Yahoo Inc.

Prepared by: Yuchen Zhang (Jessica) Prepared for: Rolf Butz BADM 364 – E-Commerce September 27 2011

......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 7 Industry analysis ............................ 9 Long term recommendations ......................................................................................................................... 6 Competitors ................................................................................................................................................................................................................ 10 Conclusion ... 14 Bibliography.......CONTENTS Executive Summary....... 3 SWOT Analysis ................................................................. 13 Statistics .......................................................................................................................................................................................... 2 Company Overview ....................... 4 Yahoo! sales strategy ............................................................................................................. 8 Derived recommendations..... 15 1 .................................................................................................. 12 Methodology ............................................................................................................................................................................................

The top three competitors of Yahoo! are Google. commerce and media company. 2 . Providing a wide range of online services includes: Media. In future. In 2008. I came up to several recommendations may be useful to Yahoo‟s future development. I summarize Yahoo‟s sales strategy and the top three competitors. AOL. which is available to more than 50 countries in more than 25 languages worldwide Yahoo! grew rapidly in 1990s. Yahoo formed an advertisement selling strategic partnership with AOL and Microsoft. founded in 1994. transferring from a search engine site to a web portal. By studied each factor that may have huge impact on Yahoo!‟s strategy formulation. After that. I used SWOT analysis tools to find out Yahoo‟s strength. Communications and Communities. Yahoo had difficulties competing with industry search leader Google and began to grow slowly.EXECUTIVE SUMMARY Yahoo! is a global Internet communications. I did a lot of research. Search and Marketplaces. According to the business model and the SWOT analysis result. yahoo will combine user experience to a single vision in the three year future strategy. and Microsoft (MSN). Recently. weakness. opportunity and threats. In order to have a clear understanding of Yahoo‟s business model. I used Porter‟s Competitive Forces Model to observe the competitions inside the industry. Yahoo made many successful acquisitions to expand their range of services.

San Francisco Chronicle. in hope to attract more users. by Jerry Yang and David Filo.000 employees as the company had suffered severely in its inability to effectively compete with industry search leader Google.11. Yahoo! has formed an advertisement selling strategic 1 Kopytoff. On January 29. Three years later. In 1990s.24 billion. Yahoo! had a stock market capitalization of USD $22. In order to compete with Google. 2008-02-11. claiming that it "substantially undervalues" Yahoo! and was not in the interest of its shareholders. 3 2 .6 billion. Yahoo! announced that the company was lying off 1. BBC News Online. Yahoo! grew rapidly developed into a Web portal. Microsoft made an unsolicited bid to acquire Yahoo! for USD $44.75 a share. Verne (2008-01-30). 2008-07-24. Yahoo‟s stock price once skyrocketed to $118.000". It also acquired many companies to expand their range of services. Yahoo! subsequently formally rejected the bid. They were both graduate students from Stanford University.HISTORY Yahoo! was founded in January 1994. "Yahoo to lay off 1. 2 According to the latest news. 2008. In January 2000. "Yahoo rejects Microsoft approach". after the dot-com bubble burst. 1 COMPANY OVERVIEW CURRENT & FUTURE PROFILE In February 2008. it reached an all-time low of $8. However. Yahoo developed its own search technologies in 2002 and improved its mail services in 2007.

which is considered as the most successful overseas company. information. it has the very high click ratio. Early global expansions into different countries Early in 1996. SWOT ANALYSIS STRENGTH 1. Yahoo! began expanded into global market. Stable advertising revenue As Yahoo! developed early in portal website and search engine sites. which becoming more competitive. Germany. WEAKNESS 4 . Now Yahoo! is available for more than 20 languages worldwide. 3. entertainment and communication. After that. It established the first branch in Japan. To build a global network of brands is always Yahoo's strategic objectives. Yahoo!‟s page advertising and search engine advertising income hold large amount of its total revenue in 2010. The diversity of products and services Yahoo! provides diversify services including search. shopping. Yahoo! established branches in France.partnership with AOL and Microsoft. According to Yahoo's chief product officer Blake Irving. finance. which considered as two of its most top competitors. Yahoo! will update its products in short cycle and Pay more attention to combine user experience to a single vision in the three year future strategy. and UK using local language. 2.

As more and more individuals are available to access the Internet through devices such as Smartphone other than a PC. Strategic partnerships enable the company to reach out to a broader audience. The packages and the services that Yahoo offers are also offered by other competition providing sites such as MSN & Google. state and international laws and 5 . governed by Federal. Yahoo collects great amount user‟s data through its services such as email. which gives great opportunity to long-term of Yahoo!‟s development. THREAT Privacy regulations With the development and popularity of the Internet technology. 2. the right of privacy is facing huge challenges. which provide new opportunities for Yahoo. Develop strategic partnerships with suppliers Yahoo! has developed partnerships with different broadband providers such as AT&T.Existing packaged services are offered by competitors. Free E-mail accounts are available from Hotmail (MSN) or G-Mail (Google). For example. Growing mobile advertising market The mobile advertising market is growing rapidly today. Verizon Communications. offering a range of free and premium Yahoo! content and services to subscribers. OPPORTUNITY 1.

4 "Yahoo to close North American auction site". 2011-04-04. stock price index.com. YAHOO! SALES STRATEGY FOCUS ON DEMANDS FROM EXISTING CUSTOMERS My Yahoo! is a personalized start page that will give registered users the ability to customize their own pages with information that interests them most from around the Web. These services are provided to users free of charge. 2008-10-28. 6 .regulations. Yahoo! Toolbar. and Connected TV all are entry points to the Yahoo! experience. watching their customized news.3 Through the "My Yahoo". United States Securities and Exchange Commission. DEVELOP ELECTRONIC BUSINESS APPLICATIONS Yahoo! provides commerce services such as Yahoo! Shopping. Yahoo! Inc. msnbc.com. weather and other information.sec. Yahoo! Autos. 2011-02-28. Yahoo! Local. the user can enter their own web pages at any time. http://www. Any failures to comply with the privacy policies could result in public criticism and limit Yahoo‟s business practices. Yahoo! Real Estate and Yahoo! Travel. Yahoo. 4 CONTINUOUS IMPROVEMENT OF CUSTOMER SERVICE Yahoo!‟s Integrated Consumer Experiences offerings include the Yahoo! Home Page.".htm. FOCUS ON THE CONTENT AND FORM OF THE WEBSITE 3 "2010 Form 10-K. My Yahoo!. "My Yahoo" learned from the user's hobby to make precise ad targeting. which enables users to gather relevant information and make commercial transactions and purchases online.gov/Archives/edgar/data/1011006/000119312511050000/d10k.

In 2000. AOL American Online (AOL) is a United States subsidiary of time Warner. and provide them the tools can measure advertising effectiveness. AOL. The company also includes advertisers. important and economic effectiveness of online advertising. COMPETITORS Yahoo‟s most significant competitors are Google. which is the Internet's largest search engine. GOOGLE Google was founded in September 1998.Compared to other competitors. including the corporate customers to provide targeted advertising services. 7 . and Microsoft (MSN). content publishers and site managers. which provides users a very clear and concise website content and form. Google provides advertising services to generate revenue. 2001. Google's core competency is search service. United States online and Time Warner (Time Warner) announced plans to merge on January 11. the deal by the Federal Trade Commission (Federal Trade Commission) confirmed. so that advertisers can publish and Specific content-related. Yahoo has the least content of advertisements in its page. Yahoo's navigation‟s design plays an important role that users can easily reach the main page of the website. the famous Internet service provider.

MSN MSN (Microsoft Network) is a collection of Internet sites and services provided by Microsoft. meets the user of the Internet era in mobile communication. and support for Internet access. video meetings. and working partners. and many needs. dialogue instantaneous communication with family members. Chinese information. will be mobile search. 8 . Whereas. friends. education and entertainment services. unless the new entrants provide much better or differentiated products than the former. the loyalty of the Internet users is difficult to change. social. Google considered search service is their primary objective. From this. mobile entertainment and mobile innovation such as discount mobile services. mobile phone SNS (the largest Windows Live online community). which creates high barriers for new competitors to entry. Microsoft's MSN mobile Internet services including cell phone MSN (instant messaging Messenger). The reasons are following: first. the market capacity is limited.AOL provides services including an E-mail. news groups. travel and entertainment. Through this software to you can see who is available online. one may conclude that Yahoo!‟s services are mainly about attracting and retaining users. China has a large number of user groups. which can be used on chatting. Second. INDUSTRY ANALYSIS THREAT OF ENTRY OF NEW COMPETITORS Yahoo! has occupied large portion of market share in the portal websites market.

htm.sec. which is becoming one of its substitute threats.com. http://www. 2011-02-28. with the popularity of internet and diversity of online products and services. which will stimulates the development of Yahoo‟s online value-added services. in the software and hardware product supply field. Yahoo! either can outsource or lease where a lot of suppliers to choose from. Most of Yahoo‟s software products are developed internally in Product Development organization includes Yahoo! Labs5.THREAT OF SUBSTITUTE PRODUCTS OR SERVICES Compared with Yahoo! extensive coverage of information. BARGAINING POWER OF SUPPLIER As a giant e-commerce platform. DERIVED RECOMMENDATIONS 5 "2010 Form 10-K.[ 9 . Therefore.gov/Archives/edgar/data/1011006/000119312511050000/d10k. Yahoo needs to purchase a large amount of software and hardware products from its suppliers. d2011-04-04. BARGAINING POWER OF BUYER In recent years. Yahoo! Inc.". United States Securities and Exchange Commission. users are becoming more and more willing to pay for online services. Yahoo. which are standardized products. the supplier's bargaining ability is very low. vertical professional web sites process to the depth of the information and constantly to upgrade their products and services. Hardware such as servers.

E-mail functions and search engine service. Compared to Google. LONG TERM RECOMMENDATIONS DEVELOP VALUE-ADDED SERVICES STRATEGY. there were many successful acquisitions which created great opportunities for Yahoo!. one of Yahoo‟s competencies. the traffic and the number of users have registered in Sina reached tens of thousands of times higher than usual. ACQUISITION In order to stay competitive and always provide user with new and professional services. After the Ceremony. Yahoo! Mail. In the past years.DEVELOP THE MEDIA MARKETING STRATEGY With the rapid development of media. 10 . and multimedia advantages to gain public attention. is not as many as functions Google served. etc. Yahoo make acquisitions to other companies. In 2008,a famous Chinese portal site “Sina” held a "Network Fashion Ceremony”. ENHANCE CORE COMPETENCIES AND DEVELOP NEW SERVICES Yahoo! „s ore competitiveness is to hold tens of thousands of Internet users at the same time enjoy diverse land information service. and create business profits. In the future. Yahoo! has a lower speed of new technology development. I believe Yahoo! can promote the media marketing strategy to reach more internet users. Yahoo can make acquisitions with small enterprises those have differ services. yahoo can carry out marketing activity on interaction.

Value-added services can increase the organizations‟ profit. which mentioned in the previous part. Yahoo has develop alliance with Microsoft and AOL. yahoo can establish its brand image. while gaining customers‟ loyalty. In 2010. Yahoo can provide Value-added services in membership system.Yahoo should pay attention to the importance of developing value-added services. Yahoo! provides services to more than 50 countries in more than 25 languages. where they can gain from the service Yahoo provide to them. The alliance members produce their competitive advantage. therefore to better serve users. SMS customized. financial services charge extra fee just for prime. COMBINE GLOBALIZATION WITH LOCALIZATION STRATEGY To develop the combination of globalization and localization strategy will help Yahoo! rapid expansion. DEVELOP STRATEGIC ALLIANCE STRATEGY. risk-sharing. For example. Not only can Yahoo! meet users‟ requirements. mutual cooperation. 11 . But in rapid development of highly competitive internet market. Through the global popularization. Strategic alliance is a two or two or more companies formed an alliance in order to achieve common strategic goals. but also gain big amount of revenue. Value-added services also can improve the user's cogitations of interests. According to the "opportunity" observed by SWOT analysis. Yahoo must continuously develop the strategic alliance strategy in different aspect of its business such as with suppliers in order to be competitive.

according to the industry analysis. I think Yahoo! has a stable industry environment as Yahoo! dominates the portal site market holding a large amount of market share. for example global expansion. from the SWOT analysis. it formed an advertisement selling strategic partnership with AOL and Microsoft. excellent Yahoo! mail service and well-design navigation. I come up with some conclusions. First of all. there is still room for further development in search engine site. which creates high barriers for new competitors to entry.CONCLUSION After studying Yahoo!‟s business case. I think Yahoo‟s early business strategy has a great impact on it today‟s strength. Third. Second. as long as some marketing activities can be carried out in the future. which lays a foundation for Yahoo!‟s global development. 12 . Although Yahoo!‟s market share is much smaller than Google‟s. I believe Yahoo! will be able to act as a leading role in e-commerce to achieve the evergreen. Moreover.

The threat of substitute p 3. roducts or services 3. and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers. Porter's Five Forces is a framework for industry analysis and business strategy development. case study. http://en. The intensity of competitive rivalry 6 “Porter five forces analysis”. 1. The bargaining power of suppliers 5. the threat of established rivals. Three of Porter's five forces refer to competition from external sources.org/wiki/Porter_five_forces_analysis.wikipedia.6 This five forces analysis is just one part of the complete Porter strategic models. The threat of the entry of new competitors 2. Porter's five forces include .METHODOLOGY In this Yahoo! Inc. The remainder is internal threats. The bargaining power of customers (buyers) 4. 13 . I used Porter‟s Competitive Forces Model to observe the competitions inside the industry. and the threat of new entrants.three forces from 'horizontal' competition: threat of substitute products.

8 1.01B 27.30% (yoy): Revenue (ttm): 5. Pvt1 = MSN (privately held) Industry = Internet Information Providers AOL 1.45 expected): P/S (ttm): 3.35M 360 15.STATISTICS Direct Competitor Comparison YHOO Market Cap: 18. Inc.30% 33.07M 3.72 18.88 P/E (ttm): 16.18% 12.33B 65.600 Qtrly Rev Growth -23.860 -8.00M 2.49% N/A 0.40% 81.78B 33.06 1.02 16.32% EBITDA (ttm): 1.62% 9.76 5.68B 28.06M 57.40% 463.53 GOOG 169.04 PVT1 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Industry 147.43B Operating Margin 15.69% 230.768 32.24% 6.00M 8. GOOG = Google Inc.16 5.17 AOL = AOL.40% 2.62 0.27B 5.16% (ttm): Net Income (ttm): 1.57B Employees: 13.57B Gross Margin (ttm): 64.96 0.17B EPS (ttm): 0.51 5.25B 33.58 14 .68 PEG (5 yr 1.

sec.".BIBLIOGRAPHY BOOK Electronic Commerce: A Managerial Perspective.htm 5. 2010 INTERNET SITES 1. 2008-07-24. 2008-02-11. San Francisco Chronicle.com. http://en. 2008-10-28.org/wiki/Porter_five_forces_analysis.000". Turban. "Yahoo to close North American auction site". 4. Yahoo. msnbc.wikipedia. Verne (2008-01-30).com. E. Kopytoff. United States Securities and Exchange Commission. 2011-02-28. "Yahoo rejects Microsoft approach". 15 . http://www. 2. Yahoo! Inc. “Porter five forces analysis”. BBC News Online. "2010 Form 10-K. "Yahoo to lay off 1. 3 .gov/Archives/edgar/data/1011006/000119312511050000/d10k.

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