Yahoo Strategic Management

MRC2213 STRATEGIC MANAGEMENT

Prepared by:Fazarizul Hashidi Bin Mohd PauziMR121133

Prepared for:Dr. Mas Bambang BarotoContentsIntroduction11.Vision and Mission Statement22.PEST Analysis32.1.Political, Government and Legal Forces32.2.Economic Forces32.3.Social, Cultural, Demographic and Natural Environment, Forces.42.4.Technological Forces52.5.PEST Analysis Summary52.6.Conclusion53.Competitive Analysis63.1.Competitive Analysis Summary73.2.Conclusion74.Industry Analysis84.1.Conclusion105.Michael Porters Five Forces115.1.Rivalry among competitors Search Engine Business115.2.Entry of new competitor Search Engine Business125.3.Substitute products Search Engine Business125.4.Bargaining power of suppliers Search Engine Business125.5.Bargaining power of buyers Search Engine Business135.6.Conclusion of Michael Porters 5 forces136.List of Opportunities and Threats.146.1.Opportunity146.2.Threats157.External Factor Evaluation (EFE) Matrix167.1.Opportunities167.2.Threat178.Competitive Profile Matrix (CPM)189.Internal Environment Analysis199.1.Culture Assessment199.2.Yahoo! Management Assessment Analysis219.3.Yahoo!, Marketing Function Assessment Table.229.4.Financial Condition of Yahoo2410.Financial Ratio Time Series Data of Yahoo from 2006 to 20082511.Production / Operation Assessment2712.Research and Development2813.MIS Function Analysis2814.Company Value Chain Analysis (VCA)2914.1.Main Activities.2913.2.Supportive Activities3014.List of All Strengths3015.List of All Weakness3116.Internal Factor Evaluation (IEF) Matrix (Strength)3217.Internal Factor Evaluation (IEF) Matrix (Weakness)3318.Yahoos Existing Long Term and Short Term Financial Objectives and Strategies.3419.Yahoos Existing Long Term and Short Term Strategic Objectives3520.Yahoos Existing Corporate Level Strategies3621.Yahoos Existing Companys Business Level Strategies. (Porters Five Generic Strategies)3722.Strategy Formulation Tools. (SWOT Analysis)3822.1.Opportunities3822.2.Threats3822.3.Strength3922.4.Weakness4022.5.SWOT Matrix4123.Converting into Strategic Terms4223.1.Corporate Level Strategy.4223.2.Business Level Strategy.4223.3.Selected Strategy Original Sentences.4324.Space Analysis4424.1.Factors that make up the space matrix axes4424.2.Space Matrix4625.BCG Analysis4925.1.Internal-External Analysis.4926.Grand Strategy Matrix5027.Final Conclusion of the results of all the strategy analysis.5128.Strategic Choice5229.Quantitative Strategic Planning Matrix (QSPM)5229.1.Outcome of QSPM5530.Implementing Strategies: New Management Strategy.5631.Conclusion57

IntroductionYahoo was formed by two Electrical Engineering PHD candidates from Stanford University, David Filo and Jerry Yang. They started Yahoo for personnel interest with no intention to developing it and to become a world recognized search engine.The initial name founded by these 2 people was Jerry and Yangs guide to the world wide web and after which they identified a new name for Yahoo! which is an abbreviation for Yet another Hierarchical Officious Oracle.In this report the following methodology will be used to analyze the companys competitive advantages among other search engine service providers and its potential in the industry.

1. Vision and Mission Statement

2. External Audit ( PEST, Competitive Analysis, Industry Analysis, Porter 5 Forces, EFE and CPM Matrix)

3. Internal Audit ( Internal Analysis, VCA and IFE Matrix)

4. Strategies in Action ( Strategic objectives and existing strategy)

5. Strategy Analysis ( SWOT, SPACE, IE Matrix, Grand Strategy Matrix and QSPM)

6. Strategy Implementation

1. Vision and Mission Statement

There is no clear indication for Yahoo vision statement in the case study. However, our suggestion is to use Yahoos strategy as a substitute for mission statement.Yahoos powers and delights our communities of users, advertisers, and publishers all of us united in creating indispensable experiences, and fueled by trust Yahoo! powers and delights

No ComponentsCase Fact of Mission Statement

1CustomerAdvertisers and publishers

2Products & ServicesNo Data

3MarketCommunities of users

4TechnologyNo Data

5Survival, growth and profitabilityYahoo! powers and delights

6PhilosophyAll of us united and Fueled by trust

7Self-ConceptCreating indispensable experiences

8Concern for Public ImageDelights our communities of users

9Concern for EmployeesNo Data

Based on the finding from the case study, Yahoo has 6 out of 9 components list, however Yahoo failed to address their standing on how much they value their employees, their far sight of technology and their major product and services offering. Otherwise, they have covered their business makeup and purpose and whom they want to serve and how they want to serve.

2. PEST Analysis

1. 2. 2.1. Political, Government and Legal Forces

NoCase FactOpportunitiesThreats

1Federal Communication Commission (FCC) adopted flexible access rules for users and wireless resellers in conjunction with agencys early 2008 wireless spectrum auction. ( Page 206 / Para 4 row 5)

2Due to changes in legislative requirements concerning technology sharing, patents rights and information security, future expenses and profitability of the companies operating with the industry are harder to predict. (Page 207 / Para 1 row 5)

3Technical and regulatory makes the projection of its business viability for existing companies difficult (Page 207 / Para 1 row 4)

2.2. Economic Forces


1Yahoo is the second leading global internet brand and one of the most trafficked internet destination worldwide ( Page 201 / Para 2 / row 3)

2There are 1.1 billion internet users around the world and 211 million in the USA as of end of 2006 (Page 202 / Para 7 row 1)

3Economic growth in the USA and the world has slowed amid crisis in housing and credit market ( Page 202 / Para 8 row 1)

4Rising unemployment and problematic geopolitics to the mix and USA had difficult economic back drop (Page 202 / Para 8 row 4)

5Although internet related business have perhaps held better than their non-digital counterparts, but have still suffered from macroeconomics malaise.( Page 202 / Para 8 row 5)

6In 2009, number of internet content and advertisement companies (including Bankrate Inc, Knot Inc including Yahoo!) reported disappointing financial results and lowered their forward financial outlooks. (Page 202 / Para 8 row 7)

7Internet media and market research firm comScore Inc, expressed concerns about deceleration in online growth. (Page 202 / Para 8 row 10)

8Internet advertisement continues to grow though in slower pace ( Page 202 / Para 9 row 4

9Broadband prices fall (Page 206 / Para 5 row 1)

10Internet advertisement revenue in USA remain strong, topping $ 23 billion (Page 202 / Para 9 row 1)

11Even Google Inc, expressed economic related caution in conjunction with its second quarter results(Page 202 / Para 8 row 9)

12Yahoo operates in the internet products, services and content markets, which are highly competitive and characterized by rapid change, converging technologies and increasing competition.(Page 206 / Para 1 row 1)

13From its first year of operation as a public company (2004), Google has increased its operating profit to $ 6.7 billion from a modest $ 852 million. ( Page 206 / Para 4 row 9)

14During 2008, Google had 72% of internet traffic while Yahoo only possessed 17% followed by MSN at 6% and IACI at 4% ( Page 206 / Para 1 row 6)Google had 72% of Internet traffic while Yahoo only possessed 17%. ( Page 206 / Para 1 row 6)

2.3. Social, Cultural, Demographic and Natural Environment, Forces.


1Increased recognition that consumers spend more and more of their time online (Page 202 / Para 9 row 5)

2.4. Technological Forces


1Future innovations and shifts in technology also make long term strategies regarding the internet and software services industry difficult. ( Page 207 / Para 1 row 8)

2.5. PEST Analysis Summary

NoPest AnalysisOpportunitiesThreats

1Economic Forces69

2Social, Cultural, Demographics and Environmental Forces10

3Political, Government and Legal Forces12

4Technological Forces01

Total 812

2.6. Conclusion

From the case study given, Yahoo has 8 opportunities and 12 threats. From case fact in economy forces, Yahoo has opportunity and threat where in the statement it is stated that internet business have performed better than their non-digital counterparts but on the whole businesses were affected by the economy depression. Internet business has performed better than their non-digital counterparts are an opportunity and economy depression is a threat.

3. Competitive Analysis

NoCase Facts (Strengths) OpportunityThreat

1During 2008, Google had 72% of internet traffic while Yahoo only possessed 17% followed by MSN at 6% and IACI at 4% ( Page 206 / Para 1 row 6)

2In October 2007, Microsoft purchased a 2% stake in social networking firm Facebook Inc, valuing the private company $15 billion.

3Microsoft has an obvious and strong desire to increase its internet presence ( Page 206 / Para 2 row 7)

4In 2009, Google is in talks with popular micro-blogging site, Twitter about a possible partnership.(Page 206 / Para 3 row 1)

5Google has expended well beyond search related function into areas such as e-mail (G-mail), mapping (Google Earth & Maps), Web Based productivity applications (Google Apps), video (Google Finance), a payment services (Google Checkout), a personalized portal offering (iGoogle), a mobile internet software platform (Android) and browser software ( Chrome Google). (Page 206 / Para 3 / row 1)

6Googles pursuit of mobile internet opportunity has made it one of the main application providers for Apple Incs iPhone. ( Page 206 / Para 4 row 1)

7Google commands good portion of the revenue in the industry and is a formidable competitor to Yahoo! in particular. From its 1st year of operation as a public company (2004). Google has increased its operating profit to $ 6.7 billion form a modest $852 million. (Page 206 / Para 4 / row 7)

8AOL LLC, a division of Time Warner Inc, shifted its business model from paid subscription to a free, advertiser-based portal that is similar to those offered by Yahoo Inc and Google Inc. ( Page 206 / Para 5 row 2 & Page 207 / Para 1 row 1)

9Each company is committed to attract as many visitors (Page 207 / Para 1 row 3 & Exhibit 8)

10Microsofts $6 billion acquisition of Quantive Inc and advertising solutions company, in Aug 2007 marked an important change. (Page 206 / Para 2 row 1)


NoCase Facts ( Weakness)OpportunityThreats

1Microsoft lost out in bidding war for privately held DoubleClick Inc a digital marketing technology and services company. (Page 206 / Para 2 row 3)

2Time Warner indicated that it might look to sell AOL access business ( Page 207 / Para 1 row 2)

3.1. Competitive Analysis Summary

NoCompetitorsOpportunityThreat

1Search Engine Service Providers211

Total210

3.2. Conclusion

The number of threats is more than its opportunity where there are 11 threats and just 2 opportunities. It can conclude that Yahoo needs an excellent strategic plan to continue their business either standalone or sign a deal with new partner like Microsoft if they wish to outnumber Google. Not much data is available in the case study on Yahoo to analyze their present situation and their future expansion plan.

4. Industry Analysis

Type of Product offeringNoCase Facts

Yahoo!

1Yahoo owned and operates online properties and services, it also provides its advertising offerings and access to Internet users beyond Yahoo through its distribution network of third party entities, who have integrated its advertising offerings in to their web sites. (Page 201 / Para 2 row 5)

2Although many of the services Yahoo, provides to users are free, it does charge fees for a range of premium services. (Page 201 / Para 2 row 9)

3Yahoo !, offering include Yahoo! Groups, Yahoo! Answers and Flickr and are generally provided to users free of charge. (Page 202 / Para 2 row 1)

4Yahoo! search offering include, Yahoo! Search, Yahoo! Local, Yahoo! Yellow Pages and Yahoo! Maps and available free to users. (Page 202 / Para 2 row 3)

5Yahoo generates revenue through its Search offerings from search and display advertisement. (Page 202 / Para 2 row 5)

6Yahoo! Communication segment include Yahoo! Mail, Zimbra Mail and Yahoo! Messenger and Yahoo ! generates display advertisement revenues from these offerings. (Page 202 / Para 3 row 1)

Microsoft

1Microsoft Corporation, Google and Time Warner Incs America Online business. Each of these firms offer an integrated variety of internet products and services. ( Page 206 / Para 1 row 4 )

Google

1Google has expanded well beyond search related functions into areas such as e-mail (Gmail), mapping (Google Earth & Google Maps), Web-based productivity applications (Google Apps), video (Google Video and You Tube Inc which Google acquired in Nov 2006), a finance offering (iGoogle), a mobile Internet software platform (Android) and browser software (Google Chrome). (Page 206 / Para 3 row 2)

2During 2008, Google had 72% of internet traffic while Yahoo only possessed 17% followed by MSN at 6% and IACI at 4% ( Page 206 / Para 1 row 6)

Search Engine Utilization

Search Engine Utilization

Service ProviderNet Income (Billion)Percentage of UsageOffices

Google4.2349.270

Yahoo0.424323.825

Group Map of Revenue & Employee worth Comparison Revenue & Employee Comparison

Service ProviderRevenue ($ Billion)Each Employee Worth in $ (Million)Most Trafficked

Google21.819.072%

Yahoo7.214.717%

MSN (Microsoft)0.0584.36%

4.1. Conclusion Based on the two group maps, Google seems to be having the advantage among everyone in the industry. Google has the highest earning as per the exhibit 7 in the case study and the earnings and total usage is corresponding positively as shown in Search engine utilization strategic group map.

5. Michael Porters Five Forces 1. 2. 3. 4. 5. 5.1. Rivalry among competitors Search Engine Business

NoCase FactsCompetitive Force

StrongModerateWeak

1Google has 72% of Internet traffic while Yahoo only possessed 17% followed by MSN at 6% and IACI at 4%. (Page 206 / Para 1 row 6)

2Exhibit 7, Google has 42% of search engine utilization compared to Yahoo which has 23.8%. (Page 206 / Exhibit 6)

3Googles net income was $ 4.23 billion and Yahoo was $ 424.30 million (Page 207 / Exhibit 7)

4In October 2007, Microsoft purchased a 2% stake in a social networking firm Facebook, valuing the private company $15 billion. ( Page 206 / Para 2 row 7)

5Microsoft has an obvious and strong desire to increase its internet presence (Page 206 / Para 2 row 8)

6Google has expanded well beyond search related functions into areas such as e-mail (Gmail), mapping (Google Earth & Google Maps), Web-based productivity applications (Google Apps), video (Google Video and You Tube Inc which Google acquired in Nov 2006), a finance offering (iGoogle), a mobile Internet software platform (Android) and browser software (Google Chrome). (Page 206 / Para 3 row 2)

7Googles pursuit of mobile internet opportunity has made it one of the main application providers for Apple Incs iPhone. ( Page 206 / Para 4 row 1)

8Google commands good portion of the revenue in the industry and is a formidable competitor to Yahoo! in particular. From its 1st year of operation as a public company (2004). Google has increased its operating profit to $ 6.7 billion form a modest $852 million. (Page 206/Para4/ row 7)

9Google has 20,222 employees globally higher than the employees in the entire internet business industry ( Exhibit 7 / Page 207)

5.2. Entry of new competitor Search Engine Business


StrongModerateWeak

1The industry has low barrier entry, technical and regulatory makes it easier for new firms to enter the industry. (Page 207 / Para 1 row 4)

2Due to changes in the legislative requirements concerning technology sharing, patent right and information security, future expenses and profitability of the companies operating within this industry are harder to predict. ( Page 207 / Para 1 row 4)

3Technical and regulatory makes the projection of its business viability for existing companies difficult (Page 207 / Para 1 row 4)

4There are 1.1 billion internet users around the world and 211 million in the USA as of end of 2006 (Page202/Para 7 row 1)

5Internet advertisement revenue in USA remain strong, topping $ 23 billion (Page 202 / Para 9 row 1)

5.3. Substitute products Search Engine Business


StrongModerateWeak

1There are top 25 Internet Properties, including Yahoo providing internet search engine services ( Exhibit 8 / Page 207)

5.4. Bargaining power of suppliers Search Engine Business


StrongModerateWeak

1No Data Provided in Case Study

5.5. Bargaining power of buyers Search Engine Business


StrongModerateWeak

1There are top 25 Internet Properties, including Yahoo providing internet search engine services that buyers can choose ( Exhibit 8 / Page 207)

5.6. Conclusion of Michael Porters 5 forces

NoForcesStrongModerateWeak

1Rivalry among competing firm 9--

2Entry of New Competitor3-2

3Substitute Products1--

4Bargaining power of suppliers---

5Bargaining power of buyers1--

Total142

The pressure from the competitive forces on Yahoo! is very strong. Yahoo! has many industry players who are competing in the same market segment and providing almost identical product and services to its customers and users. Of all the biggest and toughest competitor is Google. Google has $ 3.8 billion more net income compared Yahoo! which is second largest internet brand. Thus, with the competitive forces analysis, we can conclude that Yahoo is indeed in a highly competitive industry and has to find ways to strategies their business if they want to increase their sustainability.

6. List of Opportunities and Threats.6.1. Opportunity Opportunities

Economic Forces

NoCase Facts


2There are 1.1 billion internet users around the world and 211 million in the USA as of end of 2006 ( Page 202 / Para 7 row 1)

3Although internet related business have perhaps held better than their non-digital counterparts, but have still suffered from macroeconomics malaise.( Page 202 / Para 8 row 5)

4Internet advertisement continues to grow though in slower pace. ( Page 202 / Para 9 row 4

5Broadband prices fall. (Page 206 / Para 5 row 1)

6Internet advertisement revenue in USA remains strong, topping $ 23 billion. (Page 202 / Para 9 row 1)

7Even Google Inc, expressed economic related caution in conjunction with its second quarter results.(Page 202 / Para 8 row 9)

Social, Culture, Demography

NoCase Facts

1Increased recognition that consumers spend more and more of their time online (Page 202 / Para 9 row 5)

Political, Legal and Government

NoCase Facts

1Federal Communication Commission (FCC) adopted flexible access rules for users and wireless resellers in conjunction with agencys early 2008 wireless spectrum auction. (Page 206 / Para 4 row 5)

Technologies

Data not available in Case Study

1. 2. 3. 4. 5. 6.2. Threats

Threats

Economic Forces

NoCase Facts

1Economic growth in the USA and the world has slowed amid crisis in housing and credit market ( Page 202 / Para 8 row 1)

2Rising unemployment and problematic geopolitics to the mix and USA had difficult economic back drop ( Page 202 / Para 8 row 4)

3In 2009, number of internet content and advertisement companies (including Bankrate Inc, Knot Inc including Yahoo!) reported disappointing financial results and lowered their forward financial outlooks. ( Page 202 / Para 8 row 7)

4Internet media and market research firm com Score Inc, expressed concerns about deceleration in online growth. (Page 202 / Para 8 row 10)

5Yahoo operates in the internet products, services and content markets, which are highly competitive and characterized by rapid change, converging technologies and increasing competition. (Page 206 / Para 1 row 1)

6Although internet related business have perhaps held better than their non-digital counterparts, but have still suffered from macroeconomics malaise. (Page 202 / Para 8 row 5)


8During 2008, Google had 72% of internet traffic while Yahoo only possessed 17% followed by MSN at 6% and IACI at 4% (Page 206 / Para 1 row 6)

Political, Legal and Government

NoCase Facts

1Due to changes in legislative requirements concerning technology sharing, patents rights and information security, future expenses and profitability of the companies operating with the industry are harder to predict. (Page 207 / Para 1 row 5)

2Technical and regulatory makes the projection of its business viability for existing companies difficult ( Page 207 / Para 1 row 4)

Social, Culture and Demography

1Data not available in Case Study

Technologies

NoCase Facts

1Future innovations and shifts in technology also make long term strategies regarding the internet and software services industry difficult. ( Page 207 / Para 1 row 8)

6. 6.1. 6.2. 7. External Factor Evaluation (EFE) Matrix7.1. OpportunitiesKey External FactorsWeightRatingWeighed Score

Opportunities Economical Factor

1Yahoo is the second leading global internet brand and one of the most trafficked internet destination worldwide (Page 201/Para2 / row 3)0.2040.8

2There are 1.1 billion internet users around the world and 211 million in the USA as of end of 2006 (Page202 /Para 7 row 1)0.0940.36

3Although internet related business have perhaps held better than their non-digital counterparts, but have still suffered from macroeconomics malaise.( Page 202 / Para 8 row 5)0.0710.07

4Internet advertisement continues to grow though in slower pace. (Page 202 / Para 9 row 4)0.1510.15

5Broadband prices fall. (Page 206 / Para 5 row 1)0.0420.08

6Internet advertisement revenue in USA remains strong, topping $ 23 billion. (Page 202 / Para 9 row 1)0.0330.09

7Even Google Inc, expressed economic related caution in conjunction with its second quarter results.(Page 202 / Para 8 row 9)0.0210.02

Opportunities - Political, Legal and Government

1Federal Communication Commission (FCC) adopted flexible access rules for users and wireless resellers in conjunction with agencys early 2008 wireless spectrum auction. ( Page 206 / Para 4 row 5)0.0420.08

Opportunities Technologies


Opportunities Social, Culture and Demographic

1Increased recognition that consumers spend more and more of their time online (Page 202 / Para 9 row 5)0.0240.08

1. 2. 3. 4. 5. 6. 7. 7.1. 7.2. Threat

Key External FactorsWeightRatingWeighed Score

Threat Economical Factor

1Economic growth in the USA and the world has slowed amid crisis in housing and credit market ( Page 202 / Para 8 row 1)0.0220.04

2Rising unemployment and problematic geopolitics to the mix and USA had difficult economic back drop. ( Page 202 / Para 8 row 4)0.0220.04

3In 2009, number of internet content and advertisement companies (including Bankrate Inc, Knot Inc. including Yahoo!) reported disappointing financial results and lowered their forward financial outlooks. ( Page 202 / Para 8 row 7)0.0440.16

4Internet media and market research firm comScore Inc, expressed concerns about deceleration in online growth. (Page 202 / Para 8 row 10)0.0230.06

5Yahoo operates in the internet products, services and content markets, which are highly competitive and characterized by rapid change, converging technologies and increasing competition.(Page 206 / Para 1 row 1)0.0540.2

6Although internet related business have perhaps held better than their non-digital counterparts, but have still suffered from macroeconomics malaise.( Page 202 / Para 8 row 5)0.0210.02

7From its first year of operation as a public company (2004), Google has increased its operating profit to $ 6.7 billion from a modest $ 852 million. ( Page 206 / Para 4 row 9)0.0530.15

8During 2008, Google had 72% of internet traffic while Yahoo only possessed 17% followed by MSN at 6% and IACI at 4% ( Page 206 / Para 1 row 6)0.0240.08

Threat - Political, Legal and Government

1Due to changes in legislative requirements concerning technology sharing, patents rights and information security, future expenses and profitability of the companies operating with the industry are harder to predict. (Page 207/Para1 row5)0.0210.02

2Technical and regulatory makes the projection of its business viability for existing companies difficult ( Page 207 / Para 1 row 4)0.0310.03

Threat Technologies

1Future innovations and shifts in technology also make long term strategies regarding the internet and software services industry difficult. ( Page 207 / Para 1 row 8)0.0530.15

Threat Social, Culture and Demography


Total12.68

Total weighted score of Yahoo! is 2.68 > average total weighted score which is 2.50. With this we can conclude that Yahoo! still in the strong position. This score indicates Yahoo! is responding in an outstanding way to existing threat and opportunities in the industry. Meaning, Yahoo! is effectively taking advantage of the existing opportunities and minimizes the adverse effect of the external threats. 8. Competitive Profile Matrix (CPM)YahooGoogleIndustry

NoKey Success FactorWeightRatingWeighted ScoreRatingWeighted ScoreRating Weighted Score

1Market Capital0.2020.4030.6010.20

2Quarterly Growth0.1010.1030.3020.20

3Gross Margin0.1010.1010.1010.10

4Revenue0.2530.754110.25

5Net Income0.3531.0541.40N/AN/A

Total12.403.400.75

Ratings: 1) = Major Weakness, 2) = Minor Weakness, 3) = Minor Strength, 4) = Major Strength Based on the CPM, Google is having the highest rating which 3.40 closer to 4. This is apparent in the case study that, Google is the market leader and Yahoo! is the 2nd most preferred internet search engine. Hence, the number 3.40 shows relative strength of Google in the internet search engine industry and followed by Yahoo! receiving 2.40.9. Internal Environment Analysis9.1. Culture Assessment NoItemsCompanies Within the IndustryStrengthWeakness

YahooGoogle

Case FactsCase Facts

1ValueEthicsYahoos code of ethics is embedded in its six values, Excellence, Innovation, Customer Fixation, Teamwork, Community and Fun.(Page 202/Para 5 row 1)

Unity Part of Yahoos vision & mission statement mentions All us united in creating indispensable experience and fueled by trust. ( Page 202 / Para 5 row 2) Data not available in Case Study

2BeliefsData not available in Case StudyData not available in Case Study

3RitesIncrease in product offeringYahoo resumed discussion with Microsoft about search and advertising partnership as both firm struggle to compete with Google, but Yahoo rejected the offer from Microsoft (Page 201 / Para 1 row 1)

Yahoo offering include Yahoo Group, Yahoo Answer and search offering include Yahoo Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps are available free to users. Yahoo communication segment include Yahoo Mail, Zimbra Mail and Yahoo Massenger (Page 202 / Para 3 row 1 & Page 2020 / Para 4 row 1)Increase in product offeringEarly 2009, Google in talks with the popular micro-blogging site. (Page 206/Para 3 row 1)

Google has expended well beyond search-related functions into areas such as e-mail, mapping, web-based productivity application, video, and you tube.(Page 206 / Para 1 row 2)

4RitualsStrategy & OperationsYahoo strategy and operations is to become the starting point for internet users. (Page 201 / Para 3 row 1)Data not available in Case Study

5MythsMultinationalYahoo has offices in more than 25 countries, province or territories. (Page 201 / Para 2 row 1) Data not available in Case Study

6SymbolBrand PositionYahoo is the second leading global internet brand. (Page 201 / Para 2 row 3)Data not available in Case Study

7HeroesFoundersCarol Bartz and Jerry Yang, who developed their interest in internet made them to form an internet search engine company called Yahoo into a global renown brand Yahoo! ( Page 201 / Para 6 row 1)Data not available in Case Study

8LegendsData not available in Case StudyData not available in Case Study

ConclusionYahoo! has all the good credibility to emerge as an industry leader and to earn the support from its customers to further improve their market expansion.

1. 2. 3. 4. 5. 6. 7. 8. 9. 9.1. 9.2. Yahoo! Management Assessment Analysis

No

ItemsCompanies Within the IndustryStrengthWeakness

YahooGoogle


1PlanningThe core of Yahoos strategy and operations is to become the starting point for internet users, to become worlds largest advertisers and to deliver industry-leading open platforms that attract developers and publishers Yahoo must buy solutions (Page201/Para 3 row 1)Data not available in Case Study

2OrganizingData not available in Case StudyData not available in Case Study

3MotivatingData not available in Case StudyData not available in Case Study

4StaffingYahoo! has been extensively reducing its work force because of profit decline. In 2009 they eliminated 675 and 700 at the end of 2009. ( Page 201 / Para 4 row 6)Data not available in Case Study

5ControllingFor the 2nd quarter of 2009 cost cutting allowed Yahoo! to post 7% increase in profit up to $ 141.4 million. (Page 201 / Para 4 row 6)Data not available in Case Study

In July 2009, Yahoo! closed its third video property, Maven Network based in Cambridge Massachusetts and they plan to close twenty video services, including network site Yahoo! 360 and its Web hosting service Geocites. (Page201/Para5 row 1)

Conclusion Based on the data given, Yahoo is seems to be doing well. However, this happened because of no available data from Google and detailed information of Yahoo! in the case study.

9.3. Yahoo!, Marketing Function Assessment Table.

No

ItemsCompanies Within the IndustryStrengthWeakness

YahooGoogle


1PlanningThe core of Yahoos strategy and operations is to become the starting point for internet users, to provide must buy solutions for the worlds largest advertisers and to deliver industry-leading open platforms that attract developers and publishers. ( Page 201 / Para 3 row 1)Data not available in Case Study

2Customer AnalysisPart of Yahoos code of ethics Customer Fixation ( Page 202 / Para 6 row 3)Data not available in Case Study

3Selling product / Services Yahoo, together with its owned and operated online properties and services; it also provides advertising offerings and access to internet users beyond Yahoo through its distribution network of 3rd party entities. (Page 201 / Para 2 row 5)


Yahoo Owned and operated site increased 19% from 2006 to 2007 and increased 10% from 2007 to 2009. ( Page 205 / Exhibit 3)

4Product & Services PlanningYahoo offering include Yahoo Group, Yahoo Answer and search offering include Yahoo Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps are available free to users. Yahoo communication segment include Yahoo Mail ( Page 202 / Para 3 row 1)Yahoo & Microsoft struggle to compete with Google. ( Page 201 / Para 1 row 4)Google has expanded well beyond search related functions into areas such as e-mail (Gmail), mapping (Google Earth & Google Maps), Web-based productivity applications (Google Apps), video (Google Video and You Tube Inc which Google acquired in Nov 2006), a finance offering (iGoogle), a mobile Internet software platform (Android) and browser software (Google Chrome). (Page 206 / Para 3 row 2)

5PricingYahoo generates revenue by providing marketing services to advertisers across hundreds of web sites. Although many of the services Yahoo provides to users are free, it does charge fee for a range of premium services. ( Page 201 / Para 2 row 7)Data not available in Case Study

6DistributionYahoo has offices in more than 25 countriesData not available in Case Study

Conclusion From the assessment, Yahoo! has all the properties to emerge and to be the market leader in the internet search engine industry. However, they have to expand like what Google has done. They should explore on how they can be part of major android and smart phone manufacturers so that they can use Yahoo as the mobile Internet software platform just like how Google has done.

9.4. Financial Condition of Yahoo

NoCompanies Within the IndustryStrengthWeakness

YahooGoogle


1Yahoo!s full year revenue in 2008 exceeded by $ 2.2 billion compared to 2007, despite the weakness in overall advertising. (Page 204/Para 1)Data not available in Case Study

2Net Income of Yahoo in 2008 was $424,298 million which is 77% lesser compared to their 2006 net income (Page 203/Exhibit 1)Data not available in Case Study

3Yahoo!, posted 78% in 1st Qtr 2009 profit decline and reacted by eliminating 675 more jobs on top of 2,500 job cuts in 2008 ( Page 201 / Para 4 row 1)Data not available in Case Study

4Yahoo! advertising business is also deteriorating rapidly as the firms overall revenue fell by 13% in the 2nd quarter of 2009.Data not available in Case Study

5Yahoo! IPO in April 1996 with total employee stock raise to high of $ 120 in 2000 but for most 2009 it has been trading under $ 14. ( Page 202 / Para 2 row 1)Data not available in Case Study

6Yahoo! lost 1% in rich media revenue, 1% in sponsorship and 2% in percent in 2008. (Page 202 / Para 6 row 1)Data not available in Case Study

7Yahoo! has market capital of $18.29billion compared to Google which has $ 100.13 billion. (Page 207 / Exhibit 7) Google had $ 100.13 billion market capital.(Page 207 / Exhibit 7)

ConclusionYahoo Financial was in bad shape because they were losing out to Google tremendously. This is because of they are not innovate and the way the operate their business unlike Google. Yahoo!, has to improve their product marketability and brand loyalty in order to gain market leader ship.10. Financial Ratio Time Series Data of Yahoo from 2006 to 2008

ItemsThe assessed company Yahoo FY06The assessed company Yahoo FY07The assessed company Yahoo FY08StrengthWeakness

Liquidity Ratio

Current Ratio2.541.412.78

Quick Ratio2.401.332.65

Leverage Ratio

Debts to Total Asset Ratio8%7%2%

Debt to Equity Ratio10%9%3%

Long Term Debt to Equity Ratio9.5%1%3%

Times Interest Earned RatioNo DataNo DataNo Data

Activity Ratio

Inventory TurnoverN/AN/AN/A

Fixed Asset Turnover7.145.735.03

Total Asset Turnover0.560.570.53

Accounts Receivable Turnover7.787.026.81

Average Collection Period50.245354

Profitability Ratio

Gross Profit Ratio58%59%58%

Operating Profit Ratio18%14%9.5%

Net Profit Margin12%9.5%6%

Return on Total Asset6.5%5%3%

Return on Stockholders Equity8%7%4%

Price Earnings Ratio26.9225.5341.38

Growth Ratio

Sales100%108%112%

Net Income100%88%44%

Earnings Per Share0.520.470.29

Dividend Per ShareNo DataNo DataNo Data

No data given on the share price of Yahoo, since in the case study on page 202 /Para 2 row 3 its mentioned that Yahoo share has been trading under $ 14, hence a fix price of $12 is used to calculate the PE/Ratio.ConclusionOver financial performance based on time series data, Yahoo is in good shape but intensive competition from Google has snatched major chunk of the market share. Also, PE Ratio show their value is overpriced especially in 2009. Based on the case study, Google PE ratio is 23.86 and industry P/E ratio is 18.87 which far to lower compared to Yahoo. Yahoo should look into this if they want to increase in investment.

11. Production / Operation Assessment

NoItemsCompanies Within the IndustryStrengthWeakness

YahooGoogle


1ProcessData not available in Case StudyData not available in Case Study

2CapacityDue to changes in legislative requirement concerning technology sharing, patent rights and information security, future expenses and profitability of the companies operating within this industry are harder to predict. ( Page 207 / para 1 row 5)


3InventoryData not available in Case StudyData not available in Case Study

4WorkforceData not available in Case StudyData not available in Case Study

5QualityThe core of Yahoos strategy and operations is to become the starting point for internet users, to provide must buy solutions for the worlds largest advertisers and to deliver industry-leading open platforms that attract developers and publishers. (Page 201/Para3 row 1)


ConclusionThe reason Yahoo become a non-manufacturing is because of the company do not have a enough production criteria in this assessment.

12. Research and DevelopmentNoCase FactsStrengthWeakness

1Data not Available in Case Study

ConclusionThere is no case fact given in the case study to analyze Yahoo MIS Function.13. MIS Function Analysis

NoItemsCompanies Within the IndustryStrengthWeakness

YahooGoogle


1All Managers Use MIS to make decisionData not available in Case StudyData not available in Case Study

2CIO / Director of MISData not available in Case StudyData not available in Case Study

3MIS Data are updated regularlyData not available in Case StudyData not available in Case Study

4Effectiveness of MIS PasswordData not available in Case StudyData not available in Case Study

5The strategist familiar with the MIS rivalsData not available in Case StudyData not available in Case Study

6MIS user friendlyData not available in Case StudyData not available in Case Study

7All users of MIS understand the Competitive advantage of MISData not available in Case StudyData not available in Case Study

8MIS Training is providedData not available in Case StudyData not available in Case Study

9The MIS continually being improvedData not available in Case StudyData not available in Case Study

ConclusionThere is no case fact given in the case study to analyze Yahoo MIS Function.14. Company Value Chain Analysis (VCA)14.1. Main Activities.

NoItemsCompanies Within Industry

Yahoo!

Case Facts

1Supplier / Raw Material Data not available in Case Study

2Process / ProductionData not available in Case Study

3Product

Product or type of Services OfferedYahoo generates revenue by providing marketing services to advertisers across hundreds of web sites.(Page 201 / Para 2 row 9)

Product Segment Yahoo! Groups

Yahoo! Groups offering, Yahoo! Answers and Flickr generally offered free of charge

Product Segment Yahoo! SearchYahoo! Search, - offering, Yahoo! Search, Yahoo! Local, Yahoo! Yellow Pages and Yahoo! Maps

Product Segment Yahoo! CommunicationYahoo! Mail, Zimbra Mail and Yahoo! Messenger

Revenue Generation All the services provided to the users are for free, however, they generate revenue through its search offering from display advertising (Page 202/Para3 row 5) Yahoo! Search generates revenue through its search offering from search and display advertisement. ( Page 202 / Para 1 row 6) Yahoo! Communication generates revenue through display advertising revenues from these offering. ( Page 202 / Para 3 row 1)

4DistributionData not available in Case Study

5MarketingYahoo! lost 1% in rich media revenue, 1% in sponsorship and 2% in classified ads in 2008 as compared 2007. (Page 202 / Para 6 row 1).Although they had increase of revenue in 2008 compared to 2007, it was because of growth in the entire internet business rather than shift to Yahoo! (Page 202 / Para 6 row 2)

5MarketingRevenue generated by Yahoo! marketing activities has always being increasing between 8% from 2006 to 2007 and 4 % from 2007 to 2008.(Page 205 / Exhibit 3)

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 13.1. 13.2. Supportive ActivitiesNoItemCompanies With Industry

Yahoo! - Case Facts

1CultureCase Facts are in Companys Culture Assessment Table

2ManagementCase Facts are in Managements Assessment Analysis

3Financial Case Facts are in Financial Condition of Yahoo and Financial Ratios Analysis

4ProductionCase Facts are in Production and Operation Assessment

5AdvertisementData not available in Case Study

14. List of All Strengths

NoCase Facts

1Yahoo! IPO stock rise to high of $ 120 in 2000. (Page 202 / Para 2 row 1)


3Yahoos code of ethics is embedded in its six values, Excellence, Innovation, Customer Fixation, Teamwork, Community and Fun. (Page 202 / Para 5 row 1)

4Part of Yahoos vision & mission statement mentions All us united in creating indispensable experience and fueled by trust. ( Page 202 / Para 5 row 2)

5Vast product offering -Yahoo offering include Yahoo Group, Yahoo Answer and search offering include Yahoo Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps are available free to users. Yahoo communication segment include Yahoo Mail, Zimbra Mail and Yahoo Messenger (Page 202 / Para 3 row 1 & Page 2020 / Para 4 row 1)

6Yahoo has offices in more than 25 countries or territories. (Page 201 / Para 2 row 1)

7For the 2nd quarter of 2009 cost cutting allowed Yahoo! to post 7% increase in profit up to $ 141.4 million. (Page 201 / Para 4 row 6)

8Part of Yahoos code of ethics Customer Fixation ( Page 202 / Para 6 row 3)

9Yahoo, together with its owned and operated online properties and services; it also provides advertising offerings and access to internet users beyond Yahoo through its distribution network of 3rd party entities. (Page 201 / Para 2 row 5)

10Yahoo!s revenue in 2008 exceeded by $ 2.2 billion compared to 2007, despite the weakness in overall advertising. (Page 204 / Para 1)

11Revenue generated by Yahoo! marketing activities has always being increasing between 8% from 2006 to 2007 and 4 % from 2007 to 2008.(Page 205 / Exhibit 3)

12The core of Yahoos strategy and operations is to become the starting point for internet users, to provide must buy solutions for the worlds largest advertisers and to deliver industry-leading open platforms that attract developers and publishers. (Page 201 / Para 3 row 1).

15. List of All WeaknessNoCase Facts

1Yahoo resumed discussion with Microsoft about search and advertising partnership as both firm struggle to compete with Google, but Yahoo rejected the offer from Microsoft (Page 201 / Para 1 row 1)

2In July 2009, Yahoo! closed its third video property, Maven Network based in Cambridge Massachusetts and they plan to close twenty video services, including network site Yahoo! 360 and its Web hosting service Geocites. (Page 201 / Para 5 row 1)

3Net Income of Yahoo in 2008 was $ 424,298 million which is 77% lesser compared to their net income in 2006 ( Page 203 / Exhibit 1)

4Yahoo!, posted 78% in 1st Qtr 2009 profit decline and reacted by eliminating 675 more jobs on top of 2,500 job cuts in 2008 ( Page 201 / Para 4 row 1)

5Yahoo! advertising business is also deteriorating rapidly as the firms overall revenue fell by 13% in the 2nd quarter of 2009.

6Yahoo! IPO in April 1996 with total employee stock raise to high of $ 120 in 2000 but for most 2009 it has been trading under $ 14. ( Page 202 / Para 2 row 1)

7Yahoo! lost 1% in rich media revenue, 1% in sponsorship and 2% in percent in 2008. (Page 202 / Para 6 row 1)

8Yahoo offering include Yahoo Group, Yahoo Answer and search offering include Yahoo Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps are available free to users. Yahoo communication segment include Yahoo Mail. ( Page 202 / Para 3 row 1)

9Google has 72% of internet traffic while Yahoo only possessed 17% followed by MSN at 6% and IACI at 4%. ( Page 206 / Para 1 row 6)

10Lower Current Ratio

11Lower Quick Ratio

12Lower Operating Profit Margin Ratio

13Lower Net Profit Margin Ratio

14Lower Return on Total Asset

15Lower Return on Stockholder Equity Ratio

16High Price Earnings Ratio ( Over Valued)

17Yahoo & Microsoft struggle to compete with Google. ( Page 201 / Para 1 row 4)

16. Internal Factor Evaluation (IEF) Matrix (Strength)

NoKey Internal FactorWeight RatingWeighted Score

Strength

1The core of Yahoos strategy and operations is to become the starting point for internet users, to provide must buy solutions for the worlds largest advertisers and to deliver industry-leading open platforms that attract developers and publishers. (Page 201 / Para 3 row 1).0.1040.40

2Yahoo!s full year revenue in 2008 exceeded by $ 2.2 billion compared to 2007, despite the weakness in overall advertising. (Page 204 / Para 1)0.10

40.40

3For the 2nd quarter of 2009 cost cutting allowed Yahoo! to post 7% increase in profit up to $ 141.4 million. (Page 201 / Para 4 row 6)0.0630.18

4Revenue generated by Yahoo! marketing activities has always being increasing between 8% from 2006 to 2007 and 4 % from 2007 to 2008.(Page 205 / Exhibit 3)0.0630.18

5Yahoo is the second leading global internet brand and one of the most trafficked internet destination worldwide (Page 201 / Para 2 / row 3)0.0630.18

6Yahoo, together with its owned and operated online properties and services; it also provides advertising offerings and access to internet users beyond Yahoo through its distribution network of 3rd party entities. (Page 201 / Para 2 row 5)0.02

20.04

7Vast product offering -Yahoo offering include Yahoo Group, Yahoo Answer and search offering include Yahoo Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps are available free to users. Yahoo communication segment include Yahoo Mail, Zimbra Mail and Yahoo Messenger (Page 202 / Para 3 row 1 & Page 2020 / Para 4 row 1)0.0620.12

8Yahoo has offices in more than 25 countries, province or territories. (Page 201 / Para 2 row 1)0.0210.02

9Part of Yahoos code of ethics Customer Fixation (Customer Centric) ( Page 202 / Para 6 row 3)0.0210.02

17. Internal Factor Evaluation (IEF) Matrix (Weakness)

NoKey Internal FactorWeight RatingWeighted Score

Weakness

1Yahoo resumed discussion with Microsoft about search and advertising partnership as both firm struggle to compete with Google.(Page 201 / Para 1 row 1)0.1040.40

2In July 2009, Yahoo! closed its third video property, Maven Network based in Cambridge Massachusetts and they plan to close twenty video services, including network site Yahoo! 360 and its Web hosting service Geocites. (Page 201 / Para 5 row 1)0.0730.21

3Google has 72% of internet traffic while Yahoo only possessed 17% followed by MSN at 6% and IACI at 4%. ( Page 206 / Para 1 row 6)0.0730.21

4Yahoo & Microsoft struggle to compete with Google. ( Page 201 / Para 1 row 4)0.0730.21

5Net Income of Yahoo in 2008 was $ 424,298 million which is 77% lesser compared to their net income in 2006 ( Page 203 / Exhibit 1)0.06

30.18

6Yahoo! advertising business is also deteriorating rapidly as the firms overall revenue fell by 13% in the 2nd quarter of 2009.0.0530.15

7Yahoo! lost 1% in rich media revenue, 1% in sponsorship and 2% in percent in 2008. (Page 202 / Para 6 row 1)0.0530.15

8Yahoo!, posted 78% in 1st Qtr 2009 profit decline. ( Page 201 / Para 4 row 1)0.0120.02

9Yahoo! IPO in April 1996 with total employee stock raise to high of $ 120 in 2000 but for most 2009 it has been trading under $ 14. ( Page 202 / Para 2 row 1)0.0210.02

Grand Total (Strength + Weakness)13.09

Conclusion From the IFE Matrix analysis, Yahoo score 3.09 which is higher than average (2.50). It shows that the company has internal strength to compete with its major competitors. But they have to improvise their existing strategy either by merging with the existing industry players to diversify and in the same time it can increase their market share. 18. Yahoos Existing Long Term and Short Term Financial Objectives and Strategies.NoFinancial Objectives

Case FactsRemarks

Long Term

Short TermSuccessfulUnsuccessful

1Sustainable revenue growthIncrease revenue 5% in 2009Yahoo! posted 78% 1st Qtr 2009 profit decline and reacted by eliminating another 675 jobs. (Page 201 / Para 4 row 1)

1st Qtr of 2008, Yahoo! revenue dropped 13% to $ 1.58 billion. (Page 201 / Para 4 row 3)

Yahoo!s online advertising business is also deteriorating rapidly as the firms overall revenue fell 13% in 2nd Qtr of 2009 compared to prior year. (Page 201 / Para 4 row 5)

That 2nd Qtr 09, Yahoo! managed to post 7% increase in profit up to $ 141.40 million through their aggressive cost cutting measures. ( Page 201 / Para 4 row 5)

In 2009, Yahoo! closed its third video property, Maven networks, based in Cambridge, Massachusetts, and they plan to close twenty video services, including its social network site Yahoo! 360 and its Web hosting service Geo Cites. ( Page 201 / Para 5 row 1)

Yahoo! IPO stock rose to the high $ 120 in 2000 and dropped to $ 14 for most of 2009. (Page 202 / Para 2 row 1)

Yahoo! lost 1% in rich media revenue, 1% in sponsorship and 2% in classified ads in 2008 as compared to 2007. (Page 202 / Para 6 row 1)

Yahoo!s search revenue increased by 3% in 2008 compared to 2007 due to growth in the entire internet business rather than a shift to Yahoo. (Page 202 / Para 6 row 3)

2Larger profit marginIncreasing operating margin by 10% in 2009Yahoo! net income dropped by 44.44% in 2008 compared to 2007 even though their revenue increased by 3%. ( Page 203 / Exhibit 1)

Yahoo!s Operating Profit Margin in 2006 was 15% but in 2007 the operating profit margin drop to 10%. In 2008 its operating profit margin was 0.0017%

3Shareholder valueIncrease EPS by 15% in 2009Yahoo2 EPS in 2009 was 0.29 which is less by 0.18 compared EPS in 2008. Yahoos EPS has decreased by 39% in 2009 compared to EPS of 2008.

19. Yahoos Existing Long Term and Short Term Strategic Objectives

NoStrategic Objectives

Case FactsRemarks

Long Term

Short TermSuccessfulUnsuccessful

1Market Share GrowthIncrease Market Share by 2%Yahoo has resumed discussion with Microsoft about search and advertisement partnership as both firms struggle to compete with Google. (Page 201 / Para 1 row 1)

Yahoo together with its owned and operated online properties and services, it also provides its advertising offerings and access to internet users beyond Yahoo through its distribution network of 3rd party entities, who integrated its advertising offering into their Web sites.(Page 201/Para2 row 4)

Yahoo generates revenues by providing marketing services to advertisers across hundreds of Web Sites. (Page 201 / Para 2 row 7)

2New Improved Product DevelopmentGetting New Improved Product to Market AnnuallyData not available in Case Study

3Increase Yahoos Offices GloballyIncrease number of employees to cater the needs of Internet UsersData not available in Case Study

20. Yahoos Existing Corporate Level Strategies

No

Defensive Strategies

Case FactsRemarks

SuccessfulUnsuccessful

1Horizontal IntegrationYahoo has resumed discussion with Microsoft about search and advertisement partnership as both firm struggles to compete with Google. ( Page 201 / Para 1 row 1)

2Market PenetrationYahoo together with its owned, operated online properties and services, it also provides its advertising offerings and access to internet users beyond Yahoo through its distribution network of 3rd party entities, who integrated its advertising offering into their Web sites.(Page 201 / Para 2 row 4)

Yahoo generates revenues by providing marketing services to advertisers from hundreds of Web Sites.(Page201/ Para 2 row 7)

Vast product offering -Yahoo offering include Yahoo Group, Yahoo Answer and search offering include Yahoo Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps are available free to users. Yahoo communication segment include Yahoo Mail, Zimbra Mail and Yahoo Messenger (Page 202 / Para 3 row 1 & Page 2020 / Para 4 row 1)

3Market DevelopmentYahoo has offices in more than 25 countries, province or territories. (Page 201 / Para 2 row 1)

4RetrenchmentFor that 2nd Qtr, aggressive cost cutting allowed Yahoo to post 7% increase in profit up to $ 141.4 million, but they laid off another 700 employees to end with 13,000 employees. ( page 201 / Para 4 row 5)

5DivestitureIn July 2009, Yahoo closed its 3rd video property, Maven Network, based in Cambridge, Massachusetts. ( Page 201 / Para 5 row 1)

Yahoo plans to close twenty video services, including social network site Yahoo 360 and its Web hosting services GeoCities. ( Page 201 / Para 5 row 2)

21. Yahoos Existing Companys Business Level Strategies. (Porters Five Generic Strategies)

Name of Strategy

Case FactsRemarks

SuccessfulUnsuccessful

Cost LeadershipType 2Although many of the services Yahoo provides the users are free, it does charge fees for a range of premium services. ( Page 201 / Para 2 row 8)

Yahoo searchs services are free to users and are often the starting point for users navigating the internet and searching for information. Yahoo generates revenues through its search offering from search and display advertising. (Page 202 / Para 3 row 3)

Yahoo communications segments generate revenue display advertising revenues from these offering. (Page 202 / Para 2 row 1)

Conclusion of Yahoos existing strategies.Corporate LevelBusiness Level

Horizontal Integration

Market Penetration

Market Development

Retrenchment

Divestiture

Cost LeadershipType 2

22. Strategy Formulation Tools. (SWOT Analysis)

22.1. Opportunities

NoCase Facts

O1Yahoo is the second leading global internet brand and one of the most trafficked internet destination worldwide ( Page 201 / Para 2 / row 3)

O2There are 1.1 billion internet users around the world and 211 million in the USA as of end of 2006 ( Page 202 / Para 7 row 1)

O3Although internet related business have perhaps held better than their non-digital counterparts, but have still suffered from macroeconomics malaise.( Page 202 / Para 8 row 5)

O4Internet advertisement continues to grow though in slower pace (Page 202 / Para 9 row 4

O5Broadband prices fall (Page 206 / Para 5 row 1)

O6Internet advertisement revenue in USA remains strong, topping $ 23 billion . (Page 202 / Para 9 row 1)

O7Increased recognition that consumers spend more and more of their time online. (Page 202 / Para 9 row 5)

O8Federal Communication Commission (FCC) adopted flexible access rules for users and wireless resellers in conjunction with agencys early 2008 wireless spectrum auction. (Page 206 / Para 4 row 5)

O9Even Google Inc, expressed economic related caution in conjunction with its second quarter results (Page 202 / Para 8 row 9)

O10Yahoo resumed discussion with Microsoft about search and advertising partnership as both firm struggle to compete with Google. (Page 201 / Para 1 row 1)

22.2. Threats

NoCase Facts

T1Economic growth in the USA and the world has slowed amid crisis in housing and credit market.( Page 202 / Para 8 row 1)

T2Rising unemployment and problematic geopolitics to the mix and USA had difficult economic back drop ( Page 202 / Para 8 row 4)

T3Even though internet related business have possibly held better than their non-digital counterparts, but still suffered from macroeconomics malaise.(Page 202/Para 8 row 5)

T4Internet media and market research firm com Score Inc, expressed concerns about deceleration in online growth. (Page 202 / Para 8 row 10)

T5In 2009, number of internet content and advertisement companies (including Bankrate Inc, Knot Inc including Yahoo!) reported disappointing financial results and lowered their forward financial outlooks. ( Page 202 / Para 8 row 7)

T6Due to changes in legislative requirements concerning technology sharing, patents rights and information security, future expenses and profitability of the companies operating with the industry are harder to predict. (Page 207 / Para 1 row 5)

T7From its first year of operation as a public company (2004), Google has increased its operating profit to $ 6.7 billion from a modest $ 852 million. ( Page 206 / Para 4 row 9)

T8Technical and regulatory makes the projection of its business viability for existing companies difficult ( Page 207 / Para 1 row 4)

T9Future innovations and shifts in technology also make long term strategies regarding the internet and software services industry difficult. ( Page 207 / Para 1 row 8)

22.3. Strength

NoCase Facts

S1The core of Yahoos strategy and operations is to become the starting point for internet users, to provide must buy solutions for the worlds largest advertisers and to deliver industry-leading open platforms that attract developers and publishers. (Page 201 / Para 3 row 1).

S2Yahoo!s full year revenue in 2008 exceeded by $ 2.2 billion compared to 2007, despite the weakness in overall advertising. (Page 204 / Para 1)

S3For the 2nd quarter of 2009 cost cutting allowed Yahoo! to post 7% increase in profit up to $ 141.4 million. (Page 201 / Para 4 row 6)

S4Revenue generated by Yahoo! marketing activities has always being increasing between 8% from 2006 to 2007 and 4 % from 2007 to 2008.(Page 205 / Exhibit 3)

S5Yahoo is the second leading global internet brand and one of the most trafficked internet destination worldwide ( Page 201 / Para 2 / row 3)

S6Yahoo, together with its owned and operated online properties and services; it also provides advertising offerings and access to internet users beyond Yahoo through its distribution network of 3rd party entities. (Page 201 / Para 2 row 5)

S7Vast product offering -Yahoo offering include Yahoo Group, Yahoo Answer and search offering include Yahoo Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps are available free to users. Yahoo communication segment include Yahoo Mail, Zimbra Mail and Yahoo Messenger (Page 202 / Para 3 row 1 & Page 2020 / Para 4 row 1)

S8Yahoo has offices in more than 25 countries, province or territories. (Page 201 / Para 2 row 1)

S9Part of Yahoos code of ethics Customer Fixation (Customer Centric) ( Page 202 / Para 6 row 3)

22.4. Weakness

NoCase Facts

W1In 2008 Yahoo rejected the offer from Microsoft (Page 201 / Para 1 row 1)

W2In July 2009, Yahoo! closed its third video property, Maven Network based in Cambridge Massachusetts and they plan to close twenty video services, including network site Yahoo! 360 and its Web hosting service Geocites. (Page 201 / Para 5 row 1)

W3Net Income of Yahoo in 2008 was $ 424,298 million which is 77% lesser compared to their net income in 2006 ( Page 203 / Exhibit 1)

W4Yahoo!, posted 78% in 1st Qtr 2009 profit decline. ( Page 201 / Para 4 row 1)

W5Yahoo! advertising business is also deteriorating rapidly as the firms overall revenue fell by 13% in the 2nd quarter of 2009.

W6Yahoo! IPO in April 1996 with total employee stock raise to high of $ 120 in 2000 but for most 2009 it has been trading under $ 14. ( Page 202 / Para 2 row 1)

W7Yahoo! lost 1% in rich media revenue, 1% in sponsorship and 2% in percent in 2008. (Page 202 / Para 6 row 1)

22.5. SWOT Matrix

23. Converting into Strategic Terms23.1. Corporate Level Strategy.

NoType of StrategyAlternative Strategies

1Horizontal IntegrationSO3

SO4

WO1

ST2

2Market PenetrationSO1

SO2

ST3

WO3

ST1

3RetrenchmentST5

WT3

4DivestureST4

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 23.1. 23.2. Business Level Strategy.

NoType of StrategyAlternative Strategies

1Cost Leadership Type 2ST4

ST5

WO4

WT3

ST2

2Differentiation WT1

WT2

ST1

23.3. Selected Strategy Original Sentences.

Level of StrategyOriginal Alternative Strategies Code

Business Level Strategy

Cost Leadership (Type 2)Gain market share and position in the best place ST5

Corporate Level Strategy

Horizontal IntegrationNegotiate a deal with Microsoft to increase foothold in the USA and GloballyWO1

Market PenetrationSign up deal with smart phone manufacturers to include Yahoo a preferred search engineST1

Retrenchment Increase service and product promotion via multiple channels to increase sales to prevent retrenchment WT1

Divesture Outsource non-core activityWT3

Cost LeadershipType 2

Business Level

Horizontal IntegrationMarket IntegrationRetrenchment

Corporate Level

24. Space Analysis24.1. Factors that make up the space matrix axes

Internal Strategic Position External Strategic PositionFinancial PositionStability Position

Yahoos revenue from 2007 to 2008 increased by 3.4% to $7.2 billion. But net income decreased by 35.7% to $ 424 million. (Page 201 / Para 2 row 2)Yahoo operates in the Internet products, services and content markets, which are highly competitive and characterized by rapid change, converging technologies and increasing competition. ( Page 206 / Para 1 row 1)

Liquidity RatioCurrent ratio is > 1 , except dropped a 1.13 in 2007 compared to 2006 but regain by 1.37 in 2008Quick ratio is > 1 in 2006 and 2008, but dropped by 1.07 and regain by 1.32 in 2008.Internet advertising continues to grow, albeit slower pace. (Page 202 / Para

Leverage Ratio: Debt to total asset ratio decreased from 8% in 2006 to 2% in 2008Long term debt to equity ratio decreased from 9.5% in 2006 to 3% in 2008Add rising unemployment and problematic geopolitics to the mix and we have a difficult economic back drop to say least. (Page 202 / Para 8 row 4)

Activity Ratio:Fixed asset turnover ratio for was good 2006 reading 7.14 but dropped by 2.11 and ending with 5.03in 2008Total asset turnover ratio is low at 0.56 from 2006 and ended with 0.53 in 2008Future innovations and shift in technology also make long term strategies regarding the Internet and software services industry difficult. ( Page 207 / Para 1 row 8)

Profitability Ratio:Gross profit margin is within 59% to 58%, this shows cost of revenue is in the region of 40% of the sales generated.Operating profit ratio decreased from 18% in 2006 to 9.5% in 2008.Net profit margin in 2006 was 12% and decreased by 50% to end at 6% in 2008. ROA decreased by 3.5% from 2006 to 2008ROE decreased by 50% from 2006 ending at 4% in 2008EPS has decreased from 0.52 in 2006 to 0.29 in 2009Price earnings ratio was 41.38 in 2009

Each company in the industry is committed to attract as many visitors (as Exhibit 8 demonstrates) as possible. ( Page 207 / Para 1 row 3)Although internet related business have perhaps held up better than their non-digital counterparts, they have still suffered from macroeconomics malaise. ( Page 202 / Para 8 row 5)

Competitive PositionIndustry Position

Yahoo, together with its owned and operated online properties and services; it also provides advertising offerings and access to internet users beyond Yahoo through its distribution network of 3rd party entities. (Page 201 / Para 2 row 5)This trend confirms marketers increased recognition that consumers spend more and more of their time online.( Page 202 / Para 9 row 5)

Vast product offering -Yahoo offering include Yahoo Group, Yahoo Answer and search offering include Yahoo Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps are available free to users. Yahoo communication segment include Yahoo Mail, Zimbra Mail and Yahoo Messenger (Page 202 / Para 3 row 1 & Page 2020 / Para 4 row 1)Internet advertising revenues in the united states remain strong, topping $23 billion, according to the 2008 Internet Advertising Revenue Report, released by Interactive Advertising Bureau and PricewaterhouseCoopers LLP (Pwc). (Page 202 / Para 9 row 1)

Yahoo is the second leading global internet brand and one of the most trafficked internet destination worldwide ( Page 201 / Para 2 / row 3)Federal Communication Commission ( FCC) adopted flexible access rules for users and wireless resellers in conjunction with the agencys early 2008 wireless spectrum auction. (Page 206 / Para 4 / row 4)

Yahoo has offices in more than 25 countries, province or territories. (Page 201/Para 2 row 1)As broadband prices fall, ISPs are pursuing new business strategies, such as bundling Internet access with voice and video services. ( Page 206 / Para 5 row 1)

Yahoo! sites has 140,080,000 unique visitors sharing the same number as Google ( Page 207 / Exhibit 8)The industry, due to its low barrier entry-technical and regulatory makes the projection of its business viability for existing companies difficult. (Page 207/ Para1 row 4)

The core of Yahoos strategy and operations is to become the starting point for internet users, to provide must buy solutions for the worlds largest advertisers and to deliver industry-leading open platforms that attract developers and publishers. (Page 201 / Para 3 row 1).There are 1.1 billion internet users around the world and 211 million in the USA as of end of 2006 ( Page 202 / Para 7 row 1)

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 24.1. 24.2. Space Matrix

NoFinancial Position (FP)Ratings

1Yahoos revenue from 2007 to 2008 increased by 3.4% to $7.2 billion. But net income decreased by 35.7% to $ 424 million. (Page 201 / Para 2 row 2)1

2Liquidity RatioCurrent ratio is > 1 , except dropped a 1.13 in 2007 compared to 2006 but regain by 1.37 in 2008Quick ratio is > 1 in 2006 and 2008, but dropped by 1.07 and regain by 1.32 in 2008.1

3Leverage Ratio: Debt to total asset ratio decreased from 8% in 2006 to 2% in 2008Long term debt to equity ratio decreased from 9.5% in 2006 to1

4Activity Ratio:Fixed asset turnover ratio for was good 2006 reading 7.14 but dropped by 2.11 and ending with 5.03in 2008Total asset turnover ratio is low at 0.56 from 2006 and ended with 0.53 in 20083

5Profitability Ratio:Gross profit margin is within 59% to 58%, this shows cost of revenue is in the region of 40% of the sales generated.Operating profit ratio decreased from 18% in 2006 to 9.5% in 2008.Net profit margin in 2006 was 12% and decreased by 50% to end at 6% in 2008. ROA decreased by 3.5% from 2006 to 2008ROE decreased by 50% from 2006 ending at 4% in 2008EPS has decreased from 0.52 in 2006 to 0.29 in 2009Price earnings ratio was 41.38 in 2009

3

6Price earnings ratio was 41.38 in 20091

7Growth RatioSales started 100% in 2006 and ended up at 112% in 2008, each year sales increase by 8% in 2007 and 3% in 2008Net Income ended in 2008 at 44%, each year net income decreased by 12% in 2007 and 35.7% in 2008.

3

Total13

NoStability Position ( SP)Ratings

1Yahoo operates in the Internet products, services and content markets, which are highly competitive and characterized by rapid change, converging technologies and increasing competition. ( Page 206 / Para 1 row 1)-4

2Internet advertising continues to grow, albeit slower pace. (Page 202 / Para-3

3Add rising unemployment and problematic geopolitics to the mix and we have a difficult economic back drop to say least. (Page 202 / Para 8 row 4)-4

4Each company in the industry is committed to attract as many visitors (as Exhibit 8 demonstrates) as possible. ( Page 207 / Para 1 row 3)-4

5Although internet related business have perhaps held up better than their non-digital counterparts, they have still suffered from macroeconomics malaise. (Page 202 / Para 8 row 5)-3

6Google has 72% of Internet traffic while Yahoo only possessed 17% followed by MSN at 6% am IACI at 4%. (Page 206 / Para 1 row 6)-1

7Future innovations and shift in technology also make long term strategies regarding the Internet and software services industry difficult. ( Page 207 / Para 1 row 8)-3

Total-22

NoCompetitive Position ( CP)Ratings

1Yahoo, together with its owned and operated online properties and services; it also provides advertising offerings and access to internet users beyond Yahoo through its distribution network of 3rd party entities. (Page 201 / Para 2 row 5)-2

2Vast product offering -Yahoo offering include Yahoo Group, Yahoo Answer and search offering include Yahoo Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps are available free to users. Yahoo communication segment include Yahoo Mail, Zimbra Mail and Yahoo Messenger (Page 202 / Para 3 row 1 & Page 2020 / Para 4 row 1)-2

3Yahoo is the second leading global internet brand and one of the most trafficked internet destination worldwide ( Page 201 / Para 2 / row 3)-1

4Yahoo has offices in more than 25 countries, province or territories. (Page 201 / Para 2 row 1)-2

5Yahoo! sites has 140,080,000 unique visitors sharing the same number as Google.( Page 207 / Exhibit 8)-2

6The core of Yahoos strategy and operations is to become the starting point for internet users, to provide must buy solutions for the worlds largest advertisers and to deliver industry-leading open platforms that attract developers and publishers. (Page 201 / Para 3 row 1).-3

Total-12

NoIndustry Position ( IP)Ratings

1This trend confirms marketers increased recognition that consumers spend more and more of their time online.( Page 202 / Para 9 row 5)5

2Internet advertising revenues in the united states remain strong, topping $23 billion, according to the 2008 Internet Advertising Revenue Report, released by Interactive Advertising Bureau and PricewaterhouseCoopers LLP (Pwc). (Page 202 / Para 9 row 1)4

3Federal Communication Commission (FCC) adopted flexible access rules for users and wireless resellers in conjunction with the agencys early 2008 wireless spectrum auction. (Page 206 / Para 4 / row 4)4

4As broadband prices fall, ISPs are pursuing new business strategies, such as bundling Internet access with voice and video services. ( Page 206 / Para 5 row 1)3

5

The industry, due to its low barrier entry-technical and regulatory makes the projection of its business viability for existing companies difficult. ( Page 207 / Para1 row 4)3

6There are 1.1 billion internet users around the world and 211 million in the USA as of end of 2006 ( Page 202 / Para 7 row 1)7

Total26

SP Average : -22 7 = -3.14IP Average : 26 6 = 4.3

CP Average : -14 6 = -2.3FP Average : 13 7 = 1.86

Directional vector coordinatesX- axis -2.3 (+ 4.3) = 2

Y axis -3.14(+1.88) = -1.26

Yahoo should choose competitive strategy

Conclusion

The result of SPACE Matrix situated in Competitive area. The following are the chosen strategies: Horizontal Integration Market Penetration Market Development Product Development

25. BCG Analysis

BCG Matrix is that it draws attention to the cash flow, investment characteristics and needs of an organizations various divisions. Also, there is no industry growth rate data given in the case study, hence, this test cannot be conducted. 25.1. Internal-External Analysis.

Total Revenue from FY06 FY08 ($)Revenue (%)Total Profit from FY06 FY08 ($)Profit %EFEIFE

20,603,4551001,835,689100%3.083.10

The Strategy chosen based on the Internal External (IE) Matrix Horizontal Integration Market Penetration Market Development Product Development26. Grand Strategy Matrix

Y axis refer to revenue growth of the assess company (Yahoo), there are no data of the competitors revenue growth in the case study. Therefore, we cannot determine if Yahoos revenue growth is bad, moderate or rapid because there is no industrial standard. However, as stated in Strategic Management Concepts and Cases (David, 2013) firms whose annual growth in sales exceeds 5% could be considered to have rapid growth. As for Yahoo, the revenue growth in 2008 in comparison to 2007 was at 3%, thus we can conclude it was a slow market growth.X axis refer to Yahoo CPM result.YahooGoogleIndustry

CPM2.403.400.75

Average: 2.40 + 3.40 + 0.75 = 6.55 = 2.18 3 3Base on the given findings, Yahoo is in the strong competitive position since its CPM is 2.40 > 2.18 competitive averages.

The strategy chosen from Grand Strategy Matrix (Quadrant IV) Related Diversification

27. Final Conclusion of the results of all the strategy analysis.

SWOT MatrixSPACE MATRIXIE MATRIXGRAND MATRIX

1. Horizontal Integration2. Market Penetration3. Retrenchment4. Divesture1. Horizontal Integration2. Market Penetration3. Market Development4. Product Development1. Horizontal Integration2. Market Penetration 3. Market Development

1. Related Diversification

28. Strategic Choice

After conducting all the analysis, we finally can conclude that best strategy chosen or suitable for Yahoos future business growth is:-1. Horizontal Integration2. Market Penetration

29. Quantitative Strategic Planning Matrix (QSPM)Strategy Alternatives

Key FactorsWeight12

Horizontal IntegrationMarket Penetration

ASTASASTAS

Opportunities ( External Factors)

Yahoo is the second leading global internet brand and one of the most trafficked internet destination worldwide ( Page 201 / Para 2 / row 3)0.15 3 0.45 2 0.30

There are 1.1 billion internet users around the world and 211 million in the USA as of end of 2006 (Page 202/Para7 row 1)0.09 4 0.36 4 0.36

Although internet related business have perhaps held better than their non-digital counterparts, but have still suffered from macroeconomics malaise.( Page 202 / Para 8 row 5)0.02 1 0.02 2 0.04

Internet advertisement continues to grow though in slower pace. ( Page 202 / Para 9 row 40.02 1 0.02 2 0.04

Broadband prices fall. (Page 206 / Para 5 row 1)0.04 2 0.08 3 0.12

Internet advertisement revenue in USA remains strong, topping $ 23 billion. (Page 202 / Para 9 row 1)0.07 3 0.21 3 0.21

Even Google Inc, expressed economic related caution in conjunction with its second quarter results.(Page 202 / Para 8 row 9)0.02 - - 2 0.04

Federal Communication Commission (FCC) adopted flexible access rules for users and wireless resellers in conjunction with agencys early 2008 wireless spectrum auction. ( Page 206 / Para 4 row 5)0.04 - - 3 0.12

Increased recognition that consumers spend more and more of their time online (Page 202 / Para 9 row 5)0.08 4 0.32 4 0.32

Sub Total1.461.55

Threat

Economic growth in the USA and the world has slowed amid crisis in housing and credit market ( Page 202 / Para 8 row 1)0.04 2 0.08 1 0.04

Rising unemployment and problematic geopolitics to the mix and USA had difficult economic back drop. (Page 202 / Para 8 row 4)0.04 2 0.08 1 0.04

In 2009, number of internet content and advertisement companies (including Bankrate Inc, Knot Inc. including Yahoo!) reported disappointing financial results and lowered their forward financial outlooks. ( age 202 / Para 8 row 7)0.04 - - - -

Internet media and market research firm comScore Inc, expressed concerns about deceleration in online growth. (Page 202 / Para 8 row 10)0.04 3 0.12 1 0.04

Yahoo operates in the internet products, services and content markets, which are highly competitive and characterized by rapid change, converging technologies and increasing competition. (Page 206 / Para 1 row 1)0.05 4 0.20 3 0.15

Although internet related business have perhaps held better than their non-digital counterparts, but have still suffered from macroeconomics malaise.( Page 202 / Para 8 row 5)0.02 - - 1 0.02

From its first year of operation as a public company (2004), Google has increased its operating profit to $ 6.7 billion from a modest $ 852 million. ( Page 206 / Para 4 row 9)0.05 - - 3 0.15

During 2008, Google had 72% of internet traffic while Yahoo only possessed 17% followed by MSN at 6% and IACI at 4% ( Page 206 / Para 1 row 6)0.06 4 0.24 3 0.18

Due to changes in legislative requirements concerning technology sharing, patents rights and information security, future expenses and profitability of the companies operating with the industry are harder to predict. (Page 207 / Para 1 row 5)0.02 1 0.02 - -

Technical and regulatory makes the projection of its business viability for existing companies difficult ( Page 207 / Para 1 row 4)0.03 1 0.03 1 0.03

Future innovations and shifts in technology also make long term strategies regarding the internet and software services industry difficult. ( Page 207 / Para 1 row 8)0.08 3 0.24 1 0.08

Sub Total 1.01 0.73

Strengths (Internal Factor)

The core of Yahoos strategy and operations is to become the starting point for internet users, to provide must buy solutions for the worlds largest advertisers and to deliver industry-leading open platforms that attract developers and publishers. (Page 201 / Para 3 row 1).0.11 4 0.44 4 0.44

Yahoo!s full year revenue in 2008 exceeded by $ 2.2 billion compared to 2007, despite the weakness in overall advertising. (Page 204 / Para 1)0.09 4 0.36 3 0.27

For the 2nd quarter of 2009 cost cutting allowed Yahoo! to post 7% increase in profit up to $ 141.4 million. (Page 201 / Para 4 row 6)0.06 - - - -

Revenue generated by Yahoo! marketing activities has always being increasing between 8% from 2006 to 2007 and 4 % from 2007 to 2008.(Page 205 / Exhibit 3)0.06 3 0.18 4 0.24

Yahoo is the second leading global internet brand and one of the most trafficked internet destination worldwide ( Page 201 / Para 2 / row 3)0.06 3 0.18 4 0.24

Yahoo, together with its owned and operated online properties and services; it also provides advertising offerings and access to internet users beyond Yahoo through its distribution network of 3rd party entities. (Page 201 / Para 2 row 5)0.02 2 0.04 3 0.06

Vast product offering -Yahoo offering include Yahoo Group, Yahoo Answer and search offering include Yahoo Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps are available free to users. Yahoo communication segment include Yahoo Mail, Zimbra Mail and Yahoo Messenger (Page 202 / Para 3 row 1 & Page 2020 / Para 4 row 1)0.06 2 0.12 4 0.24

Yahoo has offices in more than 25 countries, province or territories. (Page 201 / Para 2 row 1)0.03 1 0.03 4 0.12

Part of Yahoos code of ethics Customer Fixation (Customer Centric) ( Page 202 / Para 6 row 3)0.01 - - 1 0.01

Sub Total 1.35 1.62

Weakness

Yahoo resumed discussion with Microsoft about search and advertising partnership as both firms struggle to compete with Google.(Page 201 / Para 1 row 1)0.1 4 0.40 4 0.40

In July 2009, Yahoo! closed its third video property, Maven Network based in Cambridge Massachusetts and they plan to close twenty video services, including network site Yahoo! 360 and its Web hosting service Geocites. (Page 201 / Para 5 row 1)0.07 - - 4 0.28

Google has 72% of internet traffic while Yahoo only possessed 17% followed by MSN at 6% and IACI at 4%. (Page 206 / Para 1 row 6)0.07 3 0.21 4 0.28

Yahoo & Microsoft struggle to compete with Google. ( Page 201 / Para 1 row 4)0.07 3 0.21 4 0.28

Net Income of Yahoo in 2008 was $ 424,298 million which is 77% lesser compared to their net income in 2006 ( Page 203 / Exhibit 1)0.06 - - 3 0.18

Yahoo! advertising business is also deteriorating rapidly as the firms overall revenue fell by 13% in the 2nd quarter of 2009.0.05 3 0.15 4 0.20

Yahoo! lost 1% in rich media revenue, 1% in sponsorship and 2% in percent in 2008. (Page 202 / Para 6 row 1)0.05 3 0.15 4 0.20

Yahoo!, posted 78% in 1st Qtr 2009 profit decline. ( Page 201 / Para 4 row 1)0.02 2 0.04 4 0.08

Yahoo! IPO in April 1996 with total employee stock raise to high of $ 120 in 2000 but for most 2009 it has been trading under $ 14. ( Page 202 / Para 2 row 1)0.01 - - - -

Sub Total 1.16 1.90

Total Scores 4.985.80

29.1. Outcome of QSPM

Base on WSPM, we can conclude that the best corporate level strategy to use to gain market leadership is Market Penetration.

Original Sentences: NoCase Facts ( Original Sentences)

1SO1- Improve service marketing to increase product position among the internet users to increase market leadership

2SO2- Entice more advertisers to use Yahoo as a marketing solution.(O2,O3,O4,S4,S7)

3ST3- Increase R&D continuously to produce new offering to users. ( T8,T9,S2,S5,S7,S8)

4WO3- Focus marketing development in USA

5ST1 - Sign up deal with smart phone manufacturers to include Yahoo a preferred search engine

From SWOT matrix, business level strategy chosen was Cost Leadership (Type 2)NoCase Facts ( Original Sentences)

1.ST4- System development from 3rd world countries. (T3,T5,T6,T8,S3,S5,S7,S8)

2.ST5- Gain market share and position in the best place. ( T1,T2,T4,T5,T6,T7,S4,S5,S6)

3.WO4 - Reduce service charge to increase revenue

4.ST2 - Buy over small and weak internet service providers for lower price to increase market leadership

5.WT3 - Outsource non-core activity

30. Implementing Strategies: New Management Strategy.

Business Level

31. Conclusion

Yahoo have potential to growth if they use the new implementing strategies as mention previously although they are in the competitive industry. Moreover based on the case study given, they are the second most preferred Internet search engine after Google and in America, they are the most popular Internet site. Yahoo was having financial difficulties during 2006 to 2008 was due to slow global economic growth. Moreover in 2008, Yahoo recorded lowest net income ever since 2006, because they right of Goodwill impairment charges $ 487 million despite slow economy growth. Otherwise, they would have recorded a better net income compared the past two years. Market penetration, product development and market development become three main elements which Yahoo! need to focus to further attract more customers, generate more profits and expand the business. Overall, Yahoo! is in a strategic position to maintain its market share and position in the U.S and International markets. Further innovations are to further sustain in the market as one of the major player in the industry.

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Yahoo Strategic Management