Yahoo Strategy Analysis

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An analysis of Yahoo's business strategy in the initial years.

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Yahoo Strategy Analysis

  1. 1. The evolution of strategy Vikram Jethwani Business Strategy International Institute of Foreign Trade (IIFT) International Institute of Foreign Trade (IIFT)
  2. 2. Yahoo s Yahoo’s strategy: To what extent it was planned • In an unidentified marketplace, Yahoo’s strategy was to have no Yahoo s strategy, to began with • Flexibility – the only strategy, per se, that worked for Yahoo initially y y gy, p , y • It recruited “out-of-the-box” thinking employees • And let the creative energies make its billion-dollar fortunes • The essence was to create new market, new products, new industries , p , - being futuristic in real sense • Products were launched quietly - without much fanfare © Grant Thornton International. All rights reserved.
  3. 3. Yahoo s Yahoo’s strategy: To what extent it was planned Co-founded by Jerry Yang and David Filo © Grant Thornton International. All rights reserved.
  4. 4. Emergent response to unforeseen events • Yahoo aimed at excelling in future markets and not just to grab its share in the existing market • Its initial strategy was subtle and focused toward branding, gy g, innovation and a flexible work culture • Innovation was fostered to the extent possible • In a human intellect based industry, it is critical that the product edge is not lost because of human resource attrition • To tackle this, Yahoo ensured that every engineer work on every project © Grant Thornton International. All rights reserved.
  5. 5. Emergent response to unforeseen events • Yahoo aimed at excelling in future markets and not just to grab its share in the existing market • Its initial strategy was subtle and focused toward branding, gy g, innovation and a flexible work culture • Innovation was fostered to the extent possible • In a human intellect based industry, it is critical that the product edge is not lost because of human resource attrition • To tackle this, Yahoo ensured that every engineer work on every project © Grant Thornton International. All rights reserved.
  6. 6. Positioning for slowdown • The company emphasized on collaboration, while many of the players were too big to be acquired • Its ‘how-to’ rules helped it to remain clear, focused and organised – p , g thereby enabling to meet unforeseen business conditions • However, its dependence on advertising revenues from dot com companies resulted in substantial loss (US$84 million against the profit of US$169 million in the corresponding period of previous year) in the first nine months of 2001 – courtesy: the dot com burst • This was an eye opener © Grant Thornton International. All rights reserved.
  7. 7. What could be done? • More diversification was required to reduce dependence on one p q p particular type of industry – dot com companies in this case • Revenue streams need to be broadened with the change in economic environment • Sector that are relatively less-affected by economic slowdown could be targeted; entertainment being one of them • Country-specific services could also be promoted • Search engine services were set backstage with major focus on direct revenue S h i i tb k t ith j f di t generating streams – Google captured this vacuum fast © Grant Thornton International. All rights reserved.
  8. 8. Source of potential long-term advantage Where does it come from? • Enhanced global reach by setting up operational bases in different countries g y g p p • Target-advertising was need of the hour for advertisers seeking to measure results and avoid mass-oriented vague advertising – Yahoo strikes the right cord here • Yahoo keeps enjoying the first mover advantage on the Internet © Grant Thornton International. All rights reserved.
  9. 9. Koogle’s resignation: Role of a CEO in a public company • Full accountability towards stakeholders on company’s performance y p y p • Responsibility of analysing industry trends, strengths, weaknesses, opportunities and threats • Being responsive – ignorance is bliss, but for a while! • Developing and re-aligning strategies in response to near to long term re aligning business environment © Grant Thornton International. All rights reserved.
  10. 10. Thanks. Th k © Grant Thornton International. All rights reserved.

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