Strategic analysis of Yahoo!

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Strategic analysis of "Yahoo!"

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Abstract

There are more Yahoo! Mail users around the world than two times the population of Mexico” (Yahoo! Website, 2008).

One cannot deny the success of Yahoo! over the last decade. However, the reason why Yahoo! is catching a lot of media attention today does not lie in its success but more on its uncertain future. Will Microsoft take over Yahoo!? Will Yahoo! privilege a partnership with Google or AOL? Whatever decision Yahoo! takes, it will certainly have an impact on the whole Internet industry. Therefore, it is worthwhile and challenging to carry out a strategic analysis of Yahoo!. That is the reason why we choose Yahoo!.

In the first part of this paper, we will briefly give the company's overview; we will explain its history and the strategic issues it faces today.
In order to understand Yahoo!'s position, we will present an analysis of its external environment through the PESTEL and the MICHAEL PORTER's 5 FORCES models. We will also focus on the internal issues using the SWOT and the ‘Strategic Drift' analyses.

Finally, we will bring to light the different strategic directions that Yahoo! can consider. More precisely, we will analyze the opportunities of a potential Microsoft takeover and see how it impacts Yahoo!'s BCG MATRIX. Thanks to the ‘Cultural Web' model, we will also discuss the cultural compatibility of the two companies. We will then turn to other strategic directions that Yahoo! can take. We will especially focus on a partnership with Google and an acquisition of AOL.

Yahoo! Inc
1. The Company's Overview
2. The Company's History
3. Strategic issues that Yahoo! is facing today
External environment
1. Pestel
2. Porter's five forces framework
Internal Analysis of Yahoo!
1. SWOT
2. Strategic Drift
Strategic Directions
1. Impact of Microsoft's Takeover
2. Local partnerships

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[...] Phase Phase of strategic drift, 1999-2002 Between 1999 and 2002, Yahoo! continued its strategy of acquisition and partnerships in order to diversify its product portfolio. It is during the period of the dotcom bubble when Internet developed tremendously. The bubble burst in 2001, but Yahoo! survived the collapse of its businesses due to too much speculation. Nobody expected this sudden burst, but Yahoo! as a strong and well-developed company survived; lots of companies did not. This was an obvious signal of the change of environment, but Yahoo! [...]

[...] Even though such a strategic step would bring profits in the short run, by giving up control of some of its search advertising, we think that Yahoo! would put one of its most valuable elements at risk. According to Microsoft CEO Steven Ballmer, would fundamentally undermine Yahoo!'s own strategy and long-term viability by encouraging advertisers to use Google as opposed to Yahoo!'s Panama paid search system” (Microsoft 2008). As we pointed out in the SWOT analysis, Yahoo!'s PANAMA project is one of the biggest assets of the company. [...]

[...] SWOT The SWOT analysis is defined as the summary of the key issues from the business environment and the strategic capability of an organization that are most likely to impact on strategy expansion. The SWOT helps to focus on discussion about future choices. Strengths Weaknesses Strong brand image Weak profitability Product portfolio Decline in cash from Strategic partnership operations International business presence Relatively weak search engine technology No differentiation Weak income stream Opportunities Threats Acquisitions Intensive competition Project PANAMA Privacy regulations New services Click fraud Mobile technologies Illegal contents on the New market websites Culture specific competitors Strengths Strong brand image Yahoo! [...]

[...] will highly depend on its ability to make its PANAMA project successful and to choose appropriate partners Strategic Drift The strategic drift is a concept which shows that an organization tends to develop strategies but fails to keep the pace with changing environment. While the environment is changing, the organization does not change its strategies in line with the environment. This concept aims to understand the strategic position of Yahoo!. Four phases has been identified as the following: Phase Phase of incremental change, 1994-1999 During the first period, between 1994 and 1997, Yahoo! was growing rapidly, thanks to the dynamics of the Internet market. Yahoo! had followed the explosion of the Internet business with the expansion of online services. [...]

[...] Microsoft Stories Began as a Student hobby Bill Gate's success Jokes & Fun Old company Young, familial and Innovative Rites Rituals Use of Open source Reluctance to open Software source Coffee is free Juice is free Symbols Sound of Yahoooo Microsoft Vista sound Dress Code casual Professional dress code Organizational Collaboration oriented Competition oriented structure Power structures Low Power Distance Higher power Distance Control Systems Self driven Bureaucratic The ‘Cultural Web' analysis shows that there are a large number of cultural issues to consider for Yahoo! [...]

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