Yahoo! business model is to perform value creation activities to maximum its long run profitability in the internet advertising industry. Yahoo! first started as a simple directory. And today, it’s a global internet communication, commerce, and media company that serve 237 million individual users monthly. Because of the huge number of users now are using Yahoo! as a first look up website, its advertising revenue become a lot. To have a competitive advantage and get maximum profitability, Yahoo! decided to pursue vertical integration strategy. The benefit of vertical integration is to increase the quality of their products.
Yahoo Business Model
Yahoo! Inc. is an American multinational Internet corporation headquartered in Sunnyvale, California. It is globally known for its Web portal, search engine Yahoo Search, and related services, including Yahoo Directory, Yahoo Mail, Yahoo News, Yahoo Finance, Yahoo Groups, Yahoo Answers, advertising, online mapping, video sharing, fantasy sports and its social media website. It is one of the most popular sites in the United States. According to news sources, roughly 700 million people visit Yahoo websites every month. Yahoo was founded by Jerry Yang and David Filo in January 1994 and was incorporated on March 1, 1995. On July 16, 2012, former Google executive Marissa Mayer was named as Yahoo CEO and President, effective July 17, 2012.
According to comScore, Yahoo during July 2013 surpassed Google on the number of United States visitors to its Web sites for the first time since May 2011, set at 196 million United States visitors, having increased by 21 percent in a year. Yahoo grew rapidly throughout the 1990s. Like engines and Web directories, Yahoo added a web portal. By 1998, Yahoo! was the most popular starting point for web users. It also made many high-profile acquisitions. Its stock price skyrocketed during the dot-com bubble, Yahoo stocks closing at an all-time high of $118.75 a share on January 3, 2000. However, after the dot-com bubble burst, it reached a post-bubble low of $8.11 on September 26, 2001.
To take an early view of this company, one can come to realize that it was actually bravery and uniqueness that contributed to most of Yahoo’s young business plan. The owners had the veracity and guts to take their web site to the next level, from a small web site list to a well-known brand name and beyond. Most of the foundations for Yahoo were laid before the Dot Com Boom, meaning very few people had ever made a venture like this one. Yahoo’s business model was about stepping up and taking risk. The founders of this great company strove to make their web site unique, a feature-full piece of the internet that would consolidate the regular web user’s preferences into one place. Yahoo was about having a home on the internet. Soon Yahoo grew, and soon after the Dot Com Boom they were making share-price history, particularly in Japan.
Things were going exceptionally well for this company, but as competition entered the fray, the young business minds behind the behemoth realized that their business model had to change. It was no longer unique in the sense that web sites like MSN and Google were bumping shoulders. Yahoo was in danger to losing their appeal. That’s when they realized that their primary focus from there on in would have to be diversification. Yahoo wanted to be about having everything you needed on the internet in one place. As technology developed people were doing more and more of their regular business online. Yahoo had to diversify and fast. Yahoo primarily wanted people to be able to find whatever they needed on this web site, so they soon started acquiring search engines.
They later made a deal with Google and made a partnership with the largest search engine on the internet. This of course wasn’t enough to fit their business model of diversification. Yahoo moved into a pact with Verizon and launched their own internet DSL service. They introduced communication with Yahoo Messenger. They allowed people to check their e-mail with Yahoo Webmail. Soon enough they had everything from games to TV listings to personals. Diversification was going swimmingly for Yahoo. They soon controlled everything that the average person needed on the internet.
They were finally becoming the internet super-power they are today. However, it was quickly realized that their business model had to change again. Diversification was reaching its limit, so Yahoo began to focus on growth and expansion the focus of its business model today. The company began to acquire companies such as Flickr, expanding their online empire. This is where we see Yahoo today. An online sensation that won’t stop. Its growth is now its primary focus, and who knows where their developing business model will take them next. (See Visibility of Yahoo! Brand was realized by comScore Matrix in 2004).
Yahoo Corporate Governance and strategic Issue
Yahoo! faces a number of governance and strategic challenges in late 2011 as it tries to compete with rivals such as Google and find ways to monetize its shareholding and business links with Alibaba Group in China and Yahoo! Japan. The company was valued at almost half the offer that Microsoft had made in its acquisition offer in 2008. The depth of the challenge is underscored by the frequent CEO changes the company has had. The case examines the successes and failures at Yahoo! and the decisions now facing its board as it encounters investor pressure to improve performance.
The problem at Yahoo! was that it was losing its advantage to faster-growing companies such as Google also the scope of organization’s activities was not defined properly as per Market Demand. For example, should the organization concentrate on one area of activity, or should it have many? I believed that Yahoo! was spread too thinly over too many different activities. Overall I can Say Yahoo Corporate Goveranance was lacking clarity of ownership, accountability, lack in focused, cohesive vision for there company. Yahoo, while not a dying company, has struggled to stay relevant after it missed the two biggest trends on the internet: social networks and the move to mobile devices as the gateway to information and entertainment. Yahoo total revenue in millions
Recommendation to Mayer
Marissa Mayer is an ex-Google exec, after 13-year career at the biggest Cloud Company on Earth, Mayer brings relevant experience to the CEO position of the once-great Web Company. Mayer knows who she’s competing against, she wants to win, and that means Yahoo! needs to attract Valley-class talents. Mayer did what leaders do: She made a decision that made some people unhappy in order to achieve success for the whole enterprise (toned-up employees and shareholders). After seeing Yahoo! lose altitude year after year, the criticism leveled at Mayer makes me optimistic about the company’s future. Yahoo total revenue in millions of dollars
Mayer’s first task should be to articulate a vision for Yahoo. Mayer should be more focused on As we know that Mobile is the future and mobile transition is now a global phenomenon so I recommend Mayer to be more focused on users habits through products and applications available on its web portal such as finance, news, weather, email, sports, etc
Mayer has to be well prepared for mobile competition, report suggest that Facebook and google is now expected to reach a market share of almost 40% of the mobile advertising market in the US next year. Its mobile games and apps are showing no signs of slowing down, Facebook and Google is sure to give Yahoo! a tough time as the latter tries to expand into mobile.
While increasing usage Yahoo! needs to put more focus on growing international presence and appealing to a broader demographic of users. At present, Yahoo! derives 75% of its total revenue from the Americas region, something that needs to be worked on in the future.
Search growth and Advertisement
Internet Search should continue to be a key area of investment for Yahoo! .Yahoo! should improve more on the advertising quality on its search engine,
If Yahoo! can maintain above key areas than I think it’s likely to grow even further in the future.
Yahoo FAQs. (2012). Investors FAQs . Retrieved from http://yhoo.client.shareholder.com/faq.cfm
Jones, G. R. (2007). Yahoo. In C. W. L. Hill & G. R. Jones (Eds.), Strategic Management AnIntegrated Approach (8th ed., pp. C102-C114). Boston, NY: Houghton Mifflin Company.
Yahoo! we value. Retrieved from http://docs.yahoo.com/info/values/ Yahoo 10K. (2011, 12 31).
Yahoo 10k Annual Report . Retrieved from http://files.shareholder.com/downloads/YHOO/2120211742x0xS1193125-12-86972/1011006/filing.pdf
Income statement Retrieved from
http://in.finance.yahoo.com/q/is?s=YHOOWomack, B. (2012, 08 10). Yahoo strategy review may result in changes to cash plans.
Bloomberg, Retrieved from
The NewYork Times, Retrieved from http://www.nytimes.com/2010/01/14/technology/companies/14baidu.html?_r=1Claburn, T. (2006, 01 13). Yahoo loses lawsuit over nazi memorabilia sale.
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