Yahoo! Case Study
YAHOO! Inc. 2006
|I. Current Situation |
A. Yahoo’s Current Performance (2006)
In 2006, Yahoo’s return on assets plummeted from 18.95% in 2005 to 6.73% in 2006. In addition to the poor return rates, Yahoo’s market share dropped from 30.5% in July 05 to 28.8% in July 2006. Google (Yahoo’s main competitor) however, showed an impressive market share increase from 36.5% in July 2005 to 43.7% in July 2006. Yahoo’s Profitability (Return on Assets) dropped 12.22% (18.95% in 2005 to 6.73% in 2006).
• Total revenue was $6,425.68 (million) in 2006
• Gross Profit $3,756.58
• Net Income $751.39
B. Strategic Posture
In December 2006, Chairman and CEO, Terry Semel announced the reorganization of Yahoo. The focus of this reorganization was to make major changes in Top Management / Executive Team. Semel’s reorganization strategy
1. Mission:
• To connect people to their passions, their communities and the world’s knowledge. (Yahoo SEC 2006 Annual Report, www.yahoo.com)
• Yahoo intends to bring Internet users back to their search engine by making their web-entry customer friendly, easier to use and navigate through.
• Semel’s plan is to focus more on what the customers want rather than focusing on expansion into other areas.
2. Objectives:
• Expand customer-centric culture and capabilities: Yahoo will focus on the customer, not the product
• Create leading social media environments: Yahoo will attract customers to their social media environments in order to contribute and use information such as the sharing of music, photos, etc.
• Lead in next-generation advertising platforms: Yahoo will offer a diverse range of advertising opportunities from big business to small local merchants.
• Drive organizational effectiveness and scale: Yahoo intends to
|I. Current Situation |
A. Yahoo’s Current Performance (2006)
In 2006, Yahoo’s return on assets plummeted from 18.95% in 2005 to 6.73% in 2006. In addition to the poor return rates, Yahoo’s market share dropped from 30.5% in July 05 to 28.8% in July 2006. Google (Yahoo’s main competitor) however, showed an impressive market share increase from 36.5% in July 2005 to 43.7% in July 2006. Yahoo’s Profitability (Return on Assets) dropped 12.22% (18.95% in 2005 to 6.73% in 2006).
• Total revenue was $6,425.68 (million) in 2006
• Gross Profit $3,756.58
• Net Income $751.39
B. Strategic Posture
In December 2006, Chairman and CEO, Terry Semel announced the reorganization of Yahoo. The focus of this reorganization was to make major changes in Top Management / Executive Team. Semel’s reorganization strategy
1. Mission:
• To connect people to their passions, their communities and the world’s knowledge. (Yahoo SEC 2006 Annual Report, www.yahoo.com)
• Yahoo intends to bring Internet users back to their search engine by making their web-entry customer friendly, easier to use and navigate through.
• Semel’s plan is to focus more on what the customers want rather than focusing on expansion into other areas.
2. Objectives:
• Expand customer-centric culture and capabilities: Yahoo will focus on the customer, not the product
• Create leading social media environments: Yahoo will attract customers to their social media environments in order to contribute and use information such as the sharing of music, photos, etc.
• Lead in next-generation advertising platforms: Yahoo will offer a diverse range of advertising opportunities from big business to small local merchants.
• Drive organizational effectiveness and scale: Yahoo intends to