MGMT20132: Yahoo's Response to Disruptive Innovation Report

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Report
AI Summary
This report, prepared for a business development assignment, analyzes the challenges Yahoo faces due to disruptive innovation, particularly the rise of social media and mobile devices. The report details the decline in Yahoo's revenue and market share, emphasizing the company's failure to adapt to consumer trends and build competitive mobile apps. It explores the problem's background, evidence, and timing considerations, including a financial analysis of Yahoo's revenue. The report proposes strategic responses, including redesigning Yahoo Mail, improving Yahoo Mail Pro, and focusing on mobile app subscriptions, to address the issues. It also considers project options, stakeholder identification, and potential impacts, culminating in a deliverability assessment of the recommended solutions. The report recommends efficient processes for its crawling webpage capable of indexing its text and a novel means of ranking the relevance of a page anchored on the number as well as quality of pages which link to it. The report concludes with an analysis of the benefits, interdependencies, and strategic options available to Yahoo, offering a comprehensive business case for revitalizing the company.
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Running head: YAHOO 1
Yahoo
Name
Institutional Affiliation
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Executive Summary
The report is prepared by Yahoo to probe and present recommendations whether
additional actions are needed to respond to any threat of disruptive innovation (DI) to the
Company. This competitive hazard is triggering a reduced earnings of the Yahoo and the
Company stands to additionally lose its market share if it does not build viral products that can
keep up with consumer trends. A recommendation is presented for Yahoo to come up with
extremely efficient processes for its crawling webpage capable of indexing its text and a novel
means of ranking the relevance of a page anchored on the number as well as quality of pages
which link to it. Moreover, Yahoo should have an interface which is clean refreshingly: in the
internet pervaded pages that have list since Yahoo can provide a spare alternative, with a merely
box to type search terms as well as search button.
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Table of Contents
Executive Summary.........................................................................................................................2
1. The Problem.................................................................................................................................5
1.1 Background............................................................................................................................5
1.2 Definition of the Problem......................................................................................................6
1.3 Evidence of the Problem........................................................................................................6
Figure1: Yahoo Search Revenues...........................................................................................7
1.4 Timing Considerations...........................................................................................................8
1.5 Consideration of the Broad Context.......................................................................................8
2. Part 2 Benefits..............................................................................................................................8
2.1 Benefits to Be Delivered........................................................................................................9
2.2 Importance of Benefits to Organization.................................................................................9
2.3 Evidence of Benefit Delivery.................................................................................................9
2.4 Interdependencies...................................................................................................................9
Part 3 Strategic Response................................................................................................................9
3.1 Method and Criteria.............................................................................................................10
3.2 Strategic Options Analysis...................................................................................................10
3.3 Recommended Strategic Options.........................................................................................10
4.1 Project Options Considered.................................................................................................11
4.2 Stakeholders Identification and Consultation......................................................................11
4.3 Social Impacts......................................................................................................................11
4.4 Environmental Impacts........................................................................................................11
4.5 Economic Impacts................................................................................................................12
4.6. Overall Evaluation of Socio-Economic and Environmental Impacts.................................12
4.7. Financial Analysis...............................................................................................................12
4.8 Risk Comparison..................................................................................................................12
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Part 5. Deliverability of Recommended Solution..........................................................................13
5.1 Details of Recommended Solution......................................................................................13
5.2 Commercial and Financial...................................................................................................13
5.3 Management.........................................................................................................................13
5.4 Delivery................................................................................................................................14
Appendix 1: Yahoo Search Revenue vs. Searches.......................................................................14
Appendix 2: Value Proposition Benefits Canvas: Yahoo for Advertisers....................................15
Appendix 3: Yahoo Busines Model: Revenue Stream?...............................................................17
References......................................................................................................................................18
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1. The Problem
1.1 Background
Yahoo is facing a downfall due to a disruptive innovation (DI) as it failed to quickly
adapt sufficiently to consumer Internet major trends which included rise of social media
networks and exploding mobile devices popularity. Mobile device popularity stood the most
ruthless for Yahoo whereby its Yahoo’s display ads never transform well on small screens while
consumers are spending much more time on apps as compared to surfing the Mobile Web (Eke
& Singh, 2018). However, Yahoo’s mobile apps, with exemption of Yahoo Mail, did not become
big hits for Android alongside iPhone users (Baldassarre et al., 2017).
1.2 Definition of the Problem
Todays, all those pairs of eyeballs – more than 200 million of then look at the yahoo site
every month in USA but failed to make enough of a profit in order to scale like Google and
Facebook because yahoo is a media company and they failed to adapt quickly enough to the two
major trends of the consumer internet: the rise of social networks and the exploding the
popularity of the mobile device (Marler & Boudreau, 2017). With the yahoo mobile apps display
ads do not translate well on small screens that’s way yahoo mobile app never become big hits for
iPhone and android users.
1.3 Evidence of the Problem
Yahoo is undergoing downfall due to bad bets and inability or failure to effectively adapt.
Despite having strove for the past 20 years to build the most visited sites in the US, alongside a
vigorous displaying advertising, Yahoo’s status as the 3rd-most-visited website has transformed
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into little more than darkening outlook for the firm which defined innovation in Internet early
years. Investors have extremely little confidence in Yahoo as they doubt if it is able to stand
independently. The revenue of Yahoo has plunged by 11% over the previous year. This is
because Yahoo seeded its present problems long ago. While Facebook and Google stood winning
the advertising dollars war, Yahoo saw a stable stream of its finest software engineers exit for
brighter prospects in the Silicon Valley. Thus Yahoo lacked talent which made it struggle to
effectively build viral products that could keep up with trends of consumer. Thus, Yahoo has
never been capable of making sufficient funds from the massive number of viewers who look at
exciting content and using popular email service to satisfy Wall Street. Yahoo only has a massive
traffic but the consumers have lost their patience as it has become a shadow of its former self.
Currently, despite Yahoo’s significant investments in mobile products by its CEO
(Marisa Mayer), Yahoo’s apps never ranks amongst the Top Fifty in Apple’s app store in the
US, based on App Annie analytic company. In contrast, Facebook and Google together possess
eight of the leading apps in the US. Moreover, mobile advertising merely yielded 250 million
dollars in Yahoo’ revenue in the previous quarter while Facebook generated 4.5 billion dollars
from its mobile adds in the past three months of year 2015. Yahoo reported a net loss of 99
million dollars as opposed to a profit of 21 million dollars for same quarter previous year.
Figure1: Yahoo Search Revenues
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Source: Net search revenue figures for each quarter since Q1 2009. Adapted from “The
Yahoo Search Revenue Disaster” by Third Door Media, Inc. 2019
(https://searchengineland.com/). In public domain.
The above chart indicates Yahoo’s net search revenue figures for every quarter beginning
Q1 2008. Since the above chart further provide Y-O-Y growth figures, the 2008 earnings can be
extracted. As demonstrated in the chart (2008), the chart indicates that Yahoo was earned nearly
550 million dollar in net search revenue for every quarter. Year 2008 further saw Yahoo quarter
for each available data, 552 million dollars earned in 2nd quarter of 2008. Yahoo, however,
recoded a plunge in the year 2009. The original decline could have resulted from a typically
slower ad time following the busy era sounding Christmas alongside other holidays and the GFC.
Yahoo’s plunge continued into 2010- and even prior to Yahoo beginning to use Microsoft’s ads
on Yahoo’s US alongside Canadian sites in 4th quarter of 2010. This was attributed to the
declining paid inclusion income.
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1.4 Timing Considerations
It is important for Yahoo to address this problem as it has not only caused Yahoo to lose
huge amounts revenue through a reduced market share in the past, but the declining trend will
continue even into the future.
1.5 Consideration of the Broad Context
There as similar needs or opportunities either outside or inside Yahoo that might be
tackled together with this current proposal. For instance, this response will be affected by the
benefits of a broader sectoral approach. As seen above, Yahoo failed to realize that technology
alters fast, and only successful firms can succeed by leveraging smart acquisitioning in future
building. As seen in Facebook that bought Oculus Rift and Instagram, and Google that bought
YouTube, Boston Dynamics, DoubleClick, and DeepMind hence helping them to flush out their
strategies. Yahoo further has an opportunity to buy the failed Google’s PageRank system to help
address the problem from external source as this will greatly benefit Yahoo.
2. Part 2 Benefits
2.1 Benefits to Be Delivered
Yahoo will benefit its customers from the implementation of the suggested solution. For
example, the novel Yahoo Mail App will let its customers personalize their inbox by selecting
from various color themes. Every theme comes with 3 different layout alternatives and the
customers will elect their color of choice and even set their interface to either dark or light mode.
Customers will also benefit from the less clutter saves to more spacing between items thus easily
viewing information in their inboxes. Customers will also benefit from the novel side by side
preview that shall permit customers to view attachments alongside email simultaneously.
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2.2 Importance of Benefits to Organization
A decrease in sales (average) shall negatively impact the Yahoo business performance. A
reduction in sales will lead to downward pressure on its products and services and lowered levels
of after-sale services.
2.3 Evidence of Benefit Delivery
Yahoo has demonstrated a strong track record over the years for delivering value to its
customers both as shown by advertising adds and searches and emails. Yahoo stands to
significantly benefit from this initiative (Manuela Jr, Rhoades & Curtis, 2016).
2.4 Interdependencies
Yahoo will depend from other Companies to solve the problem. For instance, it will have
to buy the Google PageRank which will significantly help the firm to achieve its targets. Further,
Yahoo will have to effectively implement the proposed solution through cooperation and
collaboration with all stakeholders including the customers to know what they need.
Part 3 Strategic Response
3.1 Method and Criteria
The method used to select the intervention is that which brings more benefit faster than
others. In this case, the suggested solution was chosen due to the urgency with which it was
required to solve the problem. Thus, Yahoo standards to greatly benefit by adopting the
suggested solution in terms of improved ability to compete with Google and Facebook and
regain its dwindling revenue flow and market share.
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3.2 Strategic Options Analysis
The strategic option is for Yahoo to keep pace with the changing mobile devise
popularity to ensure its display ads translate on small screens effectively because consumers are
now spending more time on apps than surfing Mobile Web.
3.3 Recommended Strategic Options
Option 1: Yahoo mail redesign is an option which is required to solve the problem. It
should be redesigned to let the customers personalize their inboxes by selecting from color
themes, improve spacing between items to easily view information. This option is the chosen one
since it will make Yahoo use the latest web technologies thus making customers’ experience
quicker on Yahoo Mail. This will also be optimized for slower connections alongside different
screen sizes thus working even smaller screens. Yahoo should integrate this with improvement
on its search engines which will let customers hover image icons in their inboxes to view the
effectively. It is thus recommended that Yahoo must adapt quickly and sufficiently to consumer
Internet major trends which include rise of social media networks and exploding mobile devices
popularity (Bekaert et al., 2015). This will ensure it keeps pace with the disruptive innovation
due to mobile device popularity which stood the most brutal for Yahoo to make Yahoo’s display
ads effectively transform on small screens as consumers are spending much more time on apps
as compared to surfing the Mobile Web. This will make Yahoo’s mobile apps alongside Yahoo
Mail become big hits for Android alongside iPhone users.
Option 2: Yahoo can also improve Yahoo Mail Pro as an improvement to the Ad Free
Mail option. This will allow customers to subscribe by paying either annul or monthly
subscription fee of $34.99 and $3.49 where the yearly subscription stays cheaper. This is cheaper
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as compared to Ad Free’s cost that was initially $15 more per year. This will benefit customers
through ad free mail alongside priority customer support for both desktop and mobile.
Option 3: The third option is for Yahoo to focus on its mobile app subscription whereby
customers can either pay 9.99 dollars per year or 0.99 dollars per month on either iOS or
Android app. Yahoo will make its subscription on desktop and mobile auto-renewable.
4. Project Options Analysis
4.1 Project Options Considered
Yahoo should make its display ads effectively transform on small screens as consumers
are spending much more time on apps as compared to surfing the Mobile Web (Yang et al,
2017). This will make Yahoo’s mobile apps alongside Yahoo Mail become big hits for Android
alongside iPhone users.
4.2 Stakeholders Identification and Consultation
Stakeholders have already invested in Yahoo with anticipation that it will stay in its
leadership stance through happy customers. Making Yahoo adapt quickly and sufficiently to
consumer Internet major trends including rise of social media networks and exploding mobile
devices popularity will ensure Yahoo keeps pace with the disruptive innovation due to mobile
device popularity. This will assist it Yahoo to make its stakeholders happy as its display ads will
effectively translate on small screens as consumers are spending much more time on apps as
compared to surfing the Mobile Web. This will make Yahoo’s mobile apps alongside Yahoo
Mail become big hits for Android alongside iPhone users who are the target customers.
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4.3 Social Impacts
The project will contribute socially by increasing the ability of people to interact quickly
and efficiently. This leads to happy and repeat customers without disruptions in the supply chain.
4.4 Environmental Impacts
Yahoo will contribute to the business environment by implementing the option 1 above.
In terms of finance, this project will help Yahoo efficiently align and use the resources. This plan
is a reflection of Yahoo’s goal of continuing to thoughtfully spend, effectively operate, as well as
drive its profitability. This is a cost-saving effort to help Yahoo effectively manage headcount as
well as accomplish stability with lesser costs (Akanle, Adesina & Akarah, 2016).
Yahoo remains a subject to the US government regulations of internet, voice over internet
protocols/VOIP and mobile as well as services and products that might subject Yahoo to
judgments, claims, and remedies which include monetary liabilities alongside limitations on
Yahoo business practices. Changes in government regulations or even user concerns about
privacy alongside protection of user data, or even any failure to comply that laws, might affect
Yahoo’s business adversely.
4.5 Economic Impacts
The project will greatly benefit the Yahoo. By creating a competitve edge, it will help
attract more customers and hence boosting revenue and net profits margin. Consumer will also
benefit through value for money since it will help them get the best from Yahoo.
4.6. Overall Evaluation of Socio-Economic and Environmental Impacts
The implementation of the recommendations above will ensure effectiveness in the
Company. It will have a positive environmental, economic and social impacts. Environmentally,
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