I. Executive Summary
Background and Introduction
Why is it important to study Yahoo? Yahoo is a prime example of how in today’s world of rapidly evolving technology, a company must be looking ahead to the future for innovation opportunities; otherwise the company will be overtaken by competitors who capitalized on the opportunity to further explore the technology. As consumers, we reap the benefits of increases in technology, and those firms who pose increasing technological conveniences will be rewarded in terms of market share and customer loyalty. Yahoo is an online media provider whose goal is to be the most necessary Internet services provider for both businesses and consumers around the world. Since 2008, Yahoo has begun to lose its relevance allowing itself to be pushed to the side by the market share leader--Google. Success or Failure
If Yahoo continues on its current path it will fail. Its failure will be caused by a lack of clear focus. Consequently, the firm’s core competencies have gotten lost in the process. The Yahoo brand is no longer clearly positioned, yielding little differentiation of the firm’s offerings. Yahoo is currently in the fourth stage of decline, grasping for salvation. Yahoo will progress into the fifth and final stage, capitulation to death or irrelevance, if it does not develop a strategy and define its core competencies. External Analysis
Yahoo’s primary revenue comes from advertisements featured on its web pages. Since these pages are free to access, Yahoo targets shoppers and its customers’ customers to increase the traffic on the website. Yahoo’s main competitor is Google, with indirect competitors including Facebook, AOL, and YouTube. There are three main segments for its services: advertising, business services, and personal services. Yahoo is a reactor, trying to catch up with competitors rather than anticipating their moves in advance. While Google practices its business more offensively, being proactive in its actions. Internal Analysis
Yahoo’s performance reflects low growth. Yahoo revenues come from products that are low growth cash cows. The balance scorecard indicates that there could be troubles ahead for the company. The financial portion of this analysis is the least troublesome; although the trends suggest that the financials will take a gradual decline once Yahoo’s cash cow products decline. Yahoo’s market orientation is below industry standards. Yahoo relies heavily on external innovation and strategic mergers. Yahoo’s core competencies have gotten lost in the mix while it has been focused on providing a wide variety of services. Final Recommendations and conclusions
If the company continues on its current path Yahoo will fail. To prevent further decline Yahoo must define its core competencies and excise those services that are not core competencies from its business. What is causing Yahoo to decline is not its pursuit a multitude of internet services but Yahoo undisciplined growth and lack of strategic growthYahoo should reshape itself into a news service provider.
II. Background and Introduction
The two founders of Yahoo, David Filo and Jerry Yang, Ph.D. candidates in Electrical Engineering at Stanford University started the Yahoo in a campus trailer in February 1994. Filo and Yang began listing links based on their personal interests, and then divided them into categories. When the existing categories reached their maximum holding capacity, the two engineers developed subcategories and the core concept behind Yahoo was born. Yahoo’s mission is to be the most essential global Internet service for consumers and business. (Yahoo’s Mission Statement, 2005) Yahoo’s continuous decrease in both market share and revenue began in 2008, not only putting Yahoo in a perilous position, but also pushing the company away from it...
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