Groupon Economic Forces Understanding economic trends is helpful in determining areas that are ripe for new business ideas and areas to avoid. When the economy is strong people have more money to spend and are willing to buy discretionary products and services. In contrast when the economy is weak people have less money to spend and are more reluctant to do so. (Barringer & Ireland, 2012). A weak economy provides opportunities for companies to sell upscale and everyday items at a “discount”. The founder of Groupon realized this opportunity and took advantage of it, however it was not an instant success, and it took the failure of an idea in order to prosper.
The Idea
An idea is defined as a thought, an impression, or a notion. An idea may or may not meet the criteria of an opportunity. Most entrepreneur ventures fail because there was no real opportunity to begin with; therefore it is important to understand that there is a difference between the two. (Barringer & Ireland, 2012). Andrew Mason, founder and CEO of Groupon had the idea for a website that would bring people together to solve problems collectively. Mason was offered $1 million in funding to develop the idea he created called the Point. The Point would herd people into collective social actions: marches, protest, fundraising, etc. (Saporito, 2011). Mason realized that social action was not profitable and the idea was failing. In an interview, Andrew Mason the founder of Groupon said, “I think the best lesson that I’ve learned, people always talk about the importance of failure, and I think there’s truth to that; It’s knowing that failure is a possibility.”
Opportunity Gap An opportunity gap is when an entrepreneur recognizes a problem and creates a business to fill it. (Barringer & Ireland, 2012). As mentioned in the previous section, Mason realized his original idea of focusing