Yahoo! Case Study: Analyzing Challenges and Formulating Strategies

This case study analyzes Yahoo! Inc., a global digital media company that relies on online advertising revenue. The analysis begins with a PESTLE analysis of the general environment, examining technological, demographic, economic, political/legal, sociocultural, global, and physical environment trends. An industry analysis using Porter's five forces and a competitor analysis are then conducted. The internal analysis explores Yahoo!'s workforce, compensation, and approach to innovation. A SWOT analysis identifies the company's strengths, weaknesses, opportunities, and threats. The study formulates strategic options, focusing on increasing employee engagement, expanding into Asian and African markets, and strengthening brand value. The strategic action plan includes specific steps to achieve these goals, such as regular meetings, workshops, brainstorming sessions, and incorporating local agencies. The case concludes that proper leadership, innovation, R&D, and collaboration are crucial for Yahoo!'s future growth.

Running head: YAHOO! : A CASE ANALYSIS
Yahoo!: A Case Analysis
Name of Student
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Author Note

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YAHOO! : A CASE ANALYSIS
Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
1. General Environmental Analysis..........................................................................................2
a. Technological Trends...........................................................................................................2
b. Demographic Trends...........................................................................................................2
c. Economic Trends.................................................................................................................3
d. Political/Legal Trends..........................................................................................................3
e. Sociocultural Trends............................................................................................................3
f. Global Trends.......................................................................................................................3
g. Physical Environment Trends..............................................................................................4
2. Industry Analysis (External)....................................................................................................4
3. Competitor Analysis (External)...............................................................................................6
4. Internal Analysis......................................................................................................................6
5. SWOT......................................................................................................................................7
6. Strategy Formulation...............................................................................................................8
7. Strategic Action Plan...............................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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YAHOO! : A CASE ANALYSIS
Introduction
Yahoo! Inc. is a global digital media company. It started off as technology firm but relies
on online advertising for revenue.
The company underwent a change in leadership in 2012 by appointing Marissa Meyer,
formerly of Google as its CEO after facing a decreasing trend in business. Meyer has since
introduced a number of changes to pull the company back on track.
This paper analyses the challenges that Meyer is set to face. It also formulates and
proposes strategic options that the company could consider to improve company position.
Discussion
1. General Environmental Analysis
The framework for the analysis of general industry environment follows a PESTLE
analysis format (Newton, 2014).
a. Technological Trends
The internet has become intangible in everyday life touching lives of common man all
around the world. Internet use is penetrating lives with its accessibility through PCs and mobile
devices. Technology is rapidly undergoing evolution as well. Popular technology used in the
industry includes search engines, portals and social networking.
b. Demographic Trends
The market size of the internet services industry has been increasing rapidly with PCs,
laptops and mobile devices becoming household. 80% of US households reportedly had a
personal computer in 2012.It is the largest market. Africa and Asia were reportedly the fastest
growing market in percentage and absolute terms respectively with over billion internet users in

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YAHOO! : A CASE ANALYSIS
2011.However the internet penetration rate was reported to be 13.5% and 26.2% for the two
regions respectively which indicate huge growth potential.
c. Economic Trends
The internet advertising revenue for the US in 2011 was reported to be $31.7 billion. This
marked a 22% jump from 2010 catapulting online advertising to a significant role in media.
Mobile advertisement sector made a jump of 149% from 2010 to 2011 by achieving $1.6billion
revenue. The search related revenue accounted for $14.8 billion which is 46.5% of the total
digital advertising revenue whereas display related revenue accounted for 34.8% of the total that
is $11.1 billion.
d. Political/Legal Trends
Internet consumer service businesses are subject to cyber laws. The US among others
have regulations on internet, mobile and VOIP (voice over internet protocol) which pose
limitations and liabilities on businesses. Governments have increasingly been taking into
cognizance the possible risks of unfiltered and unfettered network access. There has been a trend
towards curtailing privacy and anonymity over the internet.
e. Sociocultural Trends
The increasing internet penetration rate across continents around the globe has led to
acceleration of the globalization process. Social Networking sites like Facebook and twitter
facilitate global cultural convergence. A study in 2012 reported that average time spent by a user
on Facebook per month is 405 minutes (Hitt, Ireland & Hoskisson, 2016).

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YAHOO! : A CASE ANALYSIS
f. Global Trends
The internet consumer base is a globalized market with Asia and Africa quickly catching
up with the western world in terms of technology, internet connectivity and usage. Yahoo is a
global brand with its presence in 25 countries however it seems that its presence is weak in Asia
and Africa owing to stiff competition from local businesses.
g. Physical Environment Trends
Sharing of information via electronic communication technology has replaced paper as a
means of sharing documented information. This could reduce deforestation. However use of
technology requires energy consumption which mainly comes from coal, indicating accelerated
consumption of non-renewable energy with increasing internet usage.
2. Industry Analysis (External)
Analysis of external environment of the industry could be described in the frame work of
Porter’s five forces (Dobbs, 2014).
Threat of new entrants and potential competitors:
It held third position with 13.8% of the global market share for search engines and had
177.249 million unique visitors in the US alone in 2012 (Hitt, Ireland & Hoskisson, 2016).It has
been able to establish and retain a considerable consumer base. Moreover its main competitors
Google, Microsoft and Facebook make for a tough competitive market which is constantly
innovating making, although entry into the web portal market, the skill requirement to gather and
retain large customer base is hard, making threat of new competitors low.
Threat of Substitute Products:

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YAHOO! : A CASE ANALYSIS
Yahoo has a number of products and services especially through its web portals. It
especially faces little competition for its search engine on web portals such as Yahoo! Finance
and Yahoo! News. There are little to no efficient substitute for its products in the web portal
sector.
Bargaining power of Buyers:
Yahoo charges little to no fee for its services to its customers and this ensures that its
switching cost for users is low. This coupled with the high competitiveness of the industry
amounts to medium bargaining power to its buyers who are primarily advertisers, looking to buy
ad spaces.
Bargaining power of Suppliers:
Yahoo’s search engine sources, categorizes and presents freely available content on the
internet to its customers. It faces huge competition from Google in this aspect. It therefore has
considerably low bargaining power over its suppliers.
Existing Competitors:
The internet consumer services market is rapidly changing and evolving environment
with rapid development constantly challenging the players in the field. It is highly aggressive and
competitive with competitors such as Google and Microsoft who challenge Yahoo in terms of
innovation, capital and technological R&D. Although Yahoo has been able to retain a significant
market share in the mature markets of western countries, it is yet to tackle the competition that
local businesses pose in the growing markets of Asian and African countries.

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YAHOO! : A CASE ANALYSIS
3. Competitor Analysis (External)
Microsoft and AOL are its main competitors in the web portal industry. However Google
has also sought to enter the market with its iGoogle which customizes portals for its users. The
portal business earns money through promoting brands to its users. Therefore traffic acts as an
indicator of how well the business works. The internet traffic data for the US in 2012 as per
S&P, reveal that Google held first position followed by Microsoft then Yahoo followed by
Amazon and Facebook (Wheelen et al. 2017).
4. Internal Analysis
By end of 2012 Yahoo reported a workforce of 12000 employees across 25 countries, it
operates from. The employee count is ordered in ascending order as, operations, administration,
sales and marketing and product development. Based on tenure and designation, employees are
regularly compensated in terms of salary and incentives. CEO Marissa Meyers has brought about
a number of changes in its internal work environment starting with a thorough review of its
employees leading to a layoff of 2000 people in 2012 (Hitt, Ireland & Hoskisson, 2016).It
employs its own team in Sales for the US however it employs both external as well as internal
sales team in other regions. Its approach to innovation comprises of a combination of acquisition
and organic paths.
A major challenge of the company is the establishment of its identity. Yahoo started off
as a technology firm. However its main source of income is through digital advertisement which
falls under domain of media. This created a discrepancy in company outcome and vision (Wolf
& Floyd 2017).

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YAHOO! : A CASE ANALYSIS
5. SWOT
Analysis of SWOT helps to pinpoint pressure points of the organization, aiding strategy
formulation (Madsen & Walker, 2015).
Strengths
 Yahoo has presence in 60 countries spanning the Americas, Europe, Middle East, Africa
and Asia pacific.
 Wide range of services and products in web portal industry with little available
substitutes.
 One of the largest established firms in its industry with strong brand influence.
Weakness
 It is yet to make significant mark in Asian and African markets by failing to compete
with low prices of locals and legal regulations.
 There exists a discrepancy in clarity regarding its identity among is employees as a media
firm.
 It is vulnerable to economic scenario given its reliance on other businesses for revenue.
Any slump which adversely affects its clients in advertisement would cause harm.
Opportunities
 It has a huge potential for growth in Asia and Africa provided that it can penetrate the
markets.
 Growing internet usage across the world open up a larger consumer base for Yahoo.

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YAHOO! : A CASE ANALYSIS
Threats
 Technology is constantly developing by leaps and bounds and this requires competing
firms to constantly keep up with the emerging technology.
 Competitors Google and Microsoft present considerable challenge to its business.
6. Strategy Formulation
Yahoo although has a strong brand presence it has yet to make a mark in Asia and Africa.
It is of tantamount importance for the firm to succeed in these emerging market to hold on to its
position as a global leader in the industry while beating the competition. In order to achieve this,
it is necessary to consolidate an integrated effort by its employees to innovate and produce
quality products while cutting cost of operations (Bryson, Edwards, & Van Slyke, 2017). This
not only requires talented human resource but also an organized mission and vision plan.
7. Strategic Action Plan
The following set of plans have been developed keeping in mind the strategic goals
(Grant, 2016).
 Increase employee engagement by arranging regular meetings and activities.
 Conduct periodic workshops to keep the employees up to date with latest technological
developments.
 Conduct periodic brainstorming sessions to boost innovating thinking.
 Establish and propagate a comprehensive vision plan and a mission plan which
complements it. Additionally, ensure that people in leadership positions have clear
understanding and are on the same page about the company objectives.

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YAHOO! : A CASE ANALYSIS
 Appoint people in leadership positions who effectively motivate and communicate with
the rest.
 Increase business venture in Asian and African markets by incorporating local agencies
into its business plan keeping in mind mutual interests of all parties involved.
 Increase workforce diversity to bridge sociocultural gaps which could affect operations in
unchartered markets.
 Indulge in strengthening brand value in Eastern markets by engaging in more
promotional and charity work.
Conclusion
Yahoo! Inc. has potential and the means for further growth as a business. It is inferred
that proper leadership and vision could make significant improvement. Investing in innovation,
R&D and collaboration is also a necessary area of contention. Fostering a competitive work
culture with motivated and talented employees and leaders is also a necessity.
This could be achieved by consciously engaging in bonding activities and training
sessions and ensuring a diverse talent pool. Collaboration with external firms to further strategic
goals could also work in favour of the firm.

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YAHOO! : A CASE ANALYSIS
References
Bryson, J. M., Edwards, L. H., & Van Slyke, D. M. (2017). Getting strategic about strategic
planning research.
E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), 32-45.
Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper
Saddle River, NJ: pearson.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. Cengage Learning.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management cases:
competitiveness and globalization. Cengage Learning.
Madsen, T. L., & Walker, G. (2015). Modern competitive strategy. McGraw Hill.
Newton, P. (2014). What is the PESTLE Analysis?.
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management
and business policy. pearson.
Wolf, C., & Floyd, S. W. (2017). Strategic planning research: Toward a theory-driven
agenda. Journal of Management, 43(6), 1754-1788.