – visual aids/hand-outs encouraged • -Question and Answer 10-15 minutes • -Senior Exec Evaluation/Consensus 10 minutes (students leave room) • -Feedback Session 5-7 minutes (you will receive a team grade) What is the Executive Presentation?

  11. Dry Runs are Tues/Wed/Thurs nights (October 23, 24, 25) • Each team has been assigned a one-hour time slot on one of these evenings • Presentation in front of 3-4 student execs and MBD faculty • At the very least, you must have: • A good understanding of the situation • A clear strategic recommendation • Basic financials • Basic PowerPoint • Solid preparation will yield quality feedback • Use feedback to refine and enhance presentation for the EP day (December 7th) • Bring your iPhone, Flip, DVD recorder, or other device to film the dry run for your own review (if needed, contact Media Services to borrow a recording device) • Presentation Day – Friday, December 7th at the Holiday Inn • Assignment sheet outlines main tasks (Do not ignore it!) • You must update the case to December 7th (Look for 2012 Q3 earnings report in November) Dry Run and EP Specifics

  12. Dry Run & EP Specifics: Executives’ Evaluation • Some key concerns • Do you have a good understanding of Groupon’s situation? • Have you identified the key challenges? Will your strategy address those challenges? • Is it implementable? Have you convinced them that it can work? Have you convinced them that it’s the right course of action? • Ultimate goal is reliable, consistent, valid, and accurate assessments of • your strategic plan and presentation. We give them clear evaluation • criteria (you’ll see the evaluation form beforehand). But remember… • This is real-world • Human perception is involved • Subjective judgments are being made • “People will be people” • Imperfection is the rule rather than the exception

  13. What’s great about Groupon?“Groupon started a phenomenon that spread like wildfire: an internet coupon linked with an irresistible social component and a hip approach to marketing.” “The concept is sheer genius. The web-savvy, interactive format is so well thought out. Who ever heard of acquiring 516 new, quality customers in one day with no money up front?”Groupon allows businesses to:A) gain broad exposure with limited marketing effortB) attract new customers, esp young, well-educated customersC) create overnight businessGroupon gives consumers the chance to buy goods and services at deep discounts, while experiencing something new and exciting within their own region. (Chatterjee, O’Keeffe, & Streiff, 2012)

  14. But, Andrew Mason’s not all smiles. There are risk factors… What strategic plan will fit the challenges Groupon is facing?

  15. (source: Form 10Q Quarterly Report 2012 - Q2August 14, 2012)

  16. “We expect the percentage of revenue derived internationally to continue to be the majority of our revenue in future periods as we continue to expand globally and increase our penetration of the marketing opportunities in countries outside of North America, including those where we are already established.” (Q2 2012 10Q, Notes to financial statements, Overview) Moving forward… Acquired travel site Uptake Purchased Hyperpublic (aggregates place & deal data) Acquired Adku, an e-commerce data firm Bought local clones to gain entrance into India, South Africa, and Israel

  17. Analysis and Strategy Development Q: Where should I start? A: Read the case…it’s the foundation of your analysis. Read reports and articles linked on the MB107 website and stay current on any “new” news or reports on Groupon Analyze Groupon’s current situation to identify the major issues. Two “Key Slides” to include in your presentation: 1. The key challenges/opportunities/issues facing Groupon are… 2. Our strategy addresses these by… (explain how)

  18. Analysis and Strategy Development • Start with Situational Analysis • That leads to Strategy Development • External Analysis • General/Macro-environment • Porter’s 5 forces • Industry life cycle • KSFs • Value chain • Competitor analysis • Strategic group mapping • Market segmentation • Rivals’ profiles • Select Optimal • Strategy (5 elements) • Arenas • Vehicles • Differentiators • Staging • Economic logic Strategic Options • Internal Analysis • Mission/vision • SWOT • Core/distinctive competencies • Competitive advantage • Internal value chain

  19. Arenas • Which product categories? • Which market segments? • Which geographic areas? • Which core technologies? • Which value chain emphasis? Analysis and Strategy Development: Your strategic recommendation must be comprehensive • Economic Logic • Lowest costs via scale advantages? • Lowest costs via scope and • replication advantages? • Premium prices due to • unmatchable services? • Premium prices due to proprietary • product features? • Vehicles • Internal Development? • Joint Ventures? • Licensing/Franchising? • Acquisitions? • Staging • Speed of expansion: fast, slow, moderate? • Sequence of initiatives: methodical or ad hoc? • Action steps • Differentiators • Image? • Customization? • Price? • Styling? • Product Reliability?

  20. Financial Target – Groupon Refer to the MB107 Financial Template Guide (word doc) • Utilize case data, Groupon’s 2011 Annual Report, Groupon’s 2012 Q1 and Q2 10Qs and earnings releases, upcoming Q3 report • Recent company events/presentations (http://investor.groupon.com/index.cfm) • Analyst estimates (e.g., Yahoo Finance, Mergent Online, Datamonitor Industry Profiles, First Research reports) • Project Groupon’s operating income (without the effect of your strategic recommendation) out through 2015 (this is the projected baseline) • Your strategic recommendation must contribute an additional 10% to Groupon’s operating income by year-end 2015 Refer to the Financial Template (excel) • Step 1 tab – Groupon’s historical financials 2009-2012HY(you’ll need to update to Q3 2012) • Step 2 tab - Calculate baseline financial projections for 2012 -2015 using cost/revenue assumptions (do research to determine assumptions) • Steps 3-5 tab - Demonstrate the impact of your strategy on the projected financials (show how they earn the extra 10%)

  21. Strategy gets the plane started, the numbers keep you in the air! • Absolute Performance (Groupon) & Relative Performance (rivals) • SWOT – Key Success Factors of Groupon vs. competition • Current and Future Standing on Key Financial Variables – Margins, • Ratios, inventory turnover, profitability, etc. Financial Analysis & Projections • Financial Projections: • Gross billings and revenue for Groupon • Division revenues (direct vs. 3rd party) • Geographic revenues (North America vs. International) • Cost of sales and Operating costs • Don’t be afraid to lose a little money in YR1 • Project three years out

  22. Some key concerns: • Capital • - What is your funding source? How will you pay for your proposed plan? - Operations? Investments? Financing? Cash? • “We currently plan to fund investments in our North America and International segments with our available cash and cash equivalents balance and cash flows generated from the respective operations during this year.” (Groupon’s Q2 2012 10Q) • Can you provide qualitative explanations for your quantitative analysis? • - Offer a coherent explanation of your finances • - Realism – Is it realistic? Feasible? You need to provide a good story • - Back it up – Use external sources to provide evidence • Explain and justify the assumptions that underlie your numbers • - Assumptions about costs • - Assumptions about growth (in gross billings, merchants, subscribers, units sold, market share, revenue projections, existing product and new product • or market sales) Financial Target/Economic LogicWhat will account for the returns of your strategy?

  23. Create SYNERGY & ride MOMENTUM • Apply individual and team GOAL-SETTING • Be ACCOUNTABLE to your team • COMMUNICATE early, often, and effectively Team Dynamics: Your Junior Executive Team

  24. Team Dynamics • MB107 Teams Fail When Team Members or Individuals: • Don’t develop competencies from the course • Use the analytical tools you’re learning in MB107 • Engage in social loafing • Instead, hold each other accountable • Share the workload • Fail to take the advice of others • Instead, recognize escalation of commitment is occurring • Realize when it’s time to move on • Seek intervention when you need to • Emphasize relationships, rather than the task • Instead, look for symptoms of groupthink • Mare sure you’re not putting “getting along” ahead of • making good decisions • Don’t forget the 360-degree evaluations!

  25. Team Dynamics: Your Coaches • Coaches work with your team • They won’t do the work for you • They are facilitators, advisors, and leaders • They’re here to help you negotiate team relationships • They’ll help you stay on target • They work with you from today through to December 7th

  26. Team Dynamics: Meetings Keep a schedule that works for everyone If your team need a place to meet for one or two nights during the semester, you must reserve a room. You cannot assume that campus spaces are available. Room reservations should be made only when you absolutely need them and through Skidmore’s Scheduling Office: http://cmsauthor.skidmore.edu/odsp/scheduling-office.cfm

  27. Phase 3 Phase 1 Phase 2 Team Assignment: Project Timeline Revise presentation based on dry run feedback • Groups formed – Teambuilding • Situational analysis • Identify issues • Develop strategy • Prepare • presentation for • dry run Friday, Dec 7th Oct 15 to 23 (Dry Runs Oct 23 - 25) Today to Oct 15 Oct 25 – Dec 6

  28. Tyler Orfao ’13 and Rebecca McCourt ‘14 MB107 Student Coordinators, 2012-13 torfao@skidmore.edu rmccourt@skidmore.edu We’re here for you! Come to us with team problems, for team support, for help with preparing for the dry runs or the EP, etc… The Student Perspective

  29. Resources SUCCESS

  30. Your team is critical for success… Start by “building” that team tonight! Resources SUCCESS

  31. TO BE PROFESSIONAL, YOU MUST BE PREPARED! • Address technology needsprior to December 7th (multi-media, connection issues, laptop issues, multiple flash drives, etc.) • Prepare for no Internet access at hotel – This means no email, no datastor, no Dropbox/Cloud • Use USB/flash drives • Equipment /power failures– The show must go on…can you present without powerpoint? • Travel arrangements – getting to/from the Holiday Inn • Know the time of your presentation (it’s a tight schedule) • Perform Library Research Assignment • Check your Skidmore e-mailmultiple times each day! A FEW FINAL NOTES

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