Yahoo! Inc – 2009 Case Study Fernanda Cugola Southern States University BU-524 Strategic Management FALL 2010 Introduction Headquartered in Sunnyvale, California, Yahoo! provides services through via the internet and has offices in more than 25 countries, provinces, or territories. Yahoo! was founded by Jerry Yang and David Filo in 1994, when they created a website intended to keep track of their personal interests on the internet. Yahoo! grew tremendously during the 90’s, and like many search engines and web directories, Yahoo! turned into a Web Portal. It also made many high-profile acquisitions.In 2000, Yahoo! began utilizing Google for search results. By 2004, they had developed their own searching technologies and they’ve also revised their mail service to compete with Google’s Gmail. Yahoo! is the second leading global Internet brand and one of the most trafficked Internet destinations worldwide. Together with its owned and operated online properties and services, it also provides advertising offerings and access to Internet users beyond Yahoo!.
The company generates revenues by providing marketing services to advertisers across hundreds of websites. Yahoo! n 2008 had rejected Microsoft’s unsolicited $44. 6 billion offer, claiming that it “substantially undervalues” Yahoo! and was not in the interest of its shareholders. But in January 2009, Carol Bartz replaced Jerry Yang as Yahoo! ’s CEO and discussions with Microsoft were resumed. Firm’s existing vision, mission, objectives and strategies The core of Yahoo! ’s strategy and operations is to become the starting point for Internet users; to provide must-buy marketing solutions for the world’s largest advertisers; and to deliver industry-leading open platforms that attract developers and publishers. Yahoo! s vision or/mission statement is “Yahoo! powers and delights our communities of users, advertisers and publishers – all of us united in creating indispensable experiences, and fueled by trust”. Yahoo! ’s code of ethics is embedded in its six values: Excellence, Innovation, Costumer Fixation, Teamwork, Community and Fun.
Mission Statement Yahoo! ’s mission is to deliver to every user all the tools necessary to implement their everyday life with value and accessibility Vision Statement Yahoo! ’s vision is to become the biggest internet tool for users and businesses, providing the services needed for their successIdentify the organization’s external opportunities and threats Opportunities 1. Increasing number of internet users 2. Advertisement with videos is expected to grow 3. Customized marketing 4. Value of brand 5. Partnership with Microsoft Threats 1. Google has a better search engine 2. Competition with YouTube, owned by Google 3.
Market share 4. Negative image with too many advertisings Construct a Competitive Profile Matrix (CPM) Yahoo! Google Critical Success Factors| Weight| Rating| Score| Rating| Score| Advertising| 0. 15| 3| 0. 45| 4| 0. 60| Market Share| 0. 10| 3| 0. 30| 4| 0. 40| Brand Recognition| 0.
0| 4| 0. 80| 4| 0. 80| Innovation| 0.
10| 2| 0. 20| 4| 0. 40| International Market| 0. 20| 4| 0. 80| 2| 0. 40| Customer Loyalty| 0.
15| 4| 0. 60| 4| 0. 60| Product Value| 0. 10| 3| 0. 30| 3| 0. 30| TOTAL 1. 00 3.
45 3. 5 Construct an External Factor Evaluation (EFE) Matrix Opportunities| Weight| Rating| Weighted Score| Increasing number of Internet users| 0. 15| 4| 0. 60| Advertisement with videos is expected to grow| 0. 05| 2| 0. 10| Customized marketing| 0. 5| 3| 0. 15| Value of brand| 0.
15| 4| 0. 60| Partnership with Microsoft| 0. 10| 3| 0.
30| Threats| Weight| Rating| Weighted Score| Google has a better search engine| 0. 15| 3| 0. 45| Competition with YouTube (owned by Google)| 0. 10| 4| 0. 40| Market share| 0. 20| 4| 0.
80| Negative image with too many advertising| 0. 05| 2| 0. 10| TOTAL 1. 00 3.
50 Identify the organization’s internal strengths and weaknesses Strengths 1. Strong Brand Recognition . Available for anyone with internet access 3.
Excellent marketing engine 4. “Demographic DNA” from their users by requiring them to register Weaknesses 1. Yahoo lacks precision with search engine 2. Advertising revenues are decreasing because of competition 3. Image and Video searches are declining Construct an Internal Factor Evaluation (IFE) Matrix Strengths| Weight| Rating| Weighted Score| Strong Brand Recognition| 0. 20| 4| 0. 80| Available for anyone with internet access| 0.
15| 2| 0. 30| Excellent marketing engine| 0. 15| 3| 0. 45| “Demographic DNA” from their users| 0. 10| 2| 0.
0| Weaknesses| Weight| Rating| Weighted Score| Yahoo! lacks precision with search engine| 0. 20| 3| 0. 60| Advertising revenues are decreasing because of competition| 0. 10| 3| 0. 30| Image and video searches are declining| 0. 10| 3| 0.
30| TOTAL 1. 00 2. 95 SWOT Matrix | Strengths: 1.
Strong Brand Recognition 2. Excellent marketing engine 3. “Demographic DNA” from users 4. Available for anyone with internet access 5. Partnership with big companies, like VISA and NFL| Weakness: 1.
Yahoo! lacks precision with search engine 2.Advertising revenues are decreasing because of competition 3. Image and Video searches are declining | Opportunities: 1. Increasing number of internet users. 2. Advertisement with videos is expected to grow 3.
Customized marketing 4. Value of brand 5. Partnership with Microsoft 6. Yahoo! has explored markets that other companies haven’t| SO strategy: 1. S1/O1 – Remake the video hosting website and promote it relying on the brand strength 2. S3/O3 Gather new advertisers from different countries to expand market 3. S5/O2 Use of videos on the webpage to support and promote partnership 4.S4/O5 New Yahoo! softwares included with Microsoft computers | WO strategy: 1.
W1/O1 Develop better search technologies for the website to get users interest 2. W2/O3 Combine marketing and search service 3. W3/O5 Creation of a video editing software for Microsoft computers that upload straight to Yahoo! website| Threats: 1. Google has a better search engine 2. Competition with YouTube 3. Negative image with many advertisements 4.
Market share| ST strategy: 1. S2/T1 Improve search engine associating it with marketing strategies 2. S1/T2 Reformulate video hosting website| WT strategy: 1.
W1/T1 Improve Yahoo! ’s search engine to increase number of users 2. W2/T4 Yahoo has to acquire good technology to generate more revenue. | QSPM Strategy 1: Google’s search results generate twice as much revenue per year than Yahoo! Strategy 2: Google command most of all online searches Strategy 1 Strategy 2 Opportunities WHEIGHT AS TAS AS TAS 6. Increasing number of internet users 0.
2 4 0. 8 4 0. 8 7. Advertisement with videos is expected to grow 0. 3 0. 3 3 0. 3 8.
Customized marketing 0. 05 3 0. 15 3 0. 15 9. Value of brand 0. 1 4 0.
4 4 0. 4 10. Partnership with Microsoft 0. 2 4 0. 8 3 0.
6 Threats 5. Google has a better search engine 0. 1 2 0. 2 1 0.
1 6. Competition with YouTube, owned by Google 0. 2 0. 4 1 0. 2 7. Market share 0.
10 1 0. 1 1 0. 1 8.
Negative image with too many advertisings 0. 05 1 0. 05 1 0. 05 1.
00 Strengths 5. Strong Brand Recognition 0. 2 4 0. 8 4 0. 8 6. Available for anyone with internet access 0. 2 4 0. 4 0.
8 7. Excellent marketing engine 0. 10 2 0. 2 4 0. 4 8. “Demographic DNA” from users 0. 10 2 0.
2 1 0. 10 Weaknesses 4. Yahoo lacks precision with search engine 0.
10 1 0. 1 1 0. 10 5. Advertising revenues are decreasing 0. 2 2 0.
4 1 0. 2 6. Image and Video searches are declining 0.
1 1 0. 1 1 0. 0 1. 00 5. 80 5. 20 Both strategies seem to be very interesting for the company, but at this moment, Yahoo! should consider improving their search engine, according to Strategy1. Advantages: Yahoo! presents several factors that favor its growth and development in today’s economy.
They are presented as follow: 1. Market share: Yahoo! requires that every user register before using some tools in the website. By doing that, Yahoo! an map who and where this consumers are and make critical marketing amendments to adapt to changes in the market share. 2. Customer Loyalty: to retain customer loyalty and build brand recognition, they invest in top quality customized marketing services through channels of communication.
3. Website quality: by improving, innovating and developing new technologies, Yahoo! can build a user-friendly website that will acquire new users’ and regular internet user’s attention. 4. Technology know-how: developing new technologies, especially for their search engine, give them a competitive advantage in the volatile cyberspace. . Growth potential: this growth could come from different ways; one of them is the expansion of broadband connection, which will allow more and new users to surf for more time on the internet; second, Yahoo! ’s banner serving software, which identify marketing opportunities by tracking one’s surfing through the website; and last, advertisement of the website to create an user’s base. 6. Profit Potential: Yahoo! needs to adopt the technology where they can add advertisements to their search results and generate profits for the companies that advertise with them, opening their network for outside publishers.
. Financial Stability: Yahoo! needs to find balance and keep up with the financial challenges so it doesn’t have to go through large lay-offs. 8. Easy of entry into the market: Yahoo! has established itself as the most trafficked website in the world and it’s only second, to Google, in user loyalty. By learning what brings money to the company, it can grow into the biggest website company. Disadvantages 1.
Technological changes: Yahoo! needs to constantly be aware of user’s desires and expectations and keep their technology up to date. 2.Rates of inflation: Possibility of economy recession and inflation could cause some of the companies to cancel their advertisements with Yahoo! 3. Demand variability: Constant adaptation to customer demand and customized marketing to cover different cultures where Yahoo! is present. 4. Competitive pressure: Competitive with other companies, like Google. Recommendations Yahoo! has a certain international market advantage when compared to its competitors and they should continually keep investing and improving brand recognition due to its high importance level. Although being the most trafficked website worldwide, Yahoo! till stays behind Google when it comes to customer loyalty and culture and innovation factors.
Analyzing the SWOT Matrix, it is safe to say that the best for the company would be to concentrate the efforts on increasing their advertising revenues. Yahoo! ’s greatest strength is their strong brand recognition and they should use that to tempt to get more advertisers for their site. Yahoo! should also focus on innovating and improving their target advertising capabilities. Yahoo! needs to overcome their image of “portal” and work on their search engine. Most users turned themselves to Google for its “easy to use” way and let Yahoo! ehind.
By developing a search engine that will bring relevant and coherent results, the company can even get more advertisers brought to their website and increase their revenues. When search is wrong, cluttered or irrelevant, it drives users away. If Yahoo! doesn’t react, it will continue to stay in second place. On the same road, their “portal” is being substituted by social networks. Yahoo! spent a lot of money and time developing a place where the user could gather pictures, videos and blogs in the same place; but other companies, like Facebook for instance, are doing a much better job and growing their market share every day.Conclusions I believe Yahoo! will keep moving forward and gaining market share, increasing revenues and eventually regain their share price value just by improving their search engine.
They should focus their resources on developing the technology necessary to enter the niche of social networks and portals because of their background history. Yahoo! ’s advertisement network should be integrated with their search results to identify important affiliated keywords in linking text and content.This will be coupled with webmaster utilization so that outside publishers may benefit from Yahoo’s resources and advertising network. All in all, the outside influence will increase Yahoo’s revenue. Yahoo! needs to realize that their future lies on the search, with advertising intertwined.
Once they start moving successfully away from a portal website and start relying more on their search engine, they can begin to implement the advertising strategies that have proven useful in banner ad integration, for the contextual advertising market.