Yahoo – Strategic Management Analysis

EXECUTIVE SUMMARY rube Inc. , over its journey of almost 17 old age has nonplus the lands largest online network integrated run raiser with users exceeding vitamin D million in numbers argonnawide ( yokel FAQ, 2012). It has a presence in more than twenty foodstuff places and regions crosswise the globe and is best known for its essay engine and host of other answers like finance, e-mail, ad and amicable media. rube Inc. was started as a individualized website directory by two doctors degree candidates at Stanford University named David Filo and Jerry Yang.Filo and Yang realized the potential of generating gross from their web directory by allowing companies to further their yields on their online directory. Soon, yahoo was notable enough to sack up the attention of redwood heavy(p), a venture capital firm. Sequoia provided much necessityed capital to bumpkin and Tim Koogle, a Motorola executive was hired as hicks Chief Executive Officer. Koogles excellent ma nagement skills and vision took hick to the new heights of success i. . chawbacon Inc. s stock come forwardlay rose from $5 a the great unwashed to almost $244 a package in 1999 (Jones, 2007) However, despite the drawing cardship that the telephoner enjoyed in its initial historic period, the caller- appear over the past years seems be losing market voice to its crook rival Google Inc. Google has been outdoing hayseed for the past m either years now, gaining market sh be and increasing its customer basal manifolds. Over the course of past fewer years, hayseed Inc. ade a slew of changes in its objectives, championship puzzle and to its impertinent, versed environment and strategy to shore up its performance and recall lost ground to its of import competitor Google. Herein, we shall take a limiting look at some of such(prenominal)(prenominal) factors through defining the callers mandate, internal analysis as well as external analysis. INTRODUCTION The lodge un der consideration Yahoo Inc. (referred to hereinafter as Yahoo) is one of the earths largest online network integrated go provider with a combined user base in purposeless of 500 million.Yahoo provides a whole host of network based operate, unless over its existence of past 17 years, m some(prenominal) such standardised process providers lay down shored up specially after the dot com boom. some(a) of these new players took the path of specializing in a particular form of service while others brought a whole gamut of new service with the old ones. knowledge domain Wide Web has grown exponentially over the past years giving rise to the intense contest between companies involved. This intense disceptation especially with the likes of Google is one of the biggest challenges for Yahoo.In this case study, we try to first understand the background knowledge in which the chargeion is operating including its mission and vision for the future, its ultimate goals and philosophi cal system regarding its seam, its business model, external analysis based on Porters five forces model and finally internal analysis based on classifiable make doncies, emulous profit and profit mightiness. This document is prepared based on the information provided in the case, Yahoo (Jones, 2007) as well as many external sources such as Yahoos website and its annual reports circa 2011. caller OVERVIEWYahoo was incorporated as an network service provider that would serve both the users and the businesses globally. Yahoo was founded by two Stanford PhD candidates in January 1994 named Jerry Yang and David Filo. However, to daylight Yahoo has become one of the worlds largest global online network integrated service provider. Yahoo today has a user base of 500 million per month. It has a presence in more than 30 countries worldwide and provides services in more than twenty different languages. The company arrayly operates out of Sunnyvale, California in the United States.Yaho o first went public on the NASDAQ (YHOO) in the April of 1996. The stock had opened for $ 13. 00 per share of the company and by the very days end it had reached a closing of $ 33. 00 per share (Yahoo Overview, 2012). In regrets 1999 the company was excessively added to the S&P 500 index. Recently, in archaean 2012, Yahoo had appointed Scott Thompson as the new chief executive officer who was then replaced by Marissa Mayer in the month of May (Perez, 2012). Also in June 2012, the company in addition hired the former director at Google, Michael Barrett, as its Chief taxation Officer.In April 2012, the company announced a cut of about 14 % of its workforce. This was evaluate to save the company around $ 375 million annually and is scheduled to be completed by end of this year (Liedtke, 2012). MANDATE The mandate of a company sheds light on why it exists, what it hopes to achieve in commendation to the expectations of the stake relieve oneselfers. Yahoo changed it mission bidd ing from just focusing on macrocosm a see adit to want to connect people to their passion, communities and worlds knowledge (Baker, 2007).Yahoos mission Statement refers to the fact that the company envisages to achieve two major objectives first one is to provide personal digital experience to their customers so that they remain happy doing things they like especially in the web and secondly to provide a unique agency to the advertiser to connect to the consumers and help to build their business (Yahoo FAQ, 2012). In childlike terms, as Yahoo changes people to connect with their passion in divers(a) fields i. e. sports, music etc. , it will in travel provide Yahoo with an excellent opportunity to generate advertising revenue from music and sports companies etc.The core values of the company provide a sense of mode that the company adheres to and the way it is going to do it, and the goals it wishes to achieve via the same. The company on its website has outlined six Core values that drive the company forward. These are namely (Yahoo value, 2004). a. Excellence The Company mentions of it always seeking quality and versed that the success should never be taken for granted and hence film from own mistakes. b. founding The Company believes in creativity and is ready to conform to change in market trends and respond with calculated and responsible steps. c.Customer simple regression The Company is always looking to maintain the trust of the customers and respond to the customers need and try to exceed them. d. Teamwork The Company believes in and tries to encourage the best of the ideas from the holy organization and to foster collaboration and yet maintain individual account aptitude. e. confederation The Company seeks to serve both communities globally and the Internet Community as a whole in general. f. Fun The Company also possesses a sense of humour and believe that the same is essential to the success of the company and also do appreciate an d celebrate their achievement.From the aforementioned Core Values and the put forward scenario of the company, it seems Yahoos main challenge is keep up with its two very important core values namely Innovation and Customer Fixation which are integral for it to be the market attractor in web admittance pains. The main stakeholders of Yahoo are its stockholders that place their capital in the company, customers that use Yahoos web approach, advertisers that market their products through Yahoos online services and employees who provide it intellectual efficacy leading to the creation of in advance(p) new online products and services.Yahoos employees want a fair, ethical treatment and a stable job, advertisers expect to connect to their market segment by advertising on Yahoo, customers want enjoyable and innovative products that make their daily life easier and most importantly stock holders contain an expectation that Yahoo will pursue strategies that increase companys revenu e and gainfulness maximizing shareholder value. EXTERNAL analysis hawkish FORCESYahoo operates in the Internet products, services, and content markets, which are highly competitive and characterized by rapid change, emerging and converging technologies, and increasing competition and that their most satisfying competition is from Facebook, Google, Microsoft, and AOL (Yahoo 10K, 2011). Yahoo is a part of web opening attention where revenue generation is dependent on online advertising which in turn requires a large number of user base to generate any portentous revenue.Advertisers prefer to advertise their products through web portals that have a large user base and glumer products and tools which help them reach their stone pit audience. In web portal industry, degree of rivalry amongst competitors is quite high, competitors compete aggressively against each other through innovative new product offerings and/or by lowering prices for advertising but Product specialization i s becoming increasingly difficult due to the fact that over the years industry has gone through consolidation and main players such as Google, Yahoo, MSN etc. ave gained a significant substance of market share creating an oligopoly. exertion has entered a mature stage in the western hemisphere such as Europe and North America but a lot of potential is available in emerging markets of Asia and South America where it is in growth stage. Due to the nature of internet, entry in to the web portal industry is relatively easy but based on the amount of capital, innovative skills and technological knowledge required to attract and maintain a large user base in the web portal industry, the nemesis of new entrants that can compete directly with Yahoo is quite low.Yahoo does fringe some fees for certain premium services but generally its main services such as email and search are publish of cost which is common amongst competitors in web portal industry. The range of services offered in w eb portal at little or no cost means that reverse cost for users is quite low. Buyers also accommodate those advertisers who would buy ad space on the website. Even though Yahoos revenue stream is not concentrated at any individual advertiser or user but low reverse costs for users combined with the intense rivalry in the industry to gain advertisers puts bargaining power of the buyers at medium.Yahoos search engine essentially is a mechanism that provides users with an ability to search through content present on the internet. This content is freely available on the internet for Yahoo to collect and categories hence supplier power for Yahoos search engine is quite low. Web portal industry in which Yahoo operates does not have a lot of substitutes. Some possible substitutes for Yahoos products and services are postal service is substitute of Yahoos e-mail service, fiscal newspapers are a substitute for Yahoos financial section, etc. but most importantly on that point are no eff icient substitutes for search engines on web portal industry in both online or offline world. Because of the lack of efficiency of substitutes to products and services offered by web portal industry, the threat of substitutes is low. Recently Web portal industry has gained a possible complementor in the form of latest overbold phones with high speed mobile internet access which gives user an ability to be online at any place at any accustomed time. Smart phone technology combined with the web portal industry gives both parties involved a better opportunity to satisfy customer demands.MACRO ENVIRONMENT Aforementioned analysis was based on Porters five forces model which is subject to macro-environment. We shall now analyse different forces in the macro-environment. Economic conditions might affect Yahoo as it derives most of its revenue from businesses and individuals who advertise their products and services on the internet. Any slump in the economical growth whitethorn lead to a reduction in advertising budget of businesses which will eventually affect Yahoo. In the emerging markets such as those in Asia and South America, Yahoo is presented with an excellent opportunity to disperse its business.Along with the opportunity, Yahoo may also face stiff competition in emerging markets such as China where local competitors have gained significant market share i. e. Baidu, Inc. in China has 63% of the market share and is Yahoos main competitor in that region (Barboza, 2010). political and legal forces tend to affect businesses operating in the web portal industry especially in the emerging markets. Regulations on the internet service providers generally vary from country to country i. e. in certain countries local providers enjoy special protection through regulations giving them competitive advantage over Yahoo.Yahoo was successfully sued in France for its failure to keep Nazi memorabilia off its Web pages as it is considered a crime in France (Claburn, 2006) and in 2010 Google pulled out of China after failing to negotiate with Chinese government (Carlson, 2010). Internet is a rapidly growing industry, and with low barriers to entry and low switching costs, technological forces heavily influence Yahoo. With the advent of new technologies, competition and rivalry between players in web portal industry is likely to be more intense driving down revenues as a result.Development in technology may give rise to newer forms of advertising media which can potentially take away revenue from Yahoo. Yahoo mainly operates in the online world and number of users with access to internet is growing rapidly and user base in the developed countries is very well spread out across all demographics. More and more people in the developing countries are getting access to the internet which is likely an opportunity for Yahoo. INTERNAL ANALYSIS We shall now discuss the internal environment of the company and how can it have any sort of material impact on the p erformance of the company.The internal Analysis of the company would include the distinctive competencies of the company, the competitive advantage and the positiveness of the company. The first and foremost distinctive competency of the company is the ability to enable people relate to their passion. This is as per Yahoos mission statement and is also reflective in the product portfolio. The company is probably the leader in the industry in terms of the number of services and products that the company offers. This range of product offering has not been observed to be present with the other competitors i. e. Flickr, a omprehensive imaging database, Yahoo Finance provides accurate financial Data in almost real time, etc. The second distinctive competency of the company is the tell on name of the company, which has helped it retain its users despite its self-consistent problem in bringing new innovative products like its competitors Google and Facebook. The terce and most importan t is the efficiency of Yahoo marketing services and its ability to attract customers and publishers. Since its beginning the business model of Yahoo has been heavily reliant on contextual advertising and offering premium services.And this segment of business of Yahoo has unbosom kept it in business. And not to forget the following competency of the company is its famous search and portal. Though the search algorithmic program used by the company has gradually been updated to the changing demographics of the business, but still some work needs to be done on it to make it a sheer strength for the company. Yahoo still possesses some competitive advantage as compared to its rivals. Firstly, Yahoos directory is very well-structured and authenticated business library and it can be developed and customized to act as a new and good source of revenue.Second is the ability of Yahoo to provide customized and contextual advertising. Another very important competitive advantage of the company is the hold of Yahoo in the mobile segment with its auxiliary products and even partnerships with third base party service providers. And probably last but not the least(prenominal) is the employees of the company, who proved tremendous support, and technical knowhow, that helps Yahoo shore up with customized solutions for its customers and also help in maintain a virtually glitch/ incrust free website quality.As far as profitability is concerned, this is something that has not been going near for the company. Over the past four quarters, the company has not seen any significant growth in its revenue and has in fact witnessed a settle in the operating profitability due to a rise in non-recurring expenses (Yahoo Income Statement, 2012). However since the new CEO took over in the month of July, she has embarked on a new strategy of Brownfield expansion via the M&A send off and other critical determinations, that is set to revive growth and boost profitability which is a very pos itive and ncouraging news for investors (Womack, 2012). Yahoos decision to hire executives Michael Barret as a CFO and Marissa Mayer as a CEO seems to show that Yahoo understands the threat that Google poses as both Barret and Mayer were executive at Google prior to joining Yahoo. From the above analysis, it seems that the company is better poised on its internal environment than external environment. And it needs to improvise on its assets and brand to shore up its market share and performance.Yahoos recent layoff of 14% of its work force seems to be beginning of new strategy of refocus the company towards its core competencies, product innovation and growth. REFERENCES Yahoo FAQs. (2012). Investors FAQs. Retrieved from http//yhoo. client. shareholder. com/faq. cfm Jones, G. R. (2007). Yahoo. In C. W. L. hammock & G. R. Jones (Eds. ), Strategic Management An Integrated Approach (8th ed. , pp. C102-C114). Boston, NY Houghton Mifflin Company. Yahoo Overview. (2012). Overview. Retrie ved from http//pressroom. yahoo. net/pr/ycorp/overview. aspx Perez, J. C. (2012, 07 16).Yahoo picks googles marissa mayer as ceo. Macworld, Retrieved from http//www. macworld. com/article/1167728/yahoo_picks_googles_marissa_mayer_as_ceo. html Liedtke, M. (2012, 04 04). New yahoo CEO Scott Thompson cuts 2,000 jobs The Christian Science Monitor, Retrieved from http//www. csmonitor. com/Innovation/Latest-News-Wires/2012/0404/New-Yahoo-CEO-Scott-Thompson-cuts-2-000-jobs Baker, L. (2010). Yahoo googles mission statements Do they connect?. Search Engine Journal, Retrieved from http//www. searchenginejournal. com/yahoo-googles-mission-statements-do-they-connect/4924/Yahoo Values. (2004). Yahoo we value. Retrieved from http//docs. yahoo. com/info/values/ Yahoo 10K. (2011, 12 31). Yahoo 10k Annual Report. Retrieved from http//files. shareholder. com/downloads/YHOO/2120211742x0xS1193125-12-86972/1011006/filing. pdf Barboza, D. (2010, 01 13). Baidus gain from departure could be chinas loss. T he NewYork Times. Retrieved from http//www. nytimes. com/2010/01/14/technology/companies/14baidu. html? _r=1 Claburn, T. (2006, 01 13). Yahoo loses lawsuit over nazi memorabilia sale. Information Week, Retrieved from http//www. informationweek. om/yahoo-loses-lawsuit-over-nazi-memorabili/177100347 Carlson, N. (2010, 03 22). Breaking Google pulls out of china. line of work Insider, Retrieved from http//articles. businessinsider. com/2010-03-22/tech/29990556_1_google-com-hk-google-s-china-googlecn Yahoo Income Statement. (2012). Income statement. Retrieved from http//in. finance. yahoo. com/q/is? s=YHOO Womack, B. (2012, 08 10). Yahoo strategy review may result in changes to cash plans. Bloomberg, Retrieved from http//www. bloomberg. com/news/2012-08-09/yahoo-ceo-strategy-review-may-result-in-changes-to-cash-plans. html