SBM4301: Innovation and Technology - Yahoo vs. Google Report

This report presents a comparative analysis of Yahoo and Google, focusing on the challenges faced by Yahoo as an incumbent in the technology sector. The analysis employs several strategic frameworks, including Porter's Five Forces Model, PESTEL analysis, SWOT analysis, and the McKinsey 7-S model, to evaluate Yahoo's strengths, weaknesses, opportunities, and threats. The report investigates the competitive landscape, examining factors such as existing rivalry, the threat of potential entrants, bargaining power of suppliers and buyers, and the threat of substitutes. Furthermore, it delves into the political, economic, social, technological, environmental, and legal factors affecting Yahoo's business. Based on the analysis, the report proposes solutions to address Yahoo's challenges, emphasizing the importance of innovation, technological advancements, and strategic investments. The report aims to provide a comprehensive understanding of Yahoo's current position and offer insights into how it can navigate the competitive environment and achieve sustainable success.

Running Head: INNOVATION AND TECHNOLOGY 0
Innovation and New Technology
Student details:

INNOVATION AND TECHNOLOGY 1
Contents
Introduction......................................................................................................................................3
Google..........................................................................................................................................3
Yahoo...........................................................................................................................................3
Porter’s Five Forces Model Analysis..............................................................................................4
Degree of existing rivalry............................................................................................................4
Threat of potential entrants..........................................................................................................4
Bargaining power of suppliers.....................................................................................................4
Bargaining powers of buyers.......................................................................................................5
Threat of substitutes.....................................................................................................................5
Solution to the problems faced by Yahoo....................................................................................5
PESTEL Analysis............................................................................................................................5
Political........................................................................................................................................6
Economic.....................................................................................................................................6
Social............................................................................................................................................6
Technological...............................................................................................................................6
Environmental..............................................................................................................................6
Legal.............................................................................................................................................7
Solution to the problems faced by Yahoo Inc..............................................................................7
SWOT..............................................................................................................................................7
Strengths.......................................................................................................................................8
Weaknesses..................................................................................................................................8
Opportunities................................................................................................................................8
Threats..........................................................................................................................................8
Solution to the problems faced by Yahoo Inc..............................................................................9
The McKinsey 7-S Model Analysis................................................................................................9
Hard elements............................................................................................................................10
Strategy...................................................................................................................................10
Structure.................................................................................................................................10
System....................................................................................................................................10

INNOVATION AND TECHNOLOGY 2
Soft element...............................................................................................................................10
Shared Values.........................................................................................................................10
Skills.......................................................................................................................................10
Style........................................................................................................................................11
Staff........................................................................................................................................11
Conclusion.....................................................................................................................................11
Bibliography..................................................................................................................................12

INNOVATION AND TECHNOLOGY 3
Introduction
The following paper represents the current conditions of a challenger industry over an incumbent
industry. An incumbent is a group who is defeated or challenged by another opponent. This
challenger is a group/ industry, which is earning success and profits. The report is made up on
two search engines -yahoo and Google. Herein, Yahoo is as incumbent search engine and Google
as a challenger search engine over which analysis will be conducted. The report includes
numerous methods of analysis like porter’s five force model, SWOT (strength, weakness,
opportunity and threat), Pestle (political, economic, social, technological, environmental and
legal factors) and Mc Kinsey’s seven S (strategy, structure, system, shared values, skills, style
and staff) models of analysis. All these models are relevant for performing analysis. After
analyzing the current conditions of incumbent Yahoo detailed solutions are provided in relation
to the innovation and disruptive technology. At the end of the report, the reader may get an in
depth knowledge about the ways in which yahoo can deal with the problems.
Google
Google is an American global technological corporation, which has specialization in internet
related services. It provides various services like search engine, cloud computing, hardware and
software. Herein the report will be made in accordance to the search engine service. Google is
one the biggest search engine used worldwide; it was founded in year 1998 by Larry page and
Sergey brin. Google is world’s second largest in revenue under the segment of providing internet
services (Tavitiyaman, 2011).
Yahoo
Yahoo is an American web service provider, it was founded I year 1995 by Jerry Yang and
David Filo. The parent organization of yahoo is Verizon media. Yahoo was very popular in the
early 90s. Later after the introduction of Google the popularity and reach of yahoo decreased
(Tavitiyaman, 2011).

INNOVATION AND TECHNOLOGY 4
Porter’s Five Forces Model Analysis
Degree of existing rivalry
Since the progression of internet services, yahoo faces a lot of competition in the market. Yahoo
faces major threat from local giant Google but it is observed that Baidu and AOL Inc. have made
the existence of Yahoo in market difficult. Completion mainly arises from the organizations,
which are innovative and extensively better in the field of technology. Yahoo is using a unique
feature to develop its business by providing its users with finance page where all the data related
to the companies is present along with the stock rates. Introduction of mobile applications has
somehow helped Yahoo in defeating the competitors (Yang, 2015).
Threat of potential entrants
The threat of potential entrants is very less for a well-settled company like Yahoo. The customers
are rational and minded they are always in search of best , it is a matter of fact that a new entrant
can imitate and improvise the quality of technology and services but it takes experience of years
to be a threat for existing company (Hossin, 2018).
Bargaining power of suppliers
Yahoo is currently dependent upon some other existing technologies to upgrade and modify its
technology. There are very less choices for the suppliers, but they somehow manage to fix their
needs by negotiating with the incumbent companies like Yahoo who have no other options apart
of following the demands of suppliers. As the incumbent companies like Yahoo have very less
suppliers in market whereas Google is a technological developed website which do not need a
special support from a particular supplier as there are many more suppliers in market who will be
ready to work with Google because of its net worth (Bonanno, 2018).
Threat of
substitutes
Bargaining
power of
buyers
Bargaining
power of
suppliers
Threat of
potential
entrants
Degree of
existing
rivalry

INNOVATION AND TECHNOLOGY 5
Bargaining powers of buyers
With numerous search engine at dumping, the buyers go through low switching costs and can
look for something which suits their needs best, this is how the powers of buyers are reduced.
With the help of Yahoo, the buyers get a source to endorse them. Thus, it can be noticed that by
decreasing the switching cost Yahoo has managed to increase the purchasing power. Yahoo has
to offer exclusive services to the users so that the users may not switch (Ronquillo, 2012).
Threat of substitutes
The old sources of getting information like newspapers, televisions have lost their importance
and value. These sources are now replaced with internet and search engines. Therefore, the
possibility to get threatened by these sources has reduced which have gave pace to growth to
groups like Yahoo. In the internet world, Google has made its separate place. (Lüttgens, 2016)
Solution to the problems faced by Yahoo
It is a well-known fact that it is a difficult challenge to beat good in the internet world but if
Yahoo wants to lead the sector there are some of the changes, which should be made for the
company. For instance, Yahoo should look forward to develop its own technological frames
despite of purchasing other’s technological plans (Takata, 2011).
PESTEL Analysis
Political
Economic
Social
Technological
Environmental
Legal

INNOVATION AND TECHNOLOGY 6
Political
There are numerous political factors, which influence Yahoo’s business and marks it as an
incumbent company like Political stability and significance of ISP in the nation and economy,
risk of military incursion, the increasing level of corruption and degrading values by making
unnecessary reforms in the technological sector. The new trade regulation and tariff or taxes
implemented by government my affect the business of Yahoo (Butryn, 2015).
Economic
Any company’s success or failure, ratio of its returns depends upon the type of economy in
which the company is functioning. Along with this, the rate of interests, exchange rates and the
economic growth rate also affect the business of Yahoo. Moreover, it is seen that the well-rooted
companies like Google have to face problems during eth period of recession and inflation. These
are some of the major economic factors, which make Yahoo’s business cycle inefficient (Athey,
2019).
Social
The social factors which that impacts the Yahoo Inc. in long run are demographic conditions of
the people , structure of class, power structure in the society, the growth of entrepreneurship in
the society. For instance if the rate of investments of capital in forming own business creates a
threat of new entrants into the market. In addition, the environmental, health and strength
conditions leave san imprint over the Yahoo’s market (or any other business organization)
(Aldawood, 2019).
Technological
Technology is a fast disrupting various industries across the board. Similarly, Yahoo becomes an
incumbent, as it has to compete with the new technological developments made by other
websites. The impact of technology on product offering and impact of the newly developed cost
structures at aggregate level in the market of internet information providers affects the market of
Yahoo (Sato, 2014).
Environmental
New as well as the old firms are required to go through the environmental factors which may
affect their productivity. For instance weather of a place, the constant changes in climate, laws
and rules formulated within the economic environment and various are issues which are in

INNOVATION AND TECHNOLOGY 7
concern of environment affects the business and productivity of Yahoo. For example, if Yahoo is
using the renewable sources of energy it will save the cost incurred on electricity as well as the
environment.
Legal
In large number of states, the legal framework and bodies are not strong enough to protect the
rational property rights of a business organization. Therefore, it becomes essential for a firm to
carefully conduct a thorough evaluation of all the legal factors, which may affect a company’s
business. Some of the lawful factors that Yahoo! Inc. leadership should consider while entering
into market are discrimination law, copyrights/ patents made by other organizations, consumer
protection and e-commerce etc. Most importantly, the technical patents formalized by great
competitors should not be trite (Weber, 2016).
Solution to the problems faced by Yahoo Inc.
Herein, by conducting a Pestle analysis it becomes clear that Yahoo Inc. should be aware about
all the respective changes or amendments impending on all the above-mentioned factors. These
factors can be positive and negative, therefore understanding things from other’s experiences can
be a solution for Yahoo Inc.
SWOT
SWOT
Weakness
Opportunities
Threats
Strengths

INNOVATION AND TECHNOLOGY 8
Strengths
As one of the leading officialdoms in the industry of internet, Yahoo has several strengths that
help it to flourish in marketplace. These strengths not only help Yahoo to protect itself from the
existing companies in the market. Strong free cash flow provides resources to the company to
expand the business by forming new projects. Yahoo has successful market strategies, which
helps it to earn profits. However, with time these strategies have gone older and strictly needed
to be reconstructed for earing abnormal profits (Li, 2016).
Weaknesses
Yahoo has to overcome various weak points , it is important for every business organization to
handle the issues by analyzing them closely. Similarly, after analysis it is been discovered that
Yahoo needs to do more investment in the new technologies. The company must integrate
towards new boards. The day inventory of Yahoo is very high this compels the company to
invest more in the channel. Further, one more weakness of Yahoo is discovered that the
organizational structure followed by the company is compatible with the business model
presently followed but at the same time it restricts the growth of business
Opportunities
There are various opportunities for Yahoo to grow. For instance the opening up of new market
after agreement made by the government is an opportunity for the Yahoo to enter and trade in the
market. The espousal of new technological standards and free trade agreement made by
government has doubled the opportunities for Yahoo Inc. The new technological advancements
have enabled Yahoo to practice differentiated price strategy in new markets. This helps Yahoo to
maintain a list of loyal customers with good services. Reforming and developing trends in the
consumer behavior is an opportunity for Yahoo to increase the revenue streams (Setyo, 2016).
Threats
Introduction of new technologies by the opponent or marketplace disruptor could be a solemn
risk to the industry in the short and long run.Intense level of competition stabilizes the
profitability , increases the number of players in respective sector and eventually influences the
profitability and sales of Yahoo. Imitation of the services and techniques also spoils the image of
company in the market. Such silly mistakes performed by the companies takes them to the mouth

INNOVATION AND TECHNOLOGY 9
of incumbency. Lastly, the increasing trend of isolationism in the US economy can lead to
diminishing international trades.
Solution to the problems faced by Yahoo Inc.
The company should make efficient capital investments at the geographical locations, which tend
to give better returns. Yahoo should maintain the cash flow at same pace in order to defeat the
competitors. All of the above, Yahoo requires to invest on the technological advancement
schemes and plans. These investments are fruitful in long run.in order to remove the threats
Yahoo should develop effective strategies and plans which will be efficient enough to deal with
the opponents (Iorga, 2016).
The McKinsey 7-S Model Analysis
The Mc Kinsey 7S model helps in analyzing the firms organizational design by keeping a check
over the hard and soft elements. This model can be applied to many situations ; its most common
works are to facilitate the organizational change , to implement new strategies , to identify how
the organizational areas will get changed in future (Ravanfar, 2015).
Image source: (Insight, 2019)

INNOVATION AND TECHNOLOGY 10
Hard elements
The hard elements of this model includes Strategy , structure and system .
Strategy
The strategies developed by Yahoo are old and timeworn which are not effective enough to deal
in the present market situation. These strategies are more return centric rather the strategies
should be consumer centric. The satisfaction earned by a firm is the most important revenue. The
strategies developed by the competitor company like Google are well developed these policies
are formed while keeping the preferences and demands of the consumer in mind (E. Dobbs,
2014).
Structure
The structure developed by Yahoo is inefficient. The organizational structure is old and restricts
growth of the organization. The way Yahoo sources, keeps and analyze the information is not
good. There is a need to develop proper technical plans to keep the structure of Yahoo updated.
System
The system according to which Yahoo functions has degraded with time. The advent of new
entrants into the market can help the company to bring up new idea to create a new image in the
market. Thus, there is a strong need to bring changes in the system of Yahoo. The way Google
and other websites manage to maintain a systematic approach towards work (Szeto, 2017).
Soft element
The soft elements of this model include shared values, skills, style and staff.
Shared Values
Shared values refer to the beliefs, mindsets and the assumptions that shape how an organization
should behave. The company, Yahoo Inc. behaves in ethical manners. There are very less
incidents where Yahoo is found guilty in some accusation (Mohapatra, 2012).
Skills
The skills are part of soft elements in the table of McKinsey 7s model. The skills are dominant or
distinct abilities present in a company to deal in market. Yahoo has a distinct ability to draw
consumers by its own market image. However, in order to draw the attention Yahoo have to
make special efforts. For instance, coming up with new technological and innovation strategies
which can serve the consumer needs (Mohapatra, 2012).

INNOVATION AND TECHNOLOGY 11
Style
Style refers to the way a company is managed , by the executives at senior level. The way of
interaction and their abilities to solve eh problems is counted under the style element. The ability
to cope up with stress is very essential to run a business organization like Yahoo. There are
numerous competitors who will block the way of Yahoo on the grounds of technological
advancements but it is the duty of the senior executives to act responsibly (Gökdeniz, 2017).
Staff
Yahoo should work upon the skills and developmental training provided to the staff. The trained
staff must give these training. With increase in the work, there is strict requirement of staff
therefore Yahoo should focus on recruiting new skilled people (Gökdeniz, 2017).
Mind Map
Yahoo vs. Google
Technological
developments
More capital
investment
Developing
international
trade
Development in
organizational
structure
Innovation in
graphics
designing and
up gradation of
software
Looking for new
investors
Increasing the ratio
of foreign
investments
More
investments
requires more
returns
The organizational
structure must be
updated. Older
working structure
restricts the growth
of a company.
Developing
new strategies
for increasing
returns

INNOVATION AND TECHNOLOGY 12
Conclusion
As per the above study, it can be concluded that innovation and technology has made several
changes in all the sectors. The constant advancement in technology has not only opened doors
for growth but has also leaded to increasing competition in the market. As the word technology
relates to computer and internet services it becomes clear that the heaviest changes would have
been faced by the Internet service providers like Yahoo, Google etc. in front of Google , Yahoo
stands as an incumbent whose market is in loses because of the new technology used by Google.
The technology used by Yahoo is either old or duplicate. Thus, it becomes essential for Google
to make changes in the existing plan. There is an immediate need to develop its own technology
apart of borrowing or copying the concepts from others. Here, four different models are used to
analyze the conditions of Yahoo as an Incumbent, at the end of each model the solutions in
reference to the technical advancement is prescribed. If Yahoo goes, through these changes, it
will surely grow and in near future it will be an opponent not an incumbent.

INNOVATION AND TECHNOLOGY 13
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