Mrc2213 Strategic Management

MRC2213 STRATEGIC MANAGEMENT
Prepared by:
Fazarizul Hashidi Bin Mohd Pauzi
MR121133
Prepared for:
Dr. Mas Bambang Baroto
Contents
Introduction................................................................................................................ 1
1. Vision and Mission Statement..............................................................................2
2. PEST Analysis....................................................................................................... 3
2.1. Political, Government and Legal Forces.........................................................3
2.2. Economic Forces............................................................................................ 3
2.3. Social, Cultural, Demographic and Natural Environment, Forces...................4
2.4. Technological Forces...................................................................................... 5
2.5. PEST Analysis Summary................................................................................. 5
2.6. Conclusion..................................................................................................... 5
3. Competitive Analysis............................................................................................ 6
3.1. Competitive Analysis Summary.....................................................................7
3.2. Conclusion..................................................................................................... 7
4. Industry Analysis.................................................................................................. 8
4.1. Conclusion................................................................................................... 10
5. Michael Porters Five Forces............................................................................... 11
5.1. Rivalry among competitors Search Engine Business.................................11
5.2. Entry of new competitor Search Engine Business.....................................12
5.3. Substitute products Search Engine Business.............................................12
5.4. Bargaining power of suppliers Search Engine Business.............................12
5.5. Bargaining power of buyers Search Engine Business................................13
5.6. Conclusion of Michael Porters 5 forces........................................................13
6. List of Opportunities and Threats.......................................................................14
6.1. Opportunity.................................................................................................. 14
6.2. Threats......................................................................................................... 15
7. External Factor Evaluation (EFE) Matrix.............................................................16
7.1. Opportunities............................................................................................... 16
7.2. Threat.......................................................................................................... 17
8. Competitive Profile Matrix (CPM)........................................................................18
9. Internal Environment Analysis............................................................................19
9.1. Culture Assessment..................................................................................... 19
9.2. Yahoo! Management Assessment Analysis..................................................21
9.3. Yahoo!, Marketing Function Assessment Table.............................................22
9.4. Financial Condition of Yahoo........................................................................24
10. Financial Ratio Time Series Data of Yahoo from 2006 to 2008......................25
11. Production / Operation Assessment................................................................27
12. Research and Development............................................................................ 28
13. MIS Function Analysis...................................................................................... 28
14. Company Value Chain Analysis (VCA).............................................................29
14.1. Main Activities........................................................................................... 29
13.2. Supportive Activities.................................................................................30
14. List of All Strengths......................................................................................... 30
15. List of All Weakness........................................................................................ 31
16. Internal Factor Evaluation (IEF) Matrix (Strength)...........................................32
17. Internal Factor Evaluation (IEF) Matrix (Weakness).........................................33
18. Yahoos Existing Long Term and Short Term Financial Objectives and
Strategies................................................................................................................. 34
19. Yahoos Existing Long Term and Short Term Strategic Objectives...................35
20. Yahoos Existing Corporate Level Strategies...................................................36
21. Yahoos Existing Companys Business Level Strategies. (Porters Five Generic
Strategies)................................................................................................................ 37
22. Strategy Formulation Tools. (SWOT Analysis)..................................................38
22.1. Opportunities............................................................................................ 38
22.2. Threats..................................................................................................... 38
22.3. Strength.................................................................................................... 39
22.4. Weakness.................................................................................................. 40
22.5. SWOT Matrix............................................................................................. 41
23. Converting into Strategic Terms......................................................................42
23.1. Corporate Level Strategy..........................................................................42
23.2. Business Level Strategy............................................................................42
23.3. Selected Strategy Original Sentences.......................................................43
24. Space Analysis................................................................................................ 44
24.1. Factors that make up the space matrix axes............................................44
24.2. Space Matrix............................................................................................. 46
25. BCG Analysis................................................................................................... 49
25.1. Internal-External Analysis.........................................................................49
26. Grand Strategy Matrix..................................................................................... 50
27. Final Conclusion of the results of all the strategy analysis..............................51
28. Strategic Choice.............................................................................................. 52
29. Quantitative Strategic Planning Matrix (QSPM)...............................................52
29.1. Outcome of QSPM..................................................................................... 55
30. Implementing Strategies: New Management Strategy....................................56
31. Conclusion....................................................................................................... 57
Introduction
Yahoo was formed by two Electrical Engineering PHD candidates from Stanford University,
David Filo and Jerry Yang. They started Yahoo for personnel interest with no intention to
developing it and to become a world recognized search engine.
The initial name founded by these 2 people was Jerry and Yangs guide to the world wide web
and after which they identified a new name for Yahoo! which is an abbreviation for Yet another
Hierarchical Officious Oracle.
In this report the following methodology will be used to analyze the companys competitive
advantages among other search engine service providers and its potential in the industry.
1. Vision and Mission Statement
2. External Audit ( PEST, Competitive Analysis, Industry Analysis, Porter 5 Forces, EFE and
CPM Matrix)
3. Internal Audit ( Internal Analysis, VCA and IFE Matrix)
4. Strategies in Action ( Strategic objectives and existing strategy)
5. Strategy Analysis ( SWOT, SPACE, IE Matrix, Grand Strategy Matrix and QSPM)
6. Strategy Implementation
1. Vision and Mission Statement
5
There is no clear indication for Yahoo vision statement in the case study. However, our suggestion
is to use Yahoos strategy as a substitute for mission statement.
Yahoos powers and delights our communities of users, advertisers, and publishers all of us
united in creating indispensable experiences, and fueled by trust Yahoo! powers and delights
No Components Case Fact of Mission Statement

1 Customer Advertisers and publishers
2 Products & Services No Data
3 Market Communities of users
4 Technology No Data
5 Survival, growth and Yahoo! powers and delights
profitability
6 Philosophy All of us united and Fueled by trust
7 Self-Concept Creating indispensable experiences
8 Concern for Public Image Delights our communities of users
9 Concern for Employees No Data
Based on the finding from the case study, Yahoo has 6 out of 9 components list, however Yahoo
failed to address their standing on how much they value their employees, their far sight of
technology and their major product and services offering. Otherwise, they have covered their
business makeup and purpose and whom they want to serve and how they want to serve.
2. PEST Analysis
2.1. Political, Government and Legal Forces
No Case Fact Opportunities Threats

1 Federal Communication Commission (FCC) adopted
flexible access rules for users and wireless resellers in
6
conjunction with agencys early 2008 wireless spectrum
auction. ( Page 206 / Para 4 row 5)
2 Due to changes in legislative requirements concerning
technology sharing, patents rights and information
security, future expenses and profitability of the
companies operating with the industry are harder to
predict. (Page 207 / Para 1 row 5)
3 Technical and regulatory makes the projection of its
business viability for existing companies difficult (Page
207 / Para 1 row 4)
2.2. Economic Forces

1 Yahoo is the second leading global internet brand and
one of the most trafficked internet destination
worldwide ( Page 201 / Para 2 / row 3)
2 There are 1.1 billion internet users around the world and
211 million in the USA as of end of 2006 (Page 202 /
Para 7 row 1)
3 Economic growth in the USA and the world has slowed
amid crisis in housing and credit market ( Page 202 /
Para 8 row 1)
4 Rising unemployment and problematic geopolitics to
the mix and USA had difficult economic back drop
(Page 202 / Para 8 row 4)
5 Although internet related business have perhaps held
better than their non-digital counterparts, but have still
suffered from macroeconomics malaise.( Page 202 /
Para 8 row 5)
6 In 2009, number of internet content and advertisement
companies (including Bankrate Inc, Knot Inc
including Yahoo!) reported disappointing financial
results and lowered their forward financial outlooks.
7 Internet media and market research firm comScore Inc,
expressed concerns about deceleration in online growth.
8 Internet advertisement continues to grow though in
slower pace ( Page 202 / Para 9 row 4
9 Broadband prices fall (Page 206 / Para 5 row 1)
7
10 Internet advertisement revenue in USA remain strong,
topping $ 23 billion (Page 202 / Para 9 row 1)
11 Even Google Inc, expressed economic related caution in
conjunction with its second quarter results
12 Yahoo operates in the internet products, services and
content markets, which are highly competitive and
characterized by rapid change, converging technologies
and increasing competition.
13 From its first year of operation as a public company
(2004), Google has increased its operating profit to $
6.7 billion from a modest $ 852 million. ( Page 206 /
Para 4 row 9)
14 During 2008, Google had 72% of internet traffic while
Yahoo only possessed 17% followed by MSN at 6% and
IACI at 4% ( Page 206 / Para 1 row 6)Google had 72%
of Internet traffic while Yahoo only possessed 17%.
( Page 206 / Para 1 row 6)
2.3. Social, Cultural, Demographic and Natural

Environment, Forces.

1 Increased recognition that consumers spend more and
more of their time online (Page 202 / Para 9 row 5)
2.4. Technological Forces

1 Future innovations and shifts in technology also make
long term strategies regarding the internet and software
services industry difficult. ( Page 207 / Para 1 row 8)
8
2.5. PEST Analysis Summary
No Pest Analysis Opportunities Threats

1 Economic Forces 6 9
2 Social, Cultural, Demographics and Environmental 1 0
Forces
3 Political, Government and Legal Forces 1 2
4 Technological Forces 0 1
Total 8 12
2.6. Conclusion
From the case study given, Yahoo has 8 opportunities and 12 threats. From case fact in
economy forces, Yahoo has opportunity and threat where in the statement it is stated that
internet business have performed better than their non-digital counterparts but on the whole
businesses were affected by the economy depression. Internet business has performed better
than their non-digital counterparts are an opportunity and economy depression is a threat.
3. Competitive Analysis
N Case Facts (Strengths) Opportunity Threat

o
1 During 2008, Google had 72% of internet traffic while
Yahoo only possessed 17% followed by MSN at 6%
and IACI at 4% ( Page 206 / Para 1 row 6)
2 In October 2007, Microsoft purchased a 2% stake in
social networking firm Facebook Inc, valuing the
private company $15 billion.
3 Microsoft has an obvious and strong desire to increase
its internet presence ( Page 206 / Para 2 row 7)
9
4 In 2009, Google is in talks with popular micro-
blogging site, Twitter about a possible partnership.
5 Google has expended well beyond search related
function into areas such as e-mail (G-mail), mapping
(Google Earth & Maps), Web Based productivity
applications (Google Apps), video (Google Finance), a
payment services (Google Checkout), a personalized
portal offering (iGoogle), a mobile internet software
platform (Android) and browser software ( Chrome
Google). (Page 206 / Para 3 / row 1)
6 Googles pursuit of mobile internet opportunity has
made it one of the main application providers for Apple
Incs iPhone. ( Page 206 / Para 4 row 1)
7 Google commands good portion of the revenue in the
industry and is a formidable competitor to Yahoo! in
particular. From its 1st year of operation as a public
company (2004). Google has increased its operating
profit to $ 6.7 billion form a modest $852 million.
(Page 206 / Para 4 / row 7)
8 AOL LLC, a division of Time Warner Inc, shifted its
business model from paid subscription to a free,
advertiser-based portal that is similar to those offered
by Yahoo Inc and Google Inc. ( Page 206 / Para 5 row 2
& Page 207 / Para 1 row 1)
9 Each company is committed to attract as many visitors
(Page 207 / Para 1 row 3 & Exhibit 8)
10 Microsofts $6 billion acquisition of Quantive Inc and
advertising solutions company, in Aug 2007 marked an
important change. (Page 206 / Para 2 row 1)
11 From its first year of operation as a public company
(2004), Google has increased its operating profit to $
6.7 billion from a modest $ 852 million. ( Page 206 /
Para 4 row 9)
N Case Facts ( Weakness) Opportunity Threats
o
1 Microsoft lost out in bidding war for privately held
DoubleClick Inc a digital marketing technology and
services company. (Page 206 / Para 2 row 3)
2 Time Warner indicated that it might look to sell AOL
access business ( Page 207 / Para 1 row 2)
10
3.1. Competitive Analysis Summary
No Competitors Opportunity Threat

1 Search Engine Service Providers 2 11
Total 2 10
3.2. Conclusion
The number of threats is more than its opportunity where there are 11 threats and just 2
opportunities. It can conclude that Yahoo needs an excellent strategic plan to continue their
business either standalone or sign a deal with new partner like Microsoft if they wish to
outnumber Google. Not much data is available in the case study on Yahoo to analyze their
present situation and their future expansion plan.
4. Industry Analysis
No Case Facts
Yahoo!
1 Yahoo owned and operates online properties and services, it also provides its
advertising offerings and access to Internet users beyond Yahoo through its
Type of Product offering
distribution network of third party entities, who have integrated its advertising
offerings in to their web sites. (Page 201 / Para 2 row 5)
2 Although many of the services Yahoo, provides to users are free, it does charge fees
for a range of premium services. (Page 201 / Para 2 row 9)
3 Yahoo !, offering include Yahoo! Groups, Yahoo! Answers and Flickr and are
generally provided to users free of charge. (Page 202 / Para 2 row 1)
4 Yahoo! search offering include, Yahoo! Search, Yahoo! Local, Yahoo! Yellow Pages
and Yahoo! Maps and available free to users. (Page 202 / Para 2 row 3)
5 Yahoo generates revenue through its Search offerings from search and display
advertisement. (Page 202 / Para 2 row 5)
11
6 Yahoo! Communication segment include Yahoo! Mail, Zimbra Mail and Yahoo!
Messenger and Yahoo ! generates display advertisement revenues from these
offerings. (Page 202 / Para 3 row 1)
Microsoft
1 Microsoft Corporation, Google and Time Warner Incs America Online business.
Each of these firms offer an integrated variety of internet products and services.
( Page 206 / Para 1 row 4 )
Google
1 Google has expanded well beyond search related functions into areas such as e-mail
(Gmail), mapping (Google Earth & Google Maps), Web-based productivity
Search Engine Utilization
applications (Google Apps), video (Google Video and You Tube Inc which Google
Service Provider Net Income (Billion) Percentage of Usage Offices
acquired in Nov 2006), a finance offering (iGoogle), a mobile Internet software
Google 4.23 49.2 70
Yahoo platform (Android)
0.4243 and browser software
23.8 (Google Chrome). (Page
25 206 / Para 3 row
2)
2 During 2008, Google had 72% of internet traffic while Yahoo only possessed 17%
followed by MSN at 6% and IACI at 4% ( Page 206 / Para 1 row 6)

5
3
Revenue (Billion)
2
0
20 25 30 35 40 45 50 55
Percentage of Usage
12

Yahoo, Google & MSN
25
20
15
Revenue in $ Billion
10
0
8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000
Total Number of Employees in Thounsand
Group Map
of Revenue & Employee worth Comparison
Revenue & Employee Comparison

Each Employee Most Trafficked
Service Provider Revenue ($ Billion) Worth in $ (Million)
Google 21.8 19.0 72%
Yahoo 7.21 4.7 17%
MSN (Microsoft) 0.058 4.3 6%
4.1. Conclusion
Based on the two group maps, Google seems to be having the advantage among everyone in
the industry. Google has the highest earning as per the exhibit 7 in the case study and the
earnings and total usage is corresponding positively as shown in Search engine utilization
strategic group map.
13
5. Michael Porters Five Forces
5.1. Rivalry among competitors Search Engine Business
No Case Facts Competitive Force

Strong Moderate Weak
1 Google has 72% of Internet traffic while Yahoo only
possessed 17% followed by MSN at 6% and IACI at 4%.
2 Exhibit 7, Google has 42% of search engine utilization
compared to Yahoo which has 23.8%. (Page 206 / Exhibit 6)
3 Googles net income was $ 4.23 billion and Yahoo was $
424.30 million (Page 207 / Exhibit 7)
4 In October 2007, Microsoft purchased a 2% stake in a social
networking firm Facebook, valuing the private company $15
billion. ( Page 206 / Para 2 row 7)
5 Microsoft has an obvious and strong desire to increase its
internet presence (Page 206 / Para 2 row 8)
6 Google has expanded well beyond search related functions
into areas such as e-mail (Gmail), mapping (Google Earth &
Google Maps), Web-based productivity applications (Google
Apps), video (Google Video and You Tube Inc which Google
acquired in Nov 2006), a finance offering (iGoogle), a
mobile Internet software platform (Android) and browser
software (Google Chrome). (Page 206 / Para 3 row 2)
7 Googles pursuit of mobile internet opportunity has made it
one of the main application providers for Apple Incs iPhone.
8 Google commands good portion of the revenue in the
industry and is a formidable competitor to Yahoo! in
particular. From its 1st year of operation as a public company
(2004). Google has increased its operating profit to $ 6.7
billion form a modest $852 million. (Page 206/Para4/ row 7)
9 Google has 20,222 employees globally higher than the
employees in the entire internet business industry ( Exhibit
7 / Page 207)
14
5.2. Entry of new competitor Search Engine Business
N Case Facts Competitive Force

o Stron Moderat Weak
g e
1 The industry has low barrier entry, technical and regulatory
makes it easier for new firms to enter the industry. (Page 207 /
Para 1 row 4)
2 Due to changes in the legislative requirements concerning
technology sharing, patent right and information security,
future expenses and profitability of the companies operating
within this industry are harder to predict. ( Page 207 / Para 1
row 4)
3 Technical and regulatory makes the projection of its business
viability for existing companies difficult (Page 207 / Para 1
row 4)
4 There are 1.1 billion internet users around the world and 211
million in the USA as of end of 2006 (Page202/Para 7 row 1)
5 Internet advertisement revenue in USA remain strong,
topping $ 23 billion (Page 202 / Para 9 row 1)
5.3. Substitute products Search Engine Business

g e
1 There are top 25 Internet Properties, including Yahoo
providing internet search engine services ( Exhibit 8 / Page
207)
5.4. Bargaining power of suppliers Search Engine

Business

g e
15
1 No Data Provided in Case Study
5.5. Bargaining power of buyers Search Engine Business
Competitive Force
N Case Facts Stron Moderat Weak
o g e
1 There are top 25 Internet Properties, including Yahoo
providing internet search engine services that buyers can
choose ( Exhibit 8 / Page 207)
5.6. Conclusion of Michael Porters 5 forces
No Forces Strong Moderate Weak

1 Rivalry among competing firm 9 - -
2 Entry of New Competitor 3 - 2
3 Substitute Products 1 - -
4 Bargaining power of suppliers - - -
5 Bargaining power of buyers 1 - -
Total 14 2
The pressure from the competitive forces on Yahoo! is very strong. Yahoo! has many
industry players who are competing in the same market segment and providing almost
identical product and services to its customers and users. Of all the biggest and toughest
competitor is Google. Google has $ 3.8 billion more net income compared Yahoo! which
is second largest internet brand. Thus, with the competitive forces analysis, we can
conclude that Yahoo is indeed in a highly competitive industry and has to find ways to
strategies their business if they want to increase their sustainability.
16
6. List of Opportunities and Threats.
6.1. Opportunity
Opportunities
Economic Forces
No Case Facts
1 Yahoo is the second leading global internet brand and one of the most trafficked internet
destination worldwide ( Page 201 / Para 2 / row 3)
2 There are 1.1 billion internet users around the world and 211 million in the USA as of end
of 2006 ( Page 202 / Para 7 row 1)
3 Although internet related business have perhaps held better than their non-digital
counterparts, but have still suffered from macroeconomics malaise.( Page 202 / Para 8 row
5)
4 Internet advertisement continues to grow though in slower pace. ( Page 202 / Para 9 row 4
5 Broadband prices fall. (Page 206 / Para 5 row 1)
6 Internet advertisement revenue in USA remains strong, topping $ 23 billion. (Page 202 /
Para 9 row 1)
7 Even Google Inc, expressed economic related caution in conjunction with its second
quarter results.(Page 202 / Para 8 row 9)
Social, Culture, Demography
No Case Facts
1 Increased recognition that consumers spend more and more of their time online (Page
202 / Para 9 row 5)
Political, Legal and Government
No Case Facts
1 Federal Communication Commission (FCC) adopted flexible access rules for users and
wireless resellers in conjunction with agencys early 2008 wireless spectrum auction.
Technologies
Data not available in Case Study
17
6.2. Threats
Threats
Economic Forces
N Case Facts
o
1 Economic growth in the USA and the world has slowed amid crisis in housing and credit
market ( Page 202 / Para 8 row 1)
2 Rising unemployment and problematic geopolitics to the mix and USA had difficult
economic back drop ( Page 202 / Para 8 row 4)
3 In 2009, number of internet content and advertisement companies (including Bankrate
Inc, Knot Inc including Yahoo!) reported disappointing financial results and lowered
their forward financial outlooks. ( Page 202 / Para 8 row 7)
4 Internet media and market research firm com Score Inc, expressed concerns about
deceleration in online growth. (Page 202 / Para 8 row 10)
5 Yahoo operates in the internet products, services and content markets, which are highly
competitive and characterized by rapid change, converging technologies and increasing
competition. (Page 206 / Para 1 row 1)
6 Although internet related business have perhaps held better than their non-digital
counterparts, but have still suffered from macroeconomics malaise. (Page 202 / Para 8
row 5)
7 From its first year of operation as a public company (2004), Google has increased its
operating profit to $ 6.7 billion from a modest $ 852 million. ( Page 206 / Para 4 row 9)
8 During 2008, Google had 72% of internet traffic while Yahoo only possessed 17%
followed by MSN at 6% and IACI at 4% (Page 206 / Para 1 row 6)
Political, Legal and Government
N Case Facts
o
1 Due to changes in legislative requirements concerning technology sharing, patents rights
and information security, future expenses and profitability of the companies operating
with the industry are harder to predict. (Page 207 / Para 1 row 5)
2 Technical and regulatory makes the projection of its business viability for existing
companies difficult ( Page 207 / Para 1 row 4)
Social, Culture and Demography
1 Data not available in Case Study
Technologies
N Case Facts
o
1 Future innovations and shifts in technology also make long term strategies regarding the
internet and software services industry difficult. ( Page 207 / Para 1 row 8)
18
7. External Factor Evaluation (EFE) Matrix
7.1. Opportunities
Weighed
Key External Factors Weight Rating
Score
Opportunities Economical Factor
Yahoo is the second leading global internet brand and one of
1 the most trafficked internet destination worldwide (Page 0.20 4 0.8
201/Para2 / row 3)
There are 1.1 billion internet users around the world and 211
2 0.09 4 0.36
million in the USA as of end of 2006 (Page202 /Para 7 row 1)
Although internet related business have perhaps held better
3 than their non-digital counterparts, but have still suffered 0.07 1 0.07
from macroeconomics malaise.( Page 202 / Para 8 row 5)
Internet advertisement continues to grow though in slower
4 0.15 1 0.15
pace. (Page 202 / Para 9 row 4)
5 Broadband prices fall. (Page 206 / Para 5 row 1) 0.04 2 0.08
Internet advertisement revenue in USA remains strong,
6 0.03 3 0.09
topping $ 23 billion. (Page 202 / Para 9 row 1)
Even Google Inc, expressed economic related caution in
7 conjunction with its second quarter results.(Page 202 / Para 8 0.02 1 0.02
row 9)
Opportunities - Political, Legal and Government
Federal Communication Commission (FCC) adopted flexible
access rules for users and wireless resellers in conjunction
1 0.04 2 0.08
with agencys early 2008 wireless spectrum auction. ( Page
206 / Para 4 row 5)
Opportunities Technologies
Opportunities Social, Culture and Demographic
Increased recognition that consumers spend more and more of
1 0.02 4 0.08
their time online (Page 202 / Para 9 row 5)
19
7.2. Threat
Weighed
Key External Factors Weight Rating
Score
Threat Economical Factor
Economic growth in the USA and the world has slowed amid
1 0.02 2 0.04
crisis in housing and credit market ( Page 202 / Para 8 row 1)
Rising unemployment and problematic geopolitics to the mix
2 and USA had difficult economic back drop. ( Page 202 / Para 0.02 2 0.04
8 row 4)
In 2009, number of internet content and advertisement
companies (including Bankrate Inc, Knot Inc. including
3 0.04 4 0.16
Yahoo!) reported disappointing financial results and lowered
their forward financial outlooks. ( Page 202 / Para 8 row 7)
Internet media and market research firm comScore Inc,
4 expressed concerns about deceleration in online growth. 0.02 3 0.06
Yahoo operates in the internet products, services and content
markets, which are highly competitive and characterized by
5 0.05 4 0.2
rapid change, converging technologies and increasing
competition.(Page 206 / Para 1 row 1)
6 than their non-digital counterparts, but have still suffered 0.02 1 0.02
From its first year of operation as a public company (2004),
7 Google has increased its operating profit to $ 6.7 billion from 0.05 3 0.15
a modest $ 852 million. ( Page 206 / Para 4 row 9)
During 2008, Google had 72% of internet traffic while Yahoo
8 only possessed 17% followed by MSN at 6% and IACI at 0.02 4 0.08
4% ( Page 206 / Para 1 row 6)
Threat - Political, Legal and Government
Due to changes in legislative requirements concerning
technology sharing, patents rights and information security,
1 future expenses and profitability of the companies operating 0.02 1 0.02
with the industry are harder to predict. (Page 207/Para1
row5)
20
Technical and regulatory makes the projection of its
2 business viability for existing companies difficult ( Page 0.03 1 0.03
207 / Para 1 row 4)
Threat Technologies
Future innovations and shifts in technology also make long
1 term strategies regarding the internet and software services 0.05 3 0.15
industry difficult. ( Page 207 / Para 1 row 8)
Threat Social, Culture and Demography
Total 1 2.68
Total weighted score of Yahoo! is 2.68 > average total weighted score which is 2.50. With this we
can conclude that Yahoo! still in the strong position. This score indicates Yahoo! is responding in
an outstanding way to existing threat and opportunities in the industry. Meaning, Yahoo! is
effectively taking advantage of the existing opportunities and minimizes the adverse effect of the
external threats.
8. Competitive Profile Matrix (CPM)

Yahoo Google Industry
No Key Weight Rating Weighted Rating Weighted Rating Weighted
Success Score Score Score
Factor
1 Market 0.20 2 0.40 3 0.60 1 0.20
Capital
2 Quarterly 0.10 1 0.10 3 0.30 2 0.20
Growth
3 Gross 0.10 1 0.10 1 0.10 1 0.10
Margin
4 Revenue 0.25 3 0.75 4 1 1 0.25
5 Net 0.35 3 1.05 4 1.40 N/A N/A
Income
Total 1 2.40 3.40 0.75
Ratings: 1) = Major Weakness, 2) = Minor Weakness, 3) = Minor Strength, 4) = Major Strength
Based on the CPM, Google is having the highest rating which 3.40 closer to 4. This is apparent in
the case study that, Google is the market leader and Yahoo! is the 2nd most preferred internet
21
search engine. Hence, the number 3.40 shows relative strength of Google in the internet search
engine industry and followed by Yahoo! receiving 2.40.
9. Internal Environment Analysis

9.1. Culture Assessment
Companies Within the Industry
N Items Yahoo Google Strength Weakness
o Case Facts Case Facts
1 Value Ethics
Yahoos code of ethics is Data not available in
embedded in its six values, Case Study
Excellence, Innovation,
Customer Fixation,
Teamwork, Community and
Fun.(Page 202/Para 5 row 1)
Unity
Part of Yahoos vision &
mission statement mentions
All us united in creating
indispensable experience
and fueled by trust. ( Page
202 / Para 5 row 2)
2 Beliefs Data not available in Case Data not available in
Study Case Study
3 Rites Increase in product Increase in product
offering offering
Yahoo resumed discussion Early 2009, Google in
with Microsoft about search talks with the popular
and advertising partnership micro-blogging site.
as both firm struggle to (Page 206/Para 3 row 1)
compete with Google, but
Yahoo rejected the offer
from Microsoft (Page 201 /
Para 1 row 1)
Yahoo offering include Google has expended

Yahoo Group, Yahoo well beyond search-
Answer and search offering related functions into
22
include Yahoo Search, areas such as e-mail,
Yahoo Local, Yahoo Yellow mapping, web-based
Page & Yahoo Maps are productivity
available free to users. application, video, and
Yahoo communication you tube.(Page 206 /
segment include Yahoo Para 1 row 2)
Mail, Zimbra Mail and
Yahoo Massenger (Page 202
/ Para 3 row 1 & Page 2020
/ Para 4 row 1)
4 Rituals Strategy & Operations
Yahoo strategy and Data not available in
operations is to become the Case Study
starting point for internet
users. (Page 201 / Para 3
row 1)
5 Myths Multinational
Yahoo has offices in more Data not available in
than 25 countries, province Case Study
or territories. (Page 201 /
Para 2 row 1)
6 Symbol Brand Position
Yahoo is the second leading Data not available in
global internet brand. (Page Case Study
201 / Para 2 row 3)
7 Heroes Founders
Carol Bartz and Jerry Yang, Data not available in
who developed their interest Case Study
in internet made them to
form an internet search
engine company called
Yahoo into a global renown
brand Yahoo! ( Page 201 /
Para 6 row 1)
8 Legend Data not available in Case Data not available in
s Study Case Study
Conclusion
23
Yahoo! has all the good credibility to emerge as an industry leader and to earn the support from its
customers to further improve their market expansion.
9.2. Yahoo! Management Assessment Analysis
Strength
Weakness
No Items
Yahoo Google
Case Facts Case Facts
1 Planning The core of Yahoos strategy and
operations is to become the Data not available in Case Study
starting point for internet users, to
become worlds largest
advertisers and to deliver
industry-leading open platforms
that attract developers and
publishers Yahoo must buy
solutions (Page201/Para 3 row 1)
2 Organizing Data not available in Case Study Data not available in Case Study
3 Motivating Data not available in Case Study Data not available in Case Study
4 Staffing Yahoo! has been extensively Data not available in Case Study
reducing its work force because of
profit decline. In 2009 they
eliminated 675 and 700 at the end
of 2009. ( Page 201 / Para 4 row
6)
5 Controlling For the 2nd quarter of 2009 cost Data not available in Case Study
cutting allowed Yahoo! to post 7%
increase in profit up to $ 141.4
million. (Page 201 / Para 4 row
6)
In July 2009, Yahoo! closed its
third video property, Maven
Network based in Cambridge
Massachusetts and they plan to
close twenty video services,
including network site Yahoo! 360
and its Web hosting service
Geocites. (Page201/Para5 row 1)
24
Conclusion
Based on the data given, Yahoo is seems to be doing well. However, this happened because of no
available data from Google and detailed information of Yahoo! in the case study.
9.3. Yahoo!, Marketing Function Assessment Table.
Weakness
Strength
N Items
o
Yahoo Google
1 Planning The core of Yahoos strategy
and operations is to become the Data not available in Case
starting point for internet users, Study
to provide must buy solutions
for the worlds largest
industry-leading open platforms
that attract developers and
publishers. ( Page 201 / Para 3
row 1)
2 Customer Part of Yahoos code of ethics
Analysis Customer Fixation ( Page 202 / Data not available in Case
Para 6 row 3) Study
3 Selling Yahoo, together with its owned
product / and operated online properties Data not available in Case
Services and services; it also provides Study
advertising offerings and access
to internet users beyond Yahoo
through its distribution network
of 3rd party entities. (Page 201 /
Para 2 row 5)
25
Yahoo Owned and operated site
increased 19% from 2006 to
2007 and increased 10% from
2007 to 2009. ( Page 205 /
Exhibit 3)
4 Product & Yahoo offering include Yahoo Google has expanded well
Services Group, Yahoo Answer and beyond search related
Planning search offering include Yahoo functions into areas such as e-
Search, Yahoo Local, Yahoo mail (Gmail), mapping
Yellow Page & Yahoo Maps are (Google Earth & Google
available free to users. Yahoo Maps), Web-based
communication segment include productivity applications
Yahoo Mail ( Page 202 / Para 3 (Google Apps), video (Google
row 1) Video and You Tube Inc which
Yahoo & Microsoft struggle to Google acquired in Nov
compete with Google. ( Page 2006), a finance offering
201 / Para 1 row 4) (iGoogle), a mobile Internet
software platform (Android)
and browser software (Google
Chrome). (Page 206 / Para 3
row 2)
5 Pricing Yahoo generates revenue by
providing marketing services to Data not available in Case
advertisers across hundreds of Study
web sites. Although many of the
services Yahoo provides to users
are free, it does charge fee for a
range of premium services.
6 Distributio Yahoo has offices in more than Data not available in Case
n 25 countries Study
Conclusion
From the assessment, Yahoo! has all the properties to emerge and to be the market leader in the
internet search engine industry. However, they have to expand like what Google has done. They
should explore on how they can be part of major android and smart phone manufacturers so that
they can use Yahoo as the mobile Internet software platform just like how Google has done.
26
9.4. Financial Condition of Yahoo
Strength
Weakness
N
o
Yahoo Google
1 Yahoo!s full year revenue in 2008 exceeded
by $ 2.2 billion compared to 2007, despite Data not available in Case Study
the weakness in overall advertising. (Page
204/Para 1)
2 Net Income of Yahoo in 2008 was $424,298
million which is 77% lesser compared to Data not available in Case Study
their 2006 net income (Page 203/Exhibit 1)
3 Yahoo!, posted 78% in 1st Qtr 2009 profit
decline and reacted by eliminating 675 more Data not available in Case Study
jobs on top of 2,500 job cuts in 2008 ( Page
201 / Para 4 row 1)
4 Yahoo! advertising business is also
deteriorating rapidly as the firms overall Data not available in Case Study
revenue fell by 13% in the 2nd quarter of
2009.
5 Yahoo! IPO in April 1996 with total
employee stock raise to high of $ 120 in Data not available in Case Study
2000 but for most 2009 it has been trading
under $ 14. ( Page 202 / Para 2 row 1)
6 Yahoo! lost 1% in rich media revenue, 1% in
sponsorship and 2% in percent in 2008. (Page Data not available in Case Study
202 / Para 6 row 1)
7 Yahoo! has market capital of $18.29billion Google had $ 100.13 billion
compared to Google which has $ 100.13 market capital.(Page 207 /
billion. (Page 207 / Exhibit 7) Exhibit 7)
Conclusion
27
Yahoo Financial was in bad shape because they were losing out to Google tremendously. This is
because of they are not innovate and the way the operate their business unlike Google. Yahoo!,
has to improve their product marketability and brand loyalty in order to gain market leader ship.
10. Financial Ratio Time Series Data of Yahoo from 2006

to 2008
Items The assessed The assessed The Strength Weakness

company company assessed
Yahoo FY06 Yahoo FY07 company
Yahoo
FY08
Liquidity Ratio
Current Ratio 2.54 1.41 2.78
Quick Ratio 2.40 1.33 2.65
Leverage Ratio
Debts to Total 8% 7% 2%
Asset Ratio
Debt to Equity 10% 9% 3%
Ratio
Long Term Debt 9.5% 1% 3%
to Equity Ratio
Times Interest No Data No Data No Data
Earned Ratio
Activity Ratio
Inventory N/A N/A N/A
Turnover
Fixed Asset 7.14 5.73 5.03
Turnover
Total Asset 0.56 0.57 0.53
Turnover
Accounts 7.78 7.02 6.81
Receivable
Turnover
Average 50.24 53 54
Collection Period
Profitability Ratio
Gross Profit Ratio 58% 59% 58%
Operating Profit 18% 14% 9.5%
Ratio
28
Net Profit Margin 12% 9.5% 6%
Return on Total 6.5% 5% 3%
Asset
Return on 8% 7% 4%
Stockholders
Equity
Price Earnings 26.92 25.53 41.38
Ratio
Growth Ratio
Sales 100% 108% 112%
Net Income 100% 88% 44%
Earnings Per 0.52 0.47 0.29
Share
Dividend Per No Data No Data No Data
Share
No data given on the share price of Yahoo, since in the case study on page 202 /Para 2 row 3
its mentioned that Yahoo share has been trading under $ 14, hence a fix price of $12 is used
to calculate the PE/Ratio.
Conclusion
Over financial performance based on time series data, Yahoo is in good shape but intensive
competition from Google has snatched major chunk of the market share. Also, PE Ratio show
their value is overpriced especially in 2009. Based on the case study, Google PE ratio is 23.86 and
industry P/E ratio is 18.87 which far to lower compared to Yahoo. Yahoo should look into this if
they want to increase in investment.
29
11. Production / Operation Assessment
Strength
Weakness
N Items Companies Within the Industry
o
Yahoo Google
1 Process Data not available in Case Data not available in Case
Study Study
2 Capacity Due to changes in legislative
requirement concerning
technology sharing, patent Data not available in Case
rights and information security, Study
future expenses and
profitability of the companies
operating within this industry
are harder to predict. ( Page
207 / para 1 row 5)
3 Inventory Data not available in Case Data not available in Case
Study Study
4 Workforce Data not available in Case Data not available in Case
Study Study
5 Quality The core of Yahoos strategy
and operations is to become the
starting point for internet users, Data not available in Case
to provide must buy solutions Study
for the worlds largest
industry-leading open
platforms that attract
developers and publishers.
(Page 201/Para3 row 1)
Conclusion
The reason Yahoo become a non-manufacturing is because of the company do not have a enough
production criteria in this assessment.
30
12. Research and Development
No Case Facts Strengt Weakness
h
1 Data not Available in Case Study
Conclusion
There is no case fact given in the case study to analyze Yahoo MIS Function.
13. MIS Function Analysis
No Items Companies Within the Industry Strength Weakness

Yahoo Google
1 All Managers Use MIS Data not available Data not available
to make decision in Case Study in Case Study
2 CIO / Director of MIS Data not available Data not available
in Case Study in Case Study
3 MIS Data are updated Data not available Data not available
regularly in Case Study in Case Study
4 Effectiveness of MIS Data not available Data not available
Password in Case Study in Case Study
5 The strategist familiar Data not available Data not available
with the MIS rivals in Case Study in Case Study
6 MIS user friendly Data not available Data not available
7 All users of MIS Data not available Data not available
understand the in Case Study in Case Study
Competitive advantage
of MIS
8 MIS Training is provided Data not available Data not available
9 The MIS continually Data not available Data not available
being improved in Case Study in Case Study
Conclusion
There is no case fact given in the case study to analyze Yahoo MIS Function.
31
14. Company Value Chain Analysis (VCA)
14.1. Main Activities.
No Items Companies Within Industry
Yahoo!
Case Facts
1 Supplier / Raw Material Data not available in Case Study
2 Process / Production Data not available in Case Study
3 Product
Product or type of Yahoo generates revenue by providing marketing services to
Services Offered advertisers across hundreds of web sites.(Page 201 / Para 2
row 9)
Product Segment Yahoo! Groups offering, Yahoo! Answers and Flickr
Yahoo! Groups generally offered free of charge
Product Segment Yahoo! Search, - offering, Yahoo! Search, Yahoo! Local,

Yahoo! Search Yahoo! Yellow Pages and Yahoo! Maps
Product Segment Yahoo! Mail, Zimbra Mail and Yahoo! Messenger

Yahoo! Communication
Revenue Generation All the services provided to the users are for free,
however, they generate revenue through its search offering
from display advertising (Page 202/Para3 row 5)
Yahoo! Search generates revenue through its search
offering from search and display advertisement. ( Page
202 / Para 1 row 6)
Yahoo! Communication generates revenue through display
advertising revenues from these offering. ( Page 202 / Para
3 row 1)
4 Distribution Data not available in Case Study
5 Marketing Yahoo! lost 1% in rich media revenue, 1% in sponsorship
and 2% in classified ads in 2008 as compared 2007. (Page
202 / Para 6 row 1).
Although they had increase of revenue in 2008 compared to
2007, it was because of growth in the entire internet business
rather than shift to Yahoo! (Page 202 / Para 6 row 2)
5 Marketing Revenue generated by Yahoo! marketing activities has
always being increasing between 8% from 2006 to 2007 and
4 % from 2007 to 2008.(Page 205 / Exhibit 3)
13.2. Supportive Activities
32
No Item Companies With Industry
Yahoo! - Case Facts
1 Culture Case Facts are in Companys Culture Assessment Table
2 Management Case Facts are in Managements Assessment Analysis
3 Financial Case Facts are in Financial Condition of Yahoo and Financial Ratios
Analysis
4 Production Case Facts are in Production and Operation Assessment
5 Advertisemen Data not available in Case Study
t
14. List of All Strengths

N Case Facts
o
1 Yahoo! IPO stock rise to high of $ 120 in 2000. (Page 202 / Para 2 row 1)
2 Yahoo is the second leading global internet brand and one of the most trafficked internet
3 Yahoos code of ethics is embedded in its six values, Excellence, Innovation, Customer
Fixation, Teamwork, Community and Fun. (Page 202 / Para 5 row 1)
4 Part of Yahoos vision & mission statement mentions All us united in creating
indispensable experience and fueled by trust. ( Page 202 / Para 5 row 2)
5 Vast product offering -Yahoo offering include Yahoo Group, Yahoo Answer and search
offering include Yahoo Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps are
available free to users. Yahoo communication segment include Yahoo Mail, Zimbra Mail
and Yahoo Messenger (Page 202 / Para 3 row 1 & Page 2020 / Para 4 row 1)
6 Yahoo has offices in more than 25 countries or territories. (Page 201 / Para 2 row 1)
7 For the 2nd quarter of 2009 cost cutting allowed Yahoo! to post 7% increase in profit up to
$ 141.4 million. (Page 201 / Para 4 row 6)
8 Part of Yahoos code of ethics Customer Fixation ( Page 202 / Para 6 row 3)
9 Yahoo, together with its owned and operated online properties and services; it also
provides advertising offerings and access to internet users beyond Yahoo through its
distribution network of 3rd party entities. (Page 201 / Para 2 row 5)
10 Yahoo!s revenue in 2008 exceeded by $ 2.2 billion compared to 2007, despite the
weakness in overall advertising. (Page 204 / Para 1)
11 Revenue generated by Yahoo! marketing activities has always being increasing between
8% from 2006 to 2007 and 4 % from 2007 to 2008.(Page 205 / Exhibit 3)
12 The core of Yahoos strategy and operations is to become the starting point for internet
users, to provide must buy solutions for the worlds largest advertisers and to deliver
industry-leading open platforms that attract developers and publishers. (Page 201 / Para 3
row 1).
15. List of All Weakness

33
N Case Facts
o
1 Yahoo resumed discussion with Microsoft about search and advertising partnership as both
firm struggle to compete with Google, but Yahoo rejected the offer from Microsoft (Page
201 / Para 1 row 1)
2 In July 2009, Yahoo! closed its third video property, Maven Network based in Cambridge
Massachusetts and they plan to close twenty video services, including network site Yahoo!
360 and its Web hosting service Geocites. (Page 201 / Para 5 row 1)
3 Net Income of Yahoo in 2008 was $ 424,298 million which is 77% lesser compared to
their net income in 2006 ( Page 203 / Exhibit 1)
4 Yahoo!, posted 78% in 1st Qtr 2009 profit decline and reacted by eliminating 675 more
jobs on top of 2,500 job cuts in 2008 ( Page 201 / Para 4 row 1)
5 Yahoo! advertising business is also deteriorating rapidly as the firms overall revenue fell
by 13% in the 2nd quarter of 2009.
6 Yahoo! IPO in April 1996 with total employee stock raise to high of $ 120 in 2000 but
for most 2009 it has been trading under $ 14. ( Page 202 / Para 2 row 1)
7 Yahoo! lost 1% in rich media revenue, 1% in sponsorship and 2% in percent in 2008.
8 Yahoo offering include Yahoo Group, Yahoo Answer and search offering include Yahoo
Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps are available free to users. Yahoo
communication segment include Yahoo Mail. ( Page 202 / Para 3 row 1)
9 Google has 72% of internet traffic while Yahoo only possessed 17% followed by MSN at
6% and IACI at 4%. ( Page 206 / Para 1 row 6)
10 Lower Current Ratio
11 Lower Quick Ratio
12 Lower Operating Profit Margin Ratio
13 Lower Net Profit Margin Ratio
14 Lower Return on Total Asset
15 Lower Return on Stockholder Equity Ratio
16 High Price Earnings Ratio ( Over Valued)
17 Yahoo & Microsoft struggle to compete with Google. ( Page 201 / Para 1 row 4)
16. Internal Factor Evaluation (IEF) Matrix (Strength)
No Key Internal Factor Weight Rating Weighted

Score
34
Strength
1 The core of Yahoos strategy and operations is to become 0.10 4 0.40
the starting point for internet users, to provide must buy
solutions for the worlds largest advertisers and to deliver
industry-leading open platforms that attract developers and
publishers. (Page 201 / Para 3 row 1).
2 Yahoo!s full year revenue in 2008 exceeded by $ 2.2 0.10 4 0.40
billion compared to 2007, despite the weakness in overall
advertising. (Page 204 / Para 1)
3 For the 2nd quarter of 2009 cost cutting allowed Yahoo! to 0.06 3 0.18
post 7% increase in profit up to $ 141.4 million. (Page
201 / Para 4 row 6)
4 Revenue generated by Yahoo! marketing activities has 0.06 3 0.18
always being increasing between 8% from 2006 to 2007
and 4 % from 2007 to 2008.(Page 205 / Exhibit 3)
5 Yahoo is the second leading global internet brand and one 0.06 3 0.18
of the most trafficked internet destination worldwide
(Page 201 / Para 2 / row 3)
6 Yahoo, together with its owned and operated online
properties and services; it also provides advertising 0.02 2 0.04
offerings and access to internet users beyond Yahoo
through its distribution network of 3rd party entities. (Page
201 / Para 2 row 5)
7 Vast product offering -Yahoo offering include Yahoo
Group, Yahoo Answer and search offering include Yahoo 0.06 2 0.12
Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps
are available free to users. Yahoo communication segment
include Yahoo Mail, Zimbra Mail and Yahoo Messenger
(Page 202 / Para 3 row 1 & Page 2020 / Para 4 row 1)
8 Yahoo has offices in more than 25 countries, province or
territories. (Page 201 / Para 2 row 1) 0.02 1 0.02
9 Part of Yahoos code of ethics Customer Fixation
(Customer Centric) ( Page 202 / Para 6 row 3) 0.02 1 0.02
17. Internal Factor Evaluation (IEF) Matrix (Weakness)
N Key Internal Factor Weigh Ratin Weighted

o t g Score
Weakness
35
1 Yahoo resumed discussion with Microsoft about search and
advertising partnership as both firm struggle to compete 0.10 4 0.40
with Google.(Page 201 / Para 1 row 1)
2 In July 2009, Yahoo! closed its third video property, Maven
Network based in Cambridge Massachusetts and they plan 0.07 3 0.21
to close twenty video services, including network site
Yahoo! 360 and its Web hosting service Geocites. (Page 201
/ Para 5 row 1)
3 Google has 72% of internet traffic while Yahoo only 0.07 3 0.21
possessed 17% followed by MSN at 6% and IACI at 4%.
4 Yahoo & Microsoft struggle to compete with Google. 0.07 3 0.21
5 Net Income of Yahoo in 2008 was $ 424,298 million which 0.06 3 0.18
is 77% lesser compared to their net income in 2006 ( Page
203 / Exhibit 1)
6 Yahoo! advertising business is also deteriorating rapidly as 0.05 3 0.15
the firms overall revenue fell by 13% in the 2nd quarter of
2009.
7 Yahoo! lost 1% in rich media revenue, 1% in sponsorship 0.05 3 0.15
and 2% in percent in 2008. (Page 202 / Para 6 row 1)
8 Yahoo!, posted 78% in 1st Qtr 2009 profit decline. ( Page 0.01 2 0.02
201 / Para 4 row 1)
9 Yahoo! IPO in April 1996 with total employee stock raise 0.02 1 0.02
to high of $ 120 in 2000 but for most 2009 it has been
trading under $ 14. ( Page 202 / Para 2 row 1)
Grand Total (Strength + Weakness) 1 3.09
Conclusion
From the IFE Matrix analysis, Yahoo score 3.09 which is higher than average (2.50). It shows
that the company has internal strength to compete with its major competitors. But they have to
improvise their existing strategy either by merging with the existing industry players to diversify
and in the same time it can increase their market share.
18. Yahoos Existing Long Term and Short Term

Financial Objectives and Strategies.
N Financial Objectives Remark
o s
36
Unsuccessful
Successful
Case Facts
Long Short
Term Term
1 Sustainable Increase Yahoo! posted 78% 1st Qtr 2009 profit decline
revenue revenue 5% and reacted by eliminating another 675 jobs.
growth in 2009 (Page 201 / Para 4 row 1)
1st Qtr of 2008, Yahoo! revenue dropped 13% to $
1.58 billion. (Page 201 / Para 4 row 3)
Yahoo!s online advertising business is also
deteriorating rapidly as the firms overall revenue
fell 13% in 2nd Qtr of 2009 compared to prior
year. (Page 201 / Para 4 row 5)
That 2nd Qtr 09, Yahoo! managed to post 7%
increase in profit up to $ 141.40 million through
their aggressive cost cutting measures. ( Page 201
/ Para 4 row 5)
In 2009, Yahoo! closed its third video property,
Maven networks, based in Cambridge,
Massachusetts, and they plan to close twenty
video services, including its social network site
Yahoo! 360 and its Web hosting service Geo
Cites. ( Page 201 / Para 5 row 1)
Yahoo! IPO stock rose to the high $ 120 in 2000
and dropped to $ 14 for most of 2009.
Yahoo! lost 1% in rich media revenue, 1% in
sponsorship and 2% in classified ads in 2008 as
compared to 2007. (Page 202 / Para 6 row 1)
Yahoo!s search revenue increased by 3% in 2008
compared to 2007 due to growth in the entire
internet business rather than a shift to Yahoo.
2 Larger Increasing Yahoo! net income dropped by 44.44% in 2008
profit operating compared to 2007 even though their revenue
margin margin by increased by 3%. ( Page 203 / Exhibit 1)
10% in Yahoo!s Operating Profit Margin in 2006 was
2009 15% but in 2007 the operating profit margin drop
to 10%. In 2008 its operating profit margin was
0.0017%
37
3 Shareholde Increase Yahoo2 EPS in 2009 was 0.29 which is less by
r value EPS by 15% 0.18 compared EPS in 2008. Yahoos EPS has
in 2009 decreased by 39% in 2009 compared to EPS of
2008.
19. Yahoos Existing Long Term and Short Term Strategic

Objectives
N Strategic Objectives Remarks

o
Unsuccessful
Successful
Long Term Short Term Case Facts
1 Market Share Increase Yahoo has resumed discussion with Microsoft

Growth Market Share about search and advertisement partnership as
by 2% both firms struggle to compete with Google.
Yahoo together with its owned and operated
online properties and services, it also provides
its advertising offerings and access to internet
users beyond Yahoo through its distribution
network of 3rd party entities, who integrated its
advertising offering into their Web sites.(Page
201/Para2 row 4)
Yahoo generates revenues by providing
marketing services to advertisers across
hundreds of Web Sites. (Page 201 / Para 2 row
7)
2 New Getting New
Improved Improved Data not available in Case Study
Product Product to
Development Market
Annually
3 Increase Increase
Yahoos number of Data not available in Case Study
Offices employees to
Globally cater the
needs of
Internet Users
38
20. Yahoos Existing Corporate Level Strategies
Remarks
Unsuccessful
Successful
N Defensive
o Strategies Case Facts
1 Horizontal Yahoo has resumed discussion with Microsoft about search

Integration and advertisement partnership as both firm struggles to
compete with Google. ( Page 201 / Para 1 row 1)
2 Market Yahoo together with its owned, operated online properties and
Penetration services, it also provides its advertising offerings and access to
internet users beyond Yahoo through its distribution network
of 3rd party entities, who integrated its advertising offering into
their Web sites.(Page 201 / Para 2 row 4)
Yahoo generates revenues by providing marketing services to
advertisers from hundreds of Web Sites.(Page201/ Para 2 row
7)
Vast product offering -Yahoo offering include Yahoo Group,
Yahoo Answer and search offering include Yahoo Search,
Yahoo Local, Yahoo Yellow Page & Yahoo Maps are available
free to users. Yahoo communication segment include Yahoo
Mail, Zimbra Mail and Yahoo Messenger (Page 202 / Para 3
row 1 & Page 2020 / Para 4 row 1)
3 Market Yahoo has offices in more than 25 countries, province or
Development territories. (Page 201 / Para 2 row 1)
4 Retrenchmen For that 2nd Qtr, aggressive cost cutting allowed Yahoo to post
t 7% increase in profit up to $ 141.4 million, but they laid off
another 700 employees to end with 13,000 employees. ( page
201 / Para 4 row 5)
5 Divestiture In July 2009, Yahoo closed its 3rd video property, Maven
Network, based in Cambridge, Massachusetts. ( Page 201 /
Para 5 row 1)
Yahoo plans to close twenty video services, including social
network site Yahoo 360 and its Web hosting services
GeoCities. ( Page 201 / Para 5 row 2)
21. Yahoos Existing Companys Business Level

Strategies. (Porters Five Generic Strategies)
39
Remarks
Unsuccessful
Successful
Name of
Strategy Case Facts
Cost Although many of the services Yahoo provides the users are free, it
Leadershi does charge fees for a range of premium services. ( Page 201 / Para
p 2 row 8)
Type 2 Yahoo searchs services are free to users and are often the starting
point for users navigating the internet and searching for information.
Yahoo generates revenues through its search offering from search and
display advertising. (Page 202 / Para 3 row 3)
Yahoo communications segments generate revenue display
advertising revenues from these offering. (Page 202 / Para 2 row 1)
Conclusion of Yahoos existing strategies.

Corporate Level Business Level
Horizontal
Integration
Market Penetration
Cost Leadership
Type 2
Market Development
Retrenchment
Divestiture
22. Strategy Formulation Tools. (SWOT Analysis)
22.1. Opportunities
No Case Facts
O1 Yahoo is the second leading global internet brand and one of the most trafficked
internet destination worldwide ( Page 201 / Para 2 / row 3)
O2 There are 1.1 billion internet users around the world and 211 million in the USA as of
end of 2006 ( Page 202 / Para 7 row 1)
40
O3 Although internet related business have perhaps held better than their non-digital
counterparts, but have still suffered from macroeconomics malaise.( Page 202 / Para 8
row 5)
O4 Internet advertisement continues to grow though in slower pace (Page 202 / Para 9 row 4
O5 Broadband prices fall (Page 206 / Para 5 row 1)
O6 Internet advertisement revenue in USA remains strong, topping $ 23 billion . (Page
202 / Para 9 row 1)
O7 Increased recognition that consumers spend more and more of their time online. (Page
202 / Para 9 row 5)
O8 Federal Communication Commission (FCC) adopted flexible access rules for users and
wireless resellers in conjunction with agencys early 2008 wireless spectrum auction.
O9 Even Google Inc, expressed economic related caution in conjunction with its second
quarter results (Page 202 / Para 8 row 9)
O1 Yahoo resumed discussion with Microsoft about search and advertising partnership as
0 both firm struggle to compete with Google. (Page 201 / Para 1 row 1)
22.2. Threats
N Case Facts
o
T1 Economic growth in the USA and the world has slowed amid crisis in housing and credit
market.( Page 202 / Para 8 row 1)
T2 Rising unemployment and problematic geopolitics to the mix and USA had difficult
economic back drop ( Page 202 / Para 8 row 4)
T3 Even though internet related business have possibly held better than their non-digital
counterparts, but still suffered from macroeconomics malaise.(Page 202/Para 8 row 5)
T4 Internet media and market research firm com Score Inc, expressed concerns about
deceleration in online growth. (Page 202 / Para 8 row 10)
T5 In 2009, number of internet content and advertisement companies (including Bankrate Inc,
Knot Inc including Yahoo!) reported disappointing financial results and lowered their
forward financial outlooks. ( Page 202 / Para 8 row 7)
T6 Due to changes in legislative requirements concerning technology sharing, patents rights
and information security, future expenses and profitability of the companies operating
with the industry are harder to predict. (Page 207 / Para 1 row 5)
T7 From its first year of operation as a public company (2004), Google has increased its
operating profit to $ 6.7 billion from a modest $ 852 million. ( Page 206 / Para 4 row 9)
T8 Technical and regulatory makes the projection of its business viability for existing
companies difficult ( Page 207 / Para 1 row 4)
T9 Future innovations and shifts in technology also make long term strategies regarding the
internet and software services industry difficult. ( Page 207 / Para 1 row 8)
41
22.3. Strength
N Case Facts
o
S1 The core of Yahoos strategy and operations is to become the starting point for internet
users, to provide must buy solutions for the worlds largest advertisers and to deliver
industry-leading open platforms that attract developers and publishers. (Page 201 / Para 3
row 1).
S2 Yahoo!s full year revenue in 2008 exceeded by $ 2.2 billion compared to 2007, despite
the weakness in overall advertising. (Page 204 / Para 1)
S3 For the 2nd quarter of 2009 cost cutting allowed Yahoo! to post 7% increase in profit up to
$ 141.4 million. (Page 201 / Para 4 row 6)
S4 Revenue generated by Yahoo! marketing activities has always being increasing between
8% from 2006 to 2007 and 4 % from 2007 to 2008.(Page 205 / Exhibit 3)
S5 Yahoo is the second leading global internet brand and one of the most trafficked internet
S6 Yahoo, together with its owned and operated online properties and services; it also
provides advertising offerings and access to internet users beyond Yahoo through its
distribution network of 3rd party entities. (Page 201 / Para 2 row 5)
S7 Vast product offering -Yahoo offering include Yahoo Group, Yahoo Answer and search
offering include Yahoo Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps are
available free to users. Yahoo communication segment include Yahoo Mail, Zimbra Mail
and Yahoo Messenger (Page 202 / Para 3 row 1 & Page 2020 / Para 4 row 1)
S8 Yahoo has offices in more than 25 countries, province or territories. (Page 201 / Para 2
row 1)
S9 Part of Yahoos code of ethics Customer Fixation (Customer Centric) ( Page 202 / Para 6
row 3)
22.4. Weakness
No Case Facts
W In 2008 Yahoo rejected the offer from Microsoft (Page 201 / Para 1 row 1)
1
W In July 2009, Yahoo! closed its third video property, Maven Network based in Cambridge
2 Massachusetts and they plan to close twenty video services, including network site
Yahoo! 360 and its Web hosting service Geocites. (Page 201 / Para 5 row 1)
W Net Income of Yahoo in 2008 was $ 424,298 million which is 77% lesser compared to
3 their net income in 2006 ( Page 203 / Exhibit 1)
W Yahoo!, posted 78% in 1st Qtr 2009 profit decline. ( Page 201 / Para 4 row 1)
4
W Yahoo! advertising business is also deteriorating rapidly as the firms overall revenue fell
42
5 by 13% in the 2nd quarter of 2009.
W Yahoo! IPO in April 1996 with total employee stock raise to high of $ 120 in 2000 but
6 for most 2009 it has been trading under $ 14. ( Page 202 / Para 2 row 1)
W Yahoo! lost 1% in rich media revenue, 1% in sponsorship and 2% in percent in 2008.
7 (Page 202 / Para 6 row 1)
22.5. SWOT Matrix
43
44
23. Converting into Strategic Terms
23.1. Corporate Level Strategy.
No Type of Strategy Alternative Strategies

1 Horizontal Integration SO3
SO4
WO1
ST2
2 Market Penetration SO1
SO2
ST3
WO3
ST1
3 Retrenchment ST5
WT3
4 Divesture ST4
23.2. Business Level Strategy.
No Type of Strategy Alternative Strategies

1 Cost Leadership Type 2 ST4
ST5
WO4
WT3
ST2
2 Differentiation WT1
WT2
ST1
23.3. Selected Strategy Original Sentences.
Level of Strategy Original Alternative Strategies Code

Business Level Strategy
Cost Leadership Gain market share and position in the best place ST5
(Type 2)
Corporate Level Strategy
Horizontal Negotiate a deal with Microsoft to increase foothold in the WO1
Integration USA and Globally
Market Sign up deal with smart phone manufacturers to include ST1
45
Penetration Yahoo a preferred search engine
Retrenchment Increase service and product promotion via multiple channels WT1
to increase sales to prevent retrenchment
Divesture Outsource non-core activity WT3
Cost Leadership
Type 2
Business Level
Horizontal Integration
Corporate Level
Market Integration
Retrenchment
24. Space Analysis

24.1. Factors that make up the space matrix axes
Internal Strategic Position External Strategic Position
Financial Position Stability Position

Yahoos revenue from 2007 to 2008 increased Yahoo operates in the Internet products,
by 3.4% to $7.2 billion. But net income services and content markets, which are
decreased by 35.7% to $ 424 million. (Page highly competitive and characterized by rapid
201 / Para 2 row 2) change, converging technologies and
increasing competition. ( Page 206 / Para 1
row 1)
46
Liquidity Ratio
Current ratio is > 1 , except dropped a 1.13 in Internet advertising continues to grow, albeit
2007 compared to 2006 but regain by 1.37 in slower pace. (Page 202 / Para
2008
Quick ratio is > 1 in 2006 and 2008, but
dropped by 1.07 and regain by 1.32 in 2008.
Leverage Ratio:
Debt to total asset ratio decreased from 8% in Add rising unemployment and problematic
2006 to 2% in 2008 geopolitics to the mix and we have a difficult
Long term debt to equity ratio decreased from economic back drop to say least. (Page 202 /
9.5% in 2006 to 3% in 2008 Para 8 row 4)
Activity Ratio:
Fixed asset turnover ratio for was good 2006 Future innovations and shift in technology
reading 7.14 but dropped by 2.11 and ending also make long term strategies regarding the
with 5.03in 2008 Internet and software services industry
Total asset turnover ratio is low at 0.56 from difficult. ( Page 207 / Para 1 row 8)
2006 and ended with 0.53 in 2008
Profitability Ratio:
Gross profit margin is within 59% to 58%, this Each company in the industry is committed to
shows cost of revenue is in the region of 40% attract as many visitors (as Exhibit 8
of the sales generated. demonstrates) as possible. ( Page 207 / Para 1
Operating profit ratio decreased from 18% in row 3)
2006 to 9.5% in 2008. Although internet related business have
Net profit margin in 2006 was 12% and perhaps held up better than their non-digital
decreased by 50% to end at 6% in 2008. counterparts, they have still suffered from
ROA decreased by 3.5% from 2006 to 2008 macroeconomics malaise. ( Page 202 / Para 8
ROE decreased by 50% from 2006 ending at row 5)
4% in 2008
EPS has decreased from 0.52 in 2006 to 0.29 in
2009
Price earnings ratio was 41.38 in 2009
Competitive Position Industry Position

Yahoo, together with its owned and operated This trend confirms marketers increased
online properties and services; it also provides recognition that consumers spend more and
advertising offerings and access to internet more of their time online.( Page 202 / Para 9
users beyond Yahoo through its distribution row 5)
network of 3rd party entities. (Page 201 / Para 2
row 5)
Vast product offering -Yahoo offering include Internet advertising revenues in the united
Yahoo Group, Yahoo Answer and search states remain strong, topping $23 billion,
47
offering include Yahoo Search, Yahoo Local, according to the 2008 Internet Advertising
Yahoo Yellow Page & Yahoo Maps are Revenue Report, released by Interactive
available free to users. Yahoo communication Advertising Bureau and
segment include Yahoo Mail, Zimbra Mail and PricewaterhouseCoopers LLP (Pwc). (Page
Yahoo Messenger (Page 202 / Para 3 row 1 & 202 / Para 9 row 1)
Page 2020 / Para 4 row 1)
Yahoo is the second leading global internet Federal Communication Commission ( FCC)
brand and one of the most trafficked internet adopted flexible access rules for users and
destination worldwide ( Page 201 / Para 2 / wireless resellers in conjunction with the
row 3) agencys early 2008 wireless spectrum
auction. (Page 206 / Para 4 / row 4)
Yahoo has offices in more than 25 countries, As broadband prices fall, ISPs are pursuing
province or territories. (Page 201/Para 2 row 1) new business strategies, such as bundling
Internet access with voice and video services.
Yahoo! sites has 140,080,000 unique visitors The industry, due to its low barrier entry-
sharing the same number as Google ( Page technical and regulatory makes the
207 / Exhibit 8) projection of its business viability for existing
companies difficult. (Page 207/ Para1 row 4)
The core of Yahoos strategy and operations is There are 1.1 billion internet users around the
to become the starting point for internet users, world and 211 million in the USA as of end
to provide must buy solutions for the worlds of 2006 ( Page 202 / Para 7 row 1)
largest advertisers and to deliver industry-
leading open platforms that attract developers
and publishers. (Page 201 / Para 3 row 1).
24.2. Space Matrix
No Financial Position (FP) Ratings

Yahoos revenue from 2007 to 2008 increased by 3.4% to $7.2 billion. But net 1
1 income decreased by 35.7% to $ 424 million. (Page 201 / Para 2 row 2)
Liquidity Ratio
2 Current ratio is > 1 , except dropped a 1.13 in 2007 compared to 2006 but 1
regain by 1.37 in 2008
Quick ratio is > 1 in 2006 and 2008, but dropped by 1.07 and regain by 1.32 in
2008.
Leverage Ratio:
3 Debt to total asset ratio decreased from 8% in 2006 to 2% in 2008 1
Long term debt to equity ratio decreased from 9.5% in 2006 to
Activity Ratio:
4 Fixed asset turnover ratio for was good 2006 reading 7.14 but dropped by 2.11 3
48
and ending with 5.03in 2008
Total asset turnover ratio is low at 0.56 from 2006 and ended with 0.53 in 2008
Profitability Ratio:
Gross profit margin is within 59% to 58%, this shows cost of revenue is in the
region of 40% of the sales generated.
Operating profit ratio decreased from 18% in 2006 to 9.5% in 2008. 3
Net profit margin in 2006 was 12% and decreased by 50% to end at 6% in
5 2008.
ROA decreased by 3.5% from 2006 to 2008
ROE decreased by 50% from 2006 ending at 4% in 2008
EPS has decreased from 0.52 in 2006 to 0.29 in 2009
Price earnings ratio was 41.38 in 2009
6 Price earnings ratio was 41.38 in 2009 1
7 Growth Ratio
Sales started 100% in 2006 and ended up at 112% in 2008, each year sales 3
increase by 8% in 2007 and 3% in 2008
Net Income ended in 2008 at 44%, each year net income decreased by 12% in
2007 and 35.7% in 2008.
Total 13
No Stability Position ( SP) Ratings
Yahoo operates in the Internet products, services and content markets, which -4
1 are highly competitive and characterized by rapid change, converging
technologies and increasing competition. ( Page 206 / Para 1 row 1)
2 Internet advertising continues to grow, albeit slower pace. (Page 202 / Para -3
3 Add rising unemployment and problematic geopolitics to the mix and we have
a difficult economic back drop to say least. (Page 202 / Para 8 row 4) -4
4 Each company in the industry is committed to attract as many visitors (as -4
Exhibit 8 demonstrates) as possible. ( Page 207 / Para 1 row 3)
5 Although internet related business have perhaps held up better than their non- -3
digital counterparts, they have still suffered from macroeconomics malaise.
6 Google has 72% of Internet traffic while Yahoo only possessed 17% followed -1
by MSN at 6% am IACI at 4%. (Page 206 / Para 1 row 6)
7 Future innovations and shift in technology also make long term strategies -3
regarding the Internet and software services industry difficult. ( Page 207 / Para
1 row 8)
Total -22
No Competitive Position ( CP) Ratings
Yahoo, together with its owned and operated online properties and services; it
1 also provides advertising offerings and access to internet users beyond Yahoo -2
through its distribution network of 3rd party entities. (Page 201 / Para 2 row 5)
49
2 Vast product offering -Yahoo offering include Yahoo Group, Yahoo Answer and
search offering include Yahoo Search, Yahoo Local, Yahoo Yellow Page & -2
Yahoo Maps are available free to users. Yahoo communication segment include
Yahoo Mail, Zimbra Mail and Yahoo Messenger (Page 202 / Para 3 row 1 &
Page 2020 / Para 4 row 1)
3 Yahoo is the second leading global internet brand and one of the most -1
trafficked internet destination worldwide ( Page 201 / Para 2 / row 3)
4 Yahoo has offices in more than 25 countries, province or territories. (Page 201 / -2
Para 2 row 1)
5 Yahoo! sites has 140,080,000 unique visitors sharing the same number as -2
Google.( Page 207 / Exhibit 8)
6 The core of Yahoos strategy and operations is to become the starting point for -3
internet users, to provide must buy solutions for the worlds largest advertisers
and to deliver industry-leading open platforms that attract developers and
publishers. (Page 201 / Para 3 row 1).
Total -12
No Industry Position ( IP) Ratings
This trend confirms marketers increased recognition that consumers spend more 5
1 and more of their time online.( Page 202 / Para 9 row 5)
2 Internet advertising revenues in the united states remain strong, topping $23
billion, according to the 2008 Internet Advertising Revenue Report, released by 4
Interactive Advertising Bureau and PricewaterhouseCoopers LLP (Pwc). (Page
202 / Para 9 row 1)
3 Federal Communication Commission (FCC) adopted flexible access rules for 4
users and wireless resellers in conjunction with the agencys early 2008
wireless spectrum auction. (Page 206 / Para 4 / row 4)
4 As broadband prices fall, ISPs are pursuing new business strategies, such as 3
bundling Internet access with voice and video services. ( Page 206 / Para 5 row
1)
5 The industry, due to its low barrier entry-technical and regulatory makes the 3
projection of its business viability for existing companies difficult. ( Page 207 /
Para1 row 4)
6 There are 1.1 billion internet users around the world and 211 million in the 7
USA as of end of 2006 ( Page 202 / Para 7 row 1)
Total 26
SP Average : -22 7 = -3.14 IP Average : 26 6 = 4.3 Conclusion

CP Average : -14 6 = -2.3 FP Average : 13 7 = 1.86
Directional vector coordinates X- axis -2.3 (+ 4.3) = 2
Y axis -3.14(+1.88) = -1.26
Yahoo should choose competitive strategy
50
The result of SPACE Matrix situated in Competitive area. The following are the chosen
strategies:
Market Penetration
Market Development
Product Development
25. BCG Analysis
BCG Matrix is that it draws attention to the cash flow, investment characteristics and needs of an
organizations various divisions. Also, there is no industry growth rate data given in the case
study, hence, this test cannot be conducted.
25.1. Internal-External Analysis.
Total Revenue Revenue (%) Total Profit Profit % EFE IFE

from FY06 from FY06
51
FY08 ($) FY08 ($)
20,603,455 100 1,835,689 100% 3.08 3.10
The Strategy chosen based on the Internal External (IE) Matrix

Market Penetration
Market Development
Product Development
26. Grand Strategy Matrix
Y axis refer to revenue growth of the assess company (Yahoo), there are no data of the
competitors revenue growth in the case study. Therefore, we cannot determine if Yahoos revenue
growth is bad, moderate or rapid because there is no industrial standard. However, as stated in
Strategic Management Concepts and Cases (David, 2013) firms whose annual growth in sales
exceeds 5% could be considered to have rapid growth. As for Yahoo, the revenue growth in 2008
in comparison to 2007 was at 3%, thus we can conclude it was a slow market growth.
X axis refer to Yahoo CPM result.
Yahoo Google Industry

CPM 2.40 3.40 0.75
Average: 2.40 + 3.40 + 0.75 = 6.55 = 2.18

52
3 3
Base on the given findings, Yahoo is in the strong competitive position since its CPM is 2.40 >
2.18 competitive averages.
The strategy chosen from Grand Strategy Matrix (Quadrant IV)
Related Diversification
27. Final Conclusion of the results of all the strategy

analysis.
SWOT Matrix SPACE MATRIX IE MATRIX GRAND MATRIX
53
1. Horizontal 1. Horizontal 1. Horizontal 1. Related
Integration Integration Integration Diversification
2. Market 2. Market Penetration 2. Market
Penetration 3. Market Penetration
3. Retrenchment Development 3. Market
4. Divesture 4. Product Development
Development
28. Strategic Choice
After conducting all the analysis, we finally can conclude that best strategy chosen or suitable for
Yahoos future business growth is:-
1. Horizontal Integration
2. Market Penetration
29. Quantitative Strategic Planning Matrix (QSPM)

Strategy Alternatives
1 2
Horizontal Market
Key Factors Weight
Integration Penetration
AS TAS AS TAS
Opportunities ( External Factors)
0. 0
the most trafficked internet destination worldwide ( Page 201 0.15
3 45 2 .30
/ Para 2 / row 3)
There are 1.1 billion internet users around the world and 211 0. 0
0.09
million in the USA as of end of 2006 (Page 202/Para7 row 1) 4 36 4 .36
0. 0
than their non-digital counterparts, but have still suffered 0.02
1 02 2 .04
54
Internet advertisement continues to grow though in slower 0. 0
0.02 1
pace. ( Page 202 / Para 9 row 4 02 2 .04
0. 0
Broadband prices fall. (Page 206 / Para 5 row 1) 0.04
2 08 3 .12
Internet advertisement revenue in USA remains strong, 0. 0
0.07
topping $ 23 billion. (Page 202 / Para 9 row 1) 3 21 3 .21
Even Google Inc, expressed economic related caution in
0
conjunction with its second quarter results.(Page 202 / Para 8 0.02
- - 2 .04
row 9)
Federal Communication Commission (FCC) adopted flexible
access rules for users and wireless resellers in conjunction 0
0.04
with agencys early 2008 wireless spectrum auction. ( Page - - 3 .12
206 / Para 4 row 5)
Increased recognition that consumers spend more and more 0. 0
0.08
of their time online (Page 202 / Para 9 row 5) 4 32 4 .32
Sub Total 1.46 1.55
Threat
Economic growth in the USA and the world has slowed amid 0. 0
0.04
crisis in housing and credit market ( Page 202 / Para 8 row 1) 2 08 1 .04
Rising unemployment and problematic geopolitics to the mix
0. 0
and USA had difficult economic back drop. (Page 202 / Para 0.04
2 08 1 .04
8 row 4)
In 2009, number of internet content and advertisement
companies (including Bankrate Inc, Knot Inc. including
0.04
Yahoo!) reported disappointing financial results and lowered - - - -
their forward financial outlooks. ( age 202 / Para 8 row 7)
Internet media and market research firm comScore Inc,

0. 0
expressed concerns about deceleration in online growth. 0.04
3 12 1 .04
Yahoo operates in the internet products, services and content

markets, which are highly competitive and characterized by 0. 0
0.05
rapid change, converging technologies and increasing 4 20 3 .15
competition. (Page 206 / Para 1 row 1)

0
than their non-digital counterparts, but have still suffered 0.02
- - 1 .02
From its first year of operation as a public company (2004),
0
Google has increased its operating profit to $ 6.7 billion from 0.05
- - 3 .15
a modest $ 852 million. ( Page 206 / Para 4 row 9)
During 2008, Google had 72% of internet traffic while Yahoo

0. 0
only possessed 17% followed by MSN at 6% and IACI at 4% 0.06
4 24 3 .18
55
Due to changes in legislative requirements concerning
technology sharing, patents rights and information security,
0.
future expenses and profitability of the companies operating 0.02
1 02 - -
with the industry are harder to predict. (Page 207 / Para 1 row
5)
Technical and regulatory makes the projection of its business
0. 0
viability for existing companies difficult ( Page 207 / Para 1 0.03
1 03 1 .03
row 4)
Future innovations and shifts in technology also make long
0. 0
term strategies regarding the internet and software services 0.08
3 24 1 .08
industry difficult. ( Page 207 / Para 1 row 8)
1. 0.7
Sub Total
01 3
Strengths (Internal Factor)
The core of Yahoos strategy and operations is to become the
starting point for internet users, to provide must buy solutions
0. 0
for the worlds largest advertisers and to deliver industry- 0.11
4 44 4 .44
leading open platforms that attract developers and publishers.
(Page 201 / Para 3 row 1).
Yahoo!s full year revenue in 2008 exceeded by $ 2.2 billion
0. 0
compared to 2007, despite the weakness in overall 0.09
4 36 3 .27
advertising. (Page 204 / Para 1)
For the 2nd quarter of 2009 cost cutting allowed Yahoo! to
post 7% increase in profit up to $ 141.4 million. (Page 0.06
- - - -
201 / Para 4 row 6)
Revenue generated by Yahoo! marketing activities has always
0. 0
being increasing between 8% from 2006 to 2007 and 4 % 0.06
3 18 4 .24
from 2007 to 2008.(Page 205 / Exhibit 3)
0. 0
the most trafficked internet destination worldwide ( Page 201 0.06
3 18 4 .24
/ Para 2 / row 3)
Yahoo, together with its owned and operated online
properties and services; it also provides advertising offerings
0. 0
and access to internet users beyond Yahoo through its 0.02
2 04 3 .06
distribution network of 3rd party entities. (Page 201 / Para 2
row 5)
Vast product offering -Yahoo offering include Yahoo Group,
Yahoo Answer and search offering include Yahoo Search,
Yahoo Local, Yahoo Yellow Page & Yahoo Maps are 0. 0
0.06
available free to users. Yahoo communication segment 2 12 4 .24
include Yahoo Mail, Zimbra Mail and Yahoo Messenger
(Page 202 / Para 3 row 1 & Page 2020 / Para 4 row 1)
Yahoo has offices in more than 25 countries, province or 0. 0
0.03
territories. (Page 201 / Para 2 row 1) 1 03 4 .12
Part of Yahoos code of ethics Customer Fixation 0
0.01
(Customer Centric) ( Page 202 / Para 6 row 3) - - 1 .01
56
1 1
Sub Total
.35 .62
Weakness
Yahoo resumed discussion with Microsoft about search and
0. 0
advertising partnership as both firms struggle to compete 0.1
4 40 4 .40
with Google.(Page 201 / Para 1 row 1)
In July 2009, Yahoo! closed its third video property, Maven
Network based in Cambridge Massachusetts and they plan to
0
close twenty video services, including network site Yahoo! 0.07
- - 4 .28
360 and its Web hosting service Geocites. (Page 201 / Para 5
row 1)
Google has 72% of internet traffic while Yahoo only
0. 0
possessed 17% followed by MSN at 6% and IACI at 4%. 0.07
3 21 4 .28
Yahoo & Microsoft struggle to compete with Google. ( Page 0. 0
0.07
201 / Para 1 row 4) 3 21 4 .28
Net Income of Yahoo in 2008 was $ 424,298 million which is
0
77% lesser compared to their net income in 2006 ( Page 203 / 0.06
- - 3 .18
Exhibit 1)
Yahoo! advertising business is also deteriorating rapidly as
0. 0
the firms overall revenue fell by 13% in the 2nd quarter of 0.05
3 15 4 .20
2009.
Yahoo! lost 1% in rich media revenue, 1% in sponsorship and 0. 0
0.05
2% in percent in 2008. (Page 202 / Para 6 row 1) 3 15 4 .20
Yahoo!, posted 78% in 1st Qtr 2009 profit decline. ( Page 0. 0
0.02
201 / Para 4 row 1) 2 04 4 .08
Yahoo! IPO in April 1996 with total employee stock raise
to high of $ 120 in 2000 but for most 2009 it has been trading 0.01
- - - -
under $ 14. ( Page 202 / Para 2 row 1)
1 1
Sub Total
.16 .90
Total Scores 4.98 5.80
29.1. Outcome of QSPM
Base on WSPM, we can conclude that the best corporate level strategy to use to gain market
leadership is Market Penetration.
Original Sentences:
N Case Facts ( Original Sentences)

o
1 SO1- Improve service marketing to increase product position among the internet users to
57
increase market leadership
2 SO2- Entice more advertisers to use Yahoo as a marketing solution.(O2,O3,O4,S4,S7)
3 ST3- Increase R&D continuously to produce new offering to users. ( T8,T9,S2,S5,S7,S8)
4 WO3- Focus marketing development in USA
5 ST1 - Sign up deal with smart phone manufacturers to include Yahoo a preferred search
engine
From SWOT matrix, business level strategy chosen was Cost Leadership (Type 2)
No Case Facts ( Original Sentences)

1. ST4- System development from 3rd world countries. (T3,T5,T6,T8,S3,S5,S7,S8)
2. ST5- Gain market share and position in the best place. ( T1,T2,T4,T5,T6,T7,S4,S5,S6)
3. WO4 - Reduce service charge to increase revenue
4. ST2 - Buy over small and weak internet service providers for lower price to increase
market leadership
5. WT3 - Outsource non-core activity
30. Implementing Strategies: New Management Strategy.
Business Level
58
31. Conclusion
Yahoo have potential to growth if they use the new implementing strategies as mention
previously although they are in the competitive industry. Moreover based on the case study given,
they are the second most preferred Internet search engine after Google and in America, they are
the most popular Internet site. Yahoo was having financial difficulties during 2006 to 2008 was
due to slow global economic growth. Moreover in 2008, Yahoo recorded lowest net income ever
since 2006, because they right of Goodwill impairment charges $ 487 million despite slow
economy growth. Otherwise, they would have recorded a better net income compared the past two
years. Market penetration, product development and market development become three main
elements which Yahoo! need to focus to further attract more customers, generate more profits and
expand the business. Overall, Yahoo! is in a strategic position to maintain its market share and
position in the U.S and International markets. Further innovations are to further sustain in the
market as one of the major player in the industry.
59

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MRC2213 STRATEGIC MANAGEMENT

1. Vision and Mission Statement

3. Internal Audit ( Internal Analysis, VCA and IFE Matrix)

4. Strategies in Action ( Strategic objectives and existing strategy)

1. Vision and Mission Statement

No Components Case Fact of Mission Statement

2.1. Political, Government and Legal Forces

No Case Fact Opportunities Threats

2.2. Economic Forces

No Case Fact Opportunities Threats

2.3. Social, Cultural, Demographic and Natural

No Case Fact Opportunities Threats

2.4. Technological Forces

No Case Fact Opportunities Threats

No Pest Analysis Opportunities Threats

N Case Facts (Strengths) Opportunity Threat

No Competitors Opportunity Threat

Search Engine Utilization

Search Engine Utilization

Total Number of Employees in Thounsand

Revenue & Employee Comparison

5.1. Rivalry among competitors Search Engine Business

No Case Facts Competitive Force

N Case Facts Competitive Force

5.3. Substitute products Search Engine Business

N Case Facts Competitive Force

5.4. Bargaining power of suppliers Search Engine

N Case Facts Competitive Force

5.5. Bargaining power of buyers Search Engine Business

5.6. Conclusion of Michael Porters 5 forces

No Forces Strong Moderate Weak

8. Competitive Profile Matrix (CPM)

9. Internal Environment Analysis

Yahoo offering include Google has expended

9.2. Yahoo! Management Assessment Analysis

9.3. Yahoo!, Marketing Function Assessment Table.

10. Financial Ratio Time Series Data of Yahoo from 2006

Items The assessed The assessed The Strength Weakness

13. MIS Function Analysis

No Items Companies Within the Industry Strength Weakness

Product Segment Yahoo! Search, - offering, Yahoo! Search, Yahoo! Local,

Product Segment Yahoo! Mail, Zimbra Mail and Yahoo! Messenger

13.2. Supportive Activities

14. List of All Strengths

15. List of All Weakness

16. Internal Factor Evaluation (IEF) Matrix (Strength)

No Key Internal Factor Weight Rating Weighted

17. Internal Factor Evaluation (IEF) Matrix (Weakness)

N Key Internal Factor Weigh Ratin Weighted

18. Yahoos Existing Long Term and Short Term

19. Yahoos Existing Long Term and Short Term Strategic

N Strategic Objectives Remarks

1 Market Share Increase Yahoo has resumed discussion with Microsoft

1 Horizontal Yahoo has resumed discussion with Microsoft about search

21. Yahoos Existing Companys Business Level

Conclusion of Yahoos existing strategies.

22. Strategy Formulation Tools. (SWOT Analysis)

22.5. SWOT Matrix

No Type of Strategy Alternative Strategies