Yahoo initially had no formal strategy, instead focusing on flexibility and letting creative employees launch new products quietly. This emergent approach helped Yahoo create new markets and industries. However, over-reliance on advertising revenues from dot-com companies led to losses when that sector declined. Yahoo realized it needed more diversification and broader revenue streams to reduce dependence on any one industry. The document discusses strategies Yahoo could have used, such as targeting industries less affected by economic swings and promoting country-specific services.

1. The evolution of strategy
Vikram Jethwani
Business Strategy
International Institute of Foreign Trade (IIFT)
International Institute of Foreign Trade (IIFT)

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
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3. Yahoo s
Yahoo’s strategy: To what extent it was planned
Co-founded by Jerry Yang and David Filo
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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
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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
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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
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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
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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
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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
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10. Thanks.
Th k
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