Yahoo! A Critical Analysis

Yahoo! History

Problem Areas for Yahoo

Search Engine Industry Review

Yahoo! In the Light of Porter's Theory

Threat of New Entrants

Threat of Substitutes

Bargaining Power of Suppliers

Bargaining Power of Customer

Competition in the Industry

Strategic Plans of Yahoo!

Financials

Yahoo! Stakeholders & Other Strategic Partners

Strategic Challenges

Strategy Implementation

Realign the focus of Employees without layoffs

Improve the Algorithm

Apply the Algorithm

Redeploy the Advertising Network

Expand the Ad Network

The Implementation of Outside Publishers

Yahoo! is one of the pioneers of what virtual internet world looks like today. Incorporated with the sole objective of providing internet service to both end-users and businesses, Yahoo! has transformed into more than that. It was founded by David Filo and Jerry Yang in 1995. Since then Yahoo! has enjoyed the status of market leader for several years. However with introduction of Google and tough competition from organizations like Microsoft, Yahoo! has failed to retain its old status. In fact, recently it is struggling to revamp the company's structure and vision which may respond to the robust market requirement.

In order to meet the demands of global market, Yahoo! management has decided to build its strengths and exploit its potential. It has closed down various unprofitable ventures, laid off non-productive employees and engaged potential talent. Example of such gesture is hiring of Google's Marissa Mayer. With the rich experience of over thirteen years spent in Google, Marissa appears to be well-versed with how to operate in a robust and challenging environment. Where Yahoo employees are going through a great stress of uncertainty with change of five CEO in past four years resulting into many layoffs, Marissa's initiatives such as free food and iPhone for everyone, appear rather appealing.

Yahoo! has been currently facing many strategic challenges. Now all it needs to do is follow its new vision and act aggressively.

Introduction

"Yahoo!! creates deeply personal digital experiences that keep more than half a billion people connected to what matters most to them, across devices and around the globe. That's how we deliver your world, your way. And Yahoo!'s unique combination of Science + Art + Scale connects advertisers to the consumers who build their businesses."

Mission statement of Yahoo! surely appears to be highly powerful however it is critical to understand whether Yahoo! has been following its own ideology or not. Since its inception Yahoo! has preferred to be known as media company instead of IT company. It core business is to provide digital content which can be expanded and utilized on global scale. The Company provides online properties and services (Yahoo! Properties) to users, as well as a range of marketing services designed to reach and connect with those users on Yahoo! And through a distribution network of third-party entities (Affiliates). These Affiliates integrate its advertising offerings into their Websites or other offerings (those Websites and other offerings, Affiliate sites.

Yahoo! is a clear example of how companies lose their market position if they fail to respond to market norms and consumer requirements. Once market leader of IT world, Yahoo! has been struggling to retain a stable position, let alone the former glory that it had enjoyed for several years. Also, it is a classic case study which helps to evaluate how lack of decisiveness and insight in company's leadership make the organization and its stakeholders suffer in the long-run. There should be only two motives of an enterprise: satisfy and retain its customers and generate business. Unfortunately, Yahoo! forgot how to perform both.

Yahoo! History

Yahoo! is one of the pioneers of what virtual internet world looks like today. Incorporated with the sole objective of providing internet service to both end-users and businesses, Yahoo! has transformed into more than that. It was founded by David Filo and Jerry Yang in 1995. Initially started as a mere hobby of two PhD students it later transformed into a brand which captured millions of users all over the globe for its multifaceted services. It became the largest online service provider for integrated services and also one of the major search engines on the World Wide Web.

Yahoo! currently has over 700 million users visiting the site on monthly basis. Furthermore, its success came from providing user-friendly service to the customer which is available in more twenty languages satisfying its users globally. Currently, it is located in Europe, the Asia Pacific, Latin America, Canada and...

It has its headquarters in Sunnyvale, California.
Formed in California in March, 1995, Yahoo! shows its first public appearance in NASDAQ where the commodities and services not being listed anywhere else got listed (Yahoo!, 2012). Initially, Yahoo! announced a per share price of USD 13.00. However, at the end of its first closing day, it had reached a price hike up to USH 33.00. In its early times, Yahoo! started off with the team of forty nine members and later on its was transformed through reincorporation in 1999 (Yahoo!, 2012). Later on, it was made to add into S&P 500.

Other than the changes in stock listings, Yahoo! entered into a joint venture with SOFTBANK along with other strategic alliances with other content partners (SOFTBANK, 2012). This venture was Yahoo!'s first step into Japanese market which led to the creation of Yahoo! Japan. Later on this joint venture resulted into exploration of German, France, UK and Korean markets. Same association caused formation of Geocities Japan to happen (Marketwatch, 1998).

In 2006, Yahoo! And Seven Networks Ltd. which was an Australian media management firm, entered into another venture which made contributions to Australian internet business generation. Yahoo! owns fifty percent equity of this company and operates with the name Yahoo!7. This company owns Australian online assets, television and magazine content publisher with the name Pacific Magazines. In addition to that Yahoo! also operates Flickr which is an image management and sharing website.

Yahoo! began using the services of Google in 2000. However, over the passage of four years it began to develop its own search technology which became operational in 2004. Furthermore, it also redefined its emailing service in 2007 in competition with Google's Gmail. Yahoo had been the pioneer of today's technological web-based world however once the dot com bubble burst, Yahoo began to lose its worth. In 2008, Microsoft offered Yahoo with USD 44.8 Billion but the offer was declined by the then CEO usually known as Chief Yahoo, Jerry Yang (Ovide, 2012).

Three years later, Yahoo! had the market worth of USD 22.24 Billion. Jerry Yang although being the co-founder of this organization, was often criticized for following a vision which was not adaptive to the changing circumstances and was not in the best interest of the investors. As a result of immense criticism, Yang left his CEO's office and handed it over to Carol Bartz in 2009 who held a strong portfolio of working in the similar field in presidential role. However, even Bartz aggressive approach failed to deliver results and she ultimately was made to leave Yahoo in 2011. In an extension to that on-going criticism, Jerry resigned in response to this resistance and criticism however the parting note was rather positive and interesting at the same time. In his resignation, Yang wrote

"My time at Yahoo!, from its founding to the present, has encompassed some of the most exciting and rewarding experiences of my life. However, the time has come for me to pursue other interests outside of Yahoo! As I leave the company I co-founded nearly 17 years ago, I am enthusiastic about the appointment of Scott Thompson as Chief Executive Officer and his ability, along with the entire Yahoo! leadership team, to guide Yahoo! into an exciting and successful future."

In 2012, Scott Thompson, ex-CEO of E-bay's PayPal unit was given the particular position. In the period of five years, there were layoffs of about 14% of Yahoo's workforce which was expected to perform cost cutting of about USD 375 Million. Scott from the beginning of his tenure showed a positive vibe about the business but even he could not continue working with Yahoo upon his failure to satisfy board of directions regarding his misstated academic records. As a result of this layoff, the office of CEO was then offered to and now held by ex-Google Vice President, Marissa Mayer.

With the rich experience of over thirteen years spent in Google, Marissa appears to be well-versed with how to operate in a robust and challenging environment. Where Yahoo employees are going through a great stress of uncertainty with change of five CEO in past four years resulting into many layoffs, Marissa's initiatives such as free food and iPhone for everyone, appear rather appealing.

In addition to the controversies that Yahoo has been attached to, lawsuit against Facebook also has captured media's lime light since March 2012. The suit entailed claims for infringement of patents covering advertising, privacy controls and social networking, following through on a threat it made last month. Yahoo which is now a mere shadow of its former glory has claimed that Facebook should acquire licenses for its patent. However, Facebook has opted for rather aggressive approach in response to Yahoo's allegation of "puzzling actions"

Yahoo had first threatened the suit last month. It…