Yahoo! Inc. Strategic Analysis

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Strategic Analysis
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Yahoo! Inc.

Executive Summary3
Introduction3
Company Overview4
Mandate5
Stakeholders6
External Analysis6
Competitive Forces6
Macro Environment7
Internal Analysis8
Appendix10

Executive Summary

Yahoo! Inc. is one of the oldest and most well-known Internet content providers. Yahoo! Inc. offers one of the most diverse Internet websites. It is believed that by expanding Yahoo!'s services and expanding broadband access, Yahoo! customers will stay on the website and spend increasing amounts of time and money. Yahoo! Inc's biggest obstacle lies in its competition in the form of Google, AOL, and MSN. Google has dominated the search market, which is a large portion of the revenue for an Internet provider. Yahoo! has diversified its services to offset the losses in the market for search engines and the accompanying advertising revenue. Yahoo!'s greatest challenges are to expand its market share and continue delivering returns to its shareholders.

Yahoo is being challenged on four fronts, all tied closely to search. These include lower revenues in the advertising networks due to competitors, Google’s dominance in the search and advertising space, inefficient search results, and the changing face of portals.

The company needs to come to the realization that search is their future, with advertising intertwined. Now that Yahoo! Inc.’s core competencies have shifted successfully from a portal strategy to a company relying on its search algorithm, they can begin to implement the advertising strategies that have proven useful and in the end, needs to deliver a more value added product. Introduction

Yahoo! Inc. has become one of the world's largest global online networks of integrated services with more than 500 million users worldwide. However, intensity of rivalry in its industry is increasing, with technologies and new innovations advancing so efficiently and quickly, that many companies are struggling to keep up. As a result, the Yahoo! Inc. is in need of a well-managed strategy to lead it through the next five to ten years.

This report only reviews Yahoo! Inc’s history and current but will not go into detail of strategic recommendations and implementations. It begins with a brief history of the company followed by a review of its external environment and, more specifically, the competitive and macro environmental forces that are shaping its industry. The internal environment is considered next with the focus being the resources and capabilities on which its distinctive competencies depend.

Company Overview

Founded in 1994 by Stanford Ph.D. students David Filo and Jerry Yang, Yahoo! began as a hobby and has evolved into a leading global brand that has changed the way people communicate with each other, conduct transactions and access, share, and create information. Today, Yahoo! Inc. has become one of the world's largest global online network of integrated services with more than 500 million users worldwide. The company is headquartered in Sunnyvale, California, with a presence in more than 20 markets and regions around the globe.

In February 2008, Microsoft Corporation made an unsolicited bid to acquire Yahoo! for USD $44.6 billion. Yahoo! formally rejected the bid, claiming that it "substantially undervalues" Yahoo! and was not in the interest of its shareholders. Three years later, Yahoo! had a stock market capitalization of USD $22.24 billion. Carol Bartz replaced cofounder Jerry Yang in January 2009 [ (BBC News, 2009) ]. In September 2011, she was removed from her position at Yahoo! by the company's chairman Roy Bostock, and CFO Tim Morse was named as Interim CEO of the company.

In 2010, Yahoo! Inc. completed two major transactions that would have significant impact on the company. Yahoo! Inc. completed the transition of algorithmic search...
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