Strategic Analysis of Yahoo Search Engine Business

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
3.
4.
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
Competitive Analysis............................................................................................ 6
3.1.
Competitive Analysis Summary.....................................................................7
3.2.
Conclusion..................................................................................................... 7
Industry Analysis.................................................................................................. 8
4.1.
5.
6.
7.
Conclusion................................................................................................... 10
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
List of Opportunities and Threats.......................................................................14

6.1.
Opportunity.................................................................................................. 14
6.2.
Threats......................................................................................................... 15
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
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
1
2
3
4
5
Components
Customer
Products & Services
Market
Technology
Survival, growth and
Case Fact of Mission Statement

Advertisers and publishers
No Data
Communities of users
No Data
Yahoo! powers and delights
6
7
8
9
profitability
Philosophy
Self-Concept
Concern for Public Image
Concern for Employees
All of us united and Fueled by trust

Creating indispensable experiences
Delights our communities of users
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
1
Federal Communication Commission (FCC) adopted
flexible access rules for users and wireless resellers in
Opportunities
Threats
conjunction with agencys early 2008 wireless spectrum

auction. ( Page 206 / Para 4 row 5)
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)
Technical and regulatory makes the projection of its
business viability for existing companies difficult (Page
207 / Para 1 row 4)
2.2.
Economic Forces
No Case Fact
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)
Opportunities Threats
10
11
12
13
14
Internet advertisement revenue in USA remain strong,

topping $ 23 billion (Page 202 / Para 9 row 1)
Even Google Inc, expressed economic related caution in
conjunction with its second quarter results
Yahoo operates in the internet products, services and
content markets, which are highly competitive and
characterized by rapid change, converging technologies
and increasing competition.
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)
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.
No Case Fact
1
Increased recognition that consumers spend more and
more of their time online (Page 202 / Para 9 row 5)
2.4.
Opportunities Threats
Technological Forces
No Case Fact
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)
Opportunities
Threats
2.5.
PEST Analysis Summary
No Pest Analysis
1
Economic Forces
2
Social, Cultural, Demographics and Environmental
Forces
3
Political, Government and Legal Forces
4
Technological Forces
Total
2.6.
Opportunities
6
1
1
0
8
Threats
9
0
2
1
12
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
o
1
Case Facts (Strengths)

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)
In October 2007, Microsoft purchased a 2% stake in
social networking firm Facebook Inc, valuing the
private company $15 billion.
Microsoft has an obvious and strong desire to increase
its internet presence ( Page 206 / Para 2 row 7)
Opportunity
Threat
9
10
11
N
o
1
In 2009, Google is in talks with popular microblogging site, Twitter about a possible partnership.
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)
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)
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)
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)
Each company is committed to attract as many visitors
(Page 207 / Para 1 row 3 & Exhibit 8)
Microsofts $6 billion acquisition of Quantive Inc and
advertising solutions company, in Aug 2007 marked an
important change. (Page 206 / Para 2 row 1)
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)
Case Facts ( Weakness)
Microsoft lost out in bidding war for privately held
DoubleClick Inc a digital marketing technology and
services company. (Page 206 / Para 2 row 3)
Time Warner indicated that it might look to sell AOL
access business ( Page 207 / Para 1 row 2)
Opportunity
Threats
10
3.1.
No
1
Competitive Analysis Summary
Competitors
Search Engine Service Providers
Total
3.2.
Opportunity
2
2
Threat
11
10
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
Type of Product offering
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
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
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
platform
(Android)
and
browser
software
(Google
Chrome).
(Page
Yahoo
0.4243
23.8
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
4
3
Revenue (Billion)
2
1
0
20
25
30
35
40
45
50
55
Percentage of Usage
12
Yahoo, Google & MSN

25
20
15
Revenue in $ Billion
10
5
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
Service Provider Revenue ($ Billion)
Worth in $ (Million)
Google
21.8
19.0
Yahoo
7.21
4.7
MSN (Microsoft) 0.058
4.3
4.1.
Most Trafficked
72%
17%
6%
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.
No
1
2
3
4
5
6
Rivalry among competitors Search Engine Business

Case Facts
Google has 72% of Internet traffic while Yahoo only

possessed 17% followed by MSN at 6% and IACI at 4%.
Exhibit 7, Google has 42% of search engine utilization
compared to Yahoo which has 23.8%. (Page 206 / Exhibit 6)
Googles net income was $ 4.23 billion and Yahoo was $
424.30 million (Page 207 / Exhibit 7)
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)
Microsoft has an obvious and strong desire to increase its
internet presence (Page 206 / Para 2 row 8)
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)
Googles pursuit of mobile internet opportunity has made it
one of the main application providers for Apple Incs iPhone.
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)
Google has 20,222 employees globally higher than the
employees in the entire internet business industry ( Exhibit
7 / Page 207)
Competitive Force
Strong Moderate Weak
14
5.2.
N
o
1
4
5
Case Facts
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)
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)
Technical and regulatory makes the projection of its business
viability for existing companies difficult (Page 207 / Para 1
row 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)
Internet advertisement revenue in USA remain strong,
topping $ 23 billion (Page 202 / Para 9 row 1)
5.3.
N
o
1
Entry of new competitor Search Engine Business

Competitive Force
Stron Moderat Weak
g
e
Substitute products Search Engine Business

Case Facts
There are top 25 Internet Properties, including Yahoo

providing internet search engine services ( Exhibit 8 / Page
207)
Competitive Force
Stron Moderat Weak
g
e
5.4.
Bargaining power of suppliers Search Engine
Business
N
o
Case Facts
Competitive Force
Stron Moderat Weak
g
e
15
No Data Provided in Case Study
5.5.
N
o
1
Bargaining power of buyers Search Engine Business
Case Facts
There are top 25 Internet Properties, including Yahoo
providing internet search engine services that buyers can
choose ( Exhibit 8 / Page 207)
5.6.
No
1
2
3
4
5
Total
Competitive Force
Stron Moderat Weak
g
e
Conclusion of Michael Porters 5 forces

Forces
Rivalry among competing firm
Entry of New Competitor
Substitute Products
Bargaining power of suppliers
Bargaining power of buyers
Strong
9
3
1
1
14
Moderate
-
Weak
2
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
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
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
Key External Factors

Opportunities Economical Factor
Yahoo is the second leading global internet brand and one of
1 the most trafficked internet destination worldwide (Page
201/Para2 / row 3)
2
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
from macroeconomics malaise.( Page 202 / Para 8 row 5)
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)
Internet advertisement revenue in USA remains strong,
6
topping $ 23 billion. (Page 202 / Para 9 row 1)
7 conjunction with its second quarter results.(Page 202 / Para 8
row 9)
Opportunities - Political, Legal and Government
Federal Communication Commission (FCC) adopted flexible
access rules for users and wireless resellers in conjunction
1
with agencys early 2008 wireless spectrum auction. ( Page
206 / Para 4 row 5)
Opportunities Technologies
1 Data not available in Case Study
Opportunities Social, Culture and Demographic
Increased recognition that consumers spend more and more of
1
their time online (Page 202 / Para 9 row 5)
4
Weight Rating
Weighed
Score
0.20
0.8
0.09
0.36
0.07
0.07
0.15
0.15
0.04
0.08
0.03
0.09
0.02
0.02
0.04
0.08
0.02
0.08
19
7.2.
Threat
Key External Factors

Threat Economical Factor
Economic growth in the USA and the world has slowed amid
1
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
8 row 4)
companies (including Bankrate Inc, Knot Inc. including
3
Yahoo!) reported disappointing financial results and lowered
their forward financial outlooks. ( Page 202 / Para 8 row 7)
Weight
Rating
Weighed
Score
0.02
0.04
0.02
0.04
0.04
0.16

4 expressed concerns about deceleration in online growth.
0.02
0.06
Yahoo operates in the internet products, services and content

markets, which are highly competitive and characterized by
5
rapid change, converging technologies and increasing
competition.(Page 206 / Para 1 row 1)
0.05
0.2

6 than their non-digital counterparts, but have still suffered
0.02
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
a modest $ 852 million. ( Page 206 / Para 4 row 9)
0.05
0.15
0.02
0.08
0.02
0.02
During 2008, Google had 72% of internet traffic while Yahoo

8 only possessed 17% followed by MSN at 6% and IACI at
4% ( Page 206 / Para 1 row 6)
Threat - Political, Legal and Government
technology sharing, patents rights and information security,
1 future expenses and profitability of the companies operating
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
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
industry difficult. ( Page 207 / Para 1 row 8)
Threat Social, Culture and Demography
1 Data not available in Case Study
Total
0.03
0.03
0.05
0.15
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)

No
1
2
3
4
5
Key
Success
Factor
Market
Capital
Quarterly
Growth
Gross
Margin
Revenue
Net
Income
Yahoo
Weight Rating Weighted
Score
Google
Rating Weighted
Score
Industry
Rating Weighted
Score
0.20
0.40
0.60
0.20
0.10
0.10
0.30
0.20
0.10
0.10
0.10
0.10
0.25
0.35
3
3
0.75
1.05
4
4
1
1.40
1
N/A
0.25
N/A
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.
N
o
1
Items
Value
Beliefs
Rites
Culture Assessment
Companies Within the Industry
Yahoo
Google
Case Facts
Case Facts
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)
Data not available in Case
Study
Increase in product
offering
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)
Yahoo offering include
Yahoo Group, Yahoo
Answer and search offering
Strengt
h
Weakness

Case Study
Increase in product
offering
Early 2009, Google in
talks with the popular
micro-blogging site.
(Page 206/Para 3 row 1)
Google has expended

well beyond searchrelated functions into
22
Rituals
Myths
Symbol
Heroes
Legend
s
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 Massenger (Page 202
/ Para 3 row 1 & Page 2020
/ Para 4 row 1)
Strategy & Operations
Yahoo strategy and
operations is to become the
starting point for internet
users. (Page 201 / Para 3
row 1)
Multinational
Yahoo has offices in more
than 25 countries, province
or territories. (Page 201 /
Para 2 row 1)
Brand Position
Yahoo is the second leading
global internet brand. (Page
201 / Para 2 row 3)
Founders
Carol Bartz and Jerry Yang,
who developed their interest
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)
Study
areas such as e-mail,

mapping, web-based
productivity
application, video, and
you tube.(Page 206 /
Para 1 row 2)

Case Study

Case Study

Case Study

Case 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.

No
2
3
4
Items
Planning
Organizing
Motivating
Staffing
Controlling
Yahoo
Case Facts
The core of Yahoos strategy and
operations is to become the
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)
Yahoo! has been extensively
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)
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)
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)
Weakness
Yahoo! Management Assessment Analysis

Strength
9.2.
Google
Case Facts

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.

N
o
1
Items
Planning
Customer
Analysis
Selling
product /
Services
Yahoo
Case Facts
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
industry-leading open platforms
that attract developers and
publishers. ( Page 201 / Para 3
row 1)
Part of Yahoos code of ethics
Customer Fixation ( Page 202 /
Para 6 row 3)
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)
Weakness
Yahoo!, Marketing Function Assessment Table.

Strength
9.3.
Google
Case Facts

Study

Study
Study
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 &
Services
Planning
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)
Yahoo & Microsoft struggle to
compete with Google. ( Page
201 / Para 1 row 4)
Pricing
Yahoo generates revenue by

providing marketing services to
advertisers across hundreds of
web sites. Although many of the
services Yahoo provides to users
are free, it does charge fee for a
range of premium services.
Yahoo has offices in more than
25 countries
Distributio
n
Google has expanded well

beyond search related
functions into areas such as email (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)
Study

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

N
o
1
Yahoo
Case Facts
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)
Net Income of Yahoo in 2008 was $424,298
million which is 77% lesser compared to
their 2006 net income (Page 203/Exhibit 1)
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)
Yahoo! advertising business is also
deteriorating rapidly as the firms overall
revenue fell by 13% in the 2nd quarter of
2009.
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)
Yahoo! lost 1% in rich media revenue, 1% in
sponsorship and 2% in percent in 2008.
Yahoo! has market capital of $18.29billion
compared to Google which has $ 100.13
billion. (Page 207 / Exhibit 7)
Weakness
Financial Condition of Yahoo

Strength
9.4.
Google
Case Facts
Google had $ 100.13 billion

market capital.(Page 207 /
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
company
Yahoo FY06
The assessed
company
Yahoo FY07
The
assessed
company
Yahoo
FY08
Strength
2.78
2.65
2%
Current Ratio
Quick Ratio
2.54
2.40
Debts to Total
Asset Ratio
Debt to Equity
Ratio
Long Term Debt
to Equity Ratio
Times Interest
Earned Ratio
8%
Liquidity Ratio
1.41
1.33
Leverage Ratio
7%
10%
9%
3%
9.5%
1%
3%
No Data
No Data
No Data
N/A
Activity Ratio
N/A
N/A
7.14
5.73
5.03
0.56
0.57
0.53
7.78
7.02
6.81
50.24
53
54
58%
18%
Profitability Ratio
59%
14%
58%
9.5%
Inventory
Turnover
Fixed Asset
Turnover
Total Asset
Turnover
Accounts
Receivable
Turnover
Average
Collection Period
Gross Profit Ratio
Operating Profit
Ratio
Weakness
28
Net Profit Margin

Return on Total
Asset
Return on
Stockholders
Equity
Price Earnings
Ratio
12%
6.5%
9.5%
5%
6%
3%
8%
7%
4%
26.92
25.53
41.38
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
1
2
3
4
5
Items

Yahoo
Case Facts
Process

Study
Capacity
Due to changes in legislative
requirement concerning
technology sharing, patent
rights and information security,
future expenses and
profitability of the companies
operating within this industry
are harder to predict. ( Page
207 / para 1 row 5)
Inventory Data not available in Case
Study
Workforce Data not available in Case
Study
Quality
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
industry-leading open
platforms that attract
developers and publishers.
(Page 201/Para3 row 1)
Google
Case Facts
Weakness
N
o
Strength
11. Production / Operation Assessment

Study

Study

Study
Study

Study
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
1
Strengt
h
Weakness
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
1
2
3
4
5
6
7
8
9
Items
All Managers Use MIS
to make decision
CIO / Director of MIS
MIS Data are updated
regularly
Effectiveness of MIS
Password
The strategist familiar
with the MIS rivals
MIS user friendly

Yahoo
Google
Case Facts
Case Facts
Data not available Data not available
in Case Study
in Case Study
in Case Study
in Case Study
in Case Study
in Case Study
in Case Study
in Case Study
in Case Study
in Case Study
in Case Study
in Case Study
in Case Study
in Case Study
All users of MIS

understand the
Competitive advantage
of MIS
MIS Training is provided Data not available
in Case Study
The MIS continually
Data not available
being improved
in Case Study
Strength Weakness
Data not available

in Case Study
Data not available
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.
No
1
2
3
Main Activities.
Items
Supplier / Raw Material

Process / Production
Product
Product or type of
Services Offered
Companies Within Industry

Yahoo!
Case Facts
Product Segment
Yahoo! Groups
Yahoo generates revenue by providing marketing services to

advertisers across hundreds of web sites.(Page 201 / Para 2
row 9)
Yahoo! Groups offering, Yahoo! Answers and Flickr
generally offered free of charge
Product Segment
Yahoo! Search
Yahoo! Search, - offering, Yahoo! Search, Yahoo! Local,

Yahoo! Yellow Pages and Yahoo! Maps
Product Segment
Yahoo! Communication
Revenue Generation
Yahoo! Mail, Zimbra Mail and Yahoo! Messenger
4
5
Distribution
Marketing
Marketing
13.2.
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)
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)
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)
Supportive Activities
32
No Item
1
2
3
Culture
Management
Financial
4
5
Production
Advertisemen
t
Companies With Industry

Yahoo! - Case Facts
Case Facts are in Companys Culture Assessment Table
Case Facts are in Managements Assessment Analysis
Case Facts are in Financial Condition of Yahoo and Financial Ratios
Analysis
Case Facts are in Production and Operation Assessment
14. List of All Strengths

N
o
1
2
3
4
5
6
7
8
9
10
11
12
Case Facts
Yahoo! IPO stock rise to high of $ 120 in 2000. (Page 202 / Para 2 row 1)
Yahoos code of ethics is embedded in its six values, Excellence, Innovation, Customer
Fixation, Teamwork, Community and Fun. (Page 202 / Para 5 row 1)
Part of Yahoos vision & mission statement mentions All us united in creating
indispensable experience and fueled by trust. ( Page 202 / Para 5 row 2)
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)
Yahoo has offices in more than 25 countries or territories. (Page 201 / Para 2 row 1)
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)
Part of Yahoos code of ethics Customer Fixation ( Page 202 / Para 6 row 3)
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)
Yahoo!s revenue in 2008 exceeded by $ 2.2 billion compared to 2007, despite the
weakness in overall advertising. (Page 204 / Para 1)
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)
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
o
1
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Case Facts
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
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)
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)
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)
Yahoo! advertising business is also deteriorating rapidly as the firms overall revenue fell
by 13% in the 2nd quarter of 2009.
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)
Yahoo! lost 1% in rich media revenue, 1% in sponsorship and 2% in percent in 2008.
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)
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)
Lower Current Ratio
Lower Quick Ratio
Lower Operating Profit Margin Ratio
Lower Net Profit Margin Ratio
Lower Return on Total Asset
Lower Return on Stockholder Equity Ratio
High Price Earnings Ratio ( Over Valued)
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
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
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
post 7% increase in profit up to $ 141.4 million. (Page
201 / Para 4 row 6)
4
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)
5
Yahoo is the second leading global internet brand and one
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
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
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)
9
Part of Yahoos code of ethics Customer Fixation
(Customer Centric) ( Page 202 / Para 6 row 3)
0.10
0.40
0.10
0.40
0.06
0.18
0.06
0.18
0.06
0.18
0.02
0.04
0.06
0.12
0.02
0.02
0.02
0.02
17. Internal Factor Evaluation (IEF) Matrix (Weakness)

N Key Internal Factor
o
Weakness
Weight Ratin
g
Weighted
Score
35
4
5
7
8
9
Yahoo resumed discussion with Microsoft about search and

advertising partnership as both firm struggle to compete
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 close twenty video services, including network site
Yahoo! 360 and its Web hosting service Geocites. (Page
201 / Para 5 row 1)
Google has 72% of internet traffic while Yahoo only
Yahoo & Microsoft struggle to compete with Google.
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)
Yahoo! advertising business is also deteriorating rapidly as
the firms overall revenue fell by 13% in the 2nd quarter of
2009.
Yahoo! lost 1% in rich media revenue, 1% in sponsorship
and 2% in percent in 2008. (Page 202 / Para 6 row 1)
Yahoo!, posted 78% in 1st Qtr 2009 profit decline. ( Page
201 / Para 4 row 1)
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)
Grand Total (Strength + Weakness)
0.10
0.40
0.07
0.21
0.07
0.21
0.07
0.21
0.06
0.18
0.05
0.15
0.05
0.15
0.01
0.02
0.02
0.02
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
o
Financial Objectives
Remark
s
36
Short
Term
Sustainable Increase
revenue
revenue 5%
growth
in 2009
Larger
profit
margin
Increasing
operating
margin by
10% in
2009
Yahoo! posted 78% 1st Qtr 2009 profit decline

and reacted by eliminating another 675 jobs.
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.
Yahoo! net income dropped by 44.44% in 2008
compared to 2007 even though their revenue
increased by 3%. ( Page 203 / Exhibit 1)
Yahoo!s Operating Profit Margin in 2006 was
15% but in 2007 the operating profit margin drop
to 10%. In 2008 its operating profit margin was
0.0017%
Unsuccessful
Long
Term
Successful
Case Facts
37
Shareholde
r value
Increase
Yahoo2 EPS in 2009 was 0.29 which is less by
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
Long Term
Short Term
Market Share
Growth
Increase
Market Share
by 2%
New
Improved
Product
Development
Increase
Yahoos
Offices
Globally
Getting New
Improved
Product to
Market
Annually
Increase
number of
employees to
cater the
needs of
Internet Users
Remarks
Case Facts
Yahoo has resumed discussion with Microsoft

about search and advertisement partnership as
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)
Unsuccessful
Strategic Objectives
Successful
N
o
38
20. Yahoos Existing Corporate Level Strategies
3
4
Defensive
Strategies
Case Facts
Yahoo has resumed discussion with Microsoft about search

and advertisement partnership as both firm struggles to
compete with Google. ( Page 201 / Para 1 row 1)
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)
Market
Development territories. (Page 201 / Para 2 row 1)
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)
Unsuccessful
N
o
Successful
Remarks
Horizontal
Integration
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
Cost
Leadershi
p
Type 2
Case Facts
Although many of the services Yahoo provides the users are free, it
does charge fees for a range of premium services. ( Page 201 / Para
2 row 8)
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)
Unsuccessful
Name of
Strategy
Successful
Remarks
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.
No
O1
O2
Opportunities
Case Facts
Yahoo is the second leading global internet brand and one of the most trafficked
internet destination worldwide ( Page 201 / Para 2 / row 3)
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
O4
O5
O6
O7
O8
O9
O1
0
counterparts, but have still suffered from macroeconomics malaise.( Page 202 / Para 8
row 5)
Internet advertisement continues to grow though in slower pace (Page 202 / Para 9 row 4
Broadband prices fall (Page 206 / Para 5 row 1)
Internet advertisement revenue in USA remains strong, topping $ 23 billion . (Page
202 / Para 9 row 1)
Increased recognition that consumers spend more and more of their time online. (Page
202 / Para 9 row 5)
Federal Communication Commission (FCC) adopted flexible access rules for users and
wireless resellers in conjunction with agencys early 2008 wireless spectrum auction.
Even Google Inc, expressed economic related caution in conjunction with its second
quarter results (Page 202 / Para 8 row 9)
Yahoo resumed discussion with Microsoft about search and advertising partnership as
both firm struggle to compete with Google. (Page 201 / Para 1 row 1)
22.2.
N
o
T1
T2
T3
T4
T5
T6
T7
T8
T9
Threats
Case Facts
Economic growth in the USA and the world has slowed amid crisis in housing and credit
market.( Page 202 / Para 8 row 1)
Rising unemployment and problematic geopolitics to the mix and USA had difficult
economic back drop ( Page 202 / Para 8 row 4)
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)
Internet media and market research firm com Score Inc, expressed concerns about
deceleration in online growth. (Page 202 / Para 8 row 10)
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)
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)
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)
Technical and regulatory makes the projection of its business viability for existing
companies difficult ( Page 207 / Para 1 row 4)
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.
N
o
S1
S2
S3
S4
S5
S6
S7
S8
S9
Case Facts
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).
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)
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)
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)
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)
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)
Yahoo has offices in more than 25 countries, province or territories. (Page 201 / Para 2
row 1)
Part of Yahoos code of ethics Customer Fixation (Customer Centric) ( Page 202 / Para 6
row 3)
22.4.
No
W
1
W
2
W
3
W
4
W
Strength
Weakness
Case Facts
In 2008 Yahoo rejected the offer from Microsoft (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 close twenty video services, including network site
Yahoo! 360 and its Web hosting service Geocites. (Page 201 / Para 5 row 1)
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)
Yahoo!, posted 78% in 1st Qtr 2009 profit decline. ( Page 201 / Para 4 row 1)
Yahoo! advertising business is also deteriorating rapidly as the firms overall revenue fell
42
5
W
6
W
7
by 13% in the 2nd quarter of 2009.

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)
Yahoo! lost 1% in rich media revenue, 1% in sponsorship and 2% in percent in 2008.
22.5.
SWOT Matrix
43
44
23. Converting into Strategic Terms

23.1.
Corporate Level Strategy.
No
1
Type of Strategy
Horizontal Integration
Market Penetration
Retrenchment
Divesture
23.2.
Business Level Strategy.
No
1
Type of Strategy
Cost Leadership Type 2
Differentiation
23.3.
Alternative Strategies
SO3
SO4
WO1
ST2
SO1
SO2
ST3
WO3
ST1
ST5
WT3
ST4
Alternative Strategies
ST4
ST5
WO4
WT3
ST2
WT1
WT2
ST1
Selected Strategy Original Sentences.
Level of Strategy Original Alternative Strategies

Business Level Strategy
Cost Leadership
Gain market share and position in the best place
(Type 2)
Corporate Level Strategy
Horizontal
Negotiate a deal with Microsoft to increase foothold in the
Integration
USA and Globally
Market
Sign up deal with smart phone manufacturers to include
Code
ST5
WO1
ST1
45
Penetration
Retrenchment
Divesture
Yahoo a preferred search engine

Increase service and product promotion via multiple channels
to increase sales to prevent retrenchment
Outsource non-core activity
WT1
WT3
Cost Leadership
Type 2
Business Level
Market Integration
Corporate Level
Retrenchment
24. Space Analysis

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

Financial Position
Yahoos revenue from 2007 to 2008 increased
by 3.4% to $7.2 billion. But net income
decreased by 35.7% to $ 424 million. (Page
201 / Para 2 row 2)
External Strategic Position

Stability Position
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)
46
Liquidity Ratio
Current ratio is > 1 , except dropped a 1.13 in
2007 compared to 2006 but 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:
Debt to total asset ratio decreased from 8% in
2006 to 2% in 2008
Long term debt to equity ratio decreased from
9.5% in 2006 to 3% in 2008
Activity Ratio:
Fixed asset turnover ratio for was good 2006
reading 7.14 but dropped by 2.11 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.
Net profit margin in 2006 was 12% and
decreased by 50% to end at 6% in 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
Competitive Position
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)
Vast product offering -Yahoo offering include
Yahoo Group, Yahoo Answer and search
Internet advertising continues to grow, albeit

slower pace. (Page 202 / Para
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)
Future innovations and shift in technology
also make long term strategies regarding the
Internet and software services industry
difficult. ( Page 207 / Para 1 row 8)
Each company in the industry is committed to

attract as many visitors (as Exhibit 8
demonstrates) as possible. ( Page 207 / Para 1
row 3)
Although internet related business have
perhaps held up better than their non-digital
counterparts, they have still suffered from
macroeconomics malaise. ( Page 202 / Para 8
row 5)
Industry Position
This trend confirms marketers increased
recognition that consumers spend more and
more of their time online.( Page 202 / Para 9
row 5)
Internet advertising revenues in the united

states remain strong, topping $23 billion,
47
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)
Yahoo is the second leading global internet
brand and one of the most trafficked internet
destination worldwide ( Page 201 / Para 2 /
row 3)
Yahoo has offices in more than 25 countries,
province or territories. (Page 201/Para 2 row 1)
Yahoo! sites has 140,080,000 unique visitors

sharing the same number as Google ( Page
207 / Exhibit 8)
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 industryleading open platforms that attract developers
and publishers. (Page 201 / Para 3 row 1).
24.2.
according to the 2008 Internet Advertising

Revenue Report, released by Interactive
Advertising Bureau and
PricewaterhouseCoopers LLP (Pwc). (Page
202 / Para 9 row 1)
Federal Communication Commission ( FCC)
adopted flexible access rules for users and
wireless resellers in conjunction with the
agencys early 2008 wireless spectrum
auction. (Page 206 / Para 4 / row 4)
As broadband prices fall, ISPs are pursuing
new business strategies, such as bundling
Internet access with voice and video services.
The industry, due to its low barrier entrytechnical and regulatory makes the
projection of its business viability for existing
companies difficult. (Page 207/ Para1 row 4)
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)
Space Matrix
No Financial Position (FP)

Yahoos revenue from 2007 to 2008 increased by 3.4% to $7.2 billion. But net
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
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
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
Ratings
1
3
48
6
7
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.
Net profit margin in 2006 was 12% and decreased by 50% to end at 6% in
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
Growth Ratio
Sales started 100% in 2006 and ended up at 112% in 2008, each year sales
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
No Stability Position ( SP)
Yahoo operates in the Internet products, services and content markets, which
1
are highly competitive and characterized by rapid change, converging
technologies and increasing competition.
2
Internet advertising continues to grow, albeit slower pace. (Page 202 / Para
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
Each company in the industry is committed to attract as many visitors (as
Exhibit 8 demonstrates) as possible. ( Page 207 / Para 1 row 3)
5
Although internet related business have perhaps held up better than their nondigital counterparts, they have still suffered from macroeconomics malaise.
6
Google has 72% of Internet traffic while Yahoo only possessed 17% followed
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
regarding the Internet and software services industry difficult. ( Page 207 / Para
1 row 8)
Total
No Competitive Position ( CP)
Yahoo, together with its owned and operated online properties and services; it
1
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)
1
3
13
Ratings
-4
-3
-4
-4
-3
-1
-3
-22
Ratings
-2
49
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
CP Average : -14 6 = -2.3
Directional vector coordinates
IP Average : 26 6 = 4.3
FP Average : 13 7 = 1.86
X- axis -2.3 (+ 4.3) = 2
Y axis -3.14(+1.88) = -1.26
Yahoo should choose competitive strategy
Conclusion
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
from FY06
Revenue (%)
Total Profit
from FY06
Profit %
EFE
IFE
51
FY08 ($)
20,603,455
FY08 ($)
1,835,689
100
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.
CPM
Yahoo
2.40
Google
3.40
Industry
0.75
Average: 2.40 + 3.40 + 0.75 = 6.55 = 2.18

52
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
Integration
2. Market
Penetration
3. Retrenchment
4. Divesture
1. Horizontal
Integration
2. Market Penetration
3. Market
Development
4. Product
Development
1. Horizontal
Integration
2. Market
Penetration
3. Market
Development
1. Related
Diversification
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
Key Factors
Opportunities ( External Factors)
the most trafficked internet destination worldwide ( Page
201 / Para 2 / row 3)
million in the USA as of end of 2006 (Page 202/Para7 row 1)
than their non-digital counterparts, but have still suffered
Weight
0.15
0.09
0.02
1
Horizontal
Integration
AS
TAS
2
Market
Penetration
AS
TAS
0.
45
0
.30
0.
36
0
.36
0.
02
0
.04
54
Internet advertisement continues to grow though in slower

pace. ( Page 202 / Para 9 row 4
0.02
Broadband prices fall. (Page 206 / Para 5 row 1)
0.04
Internet advertisement revenue in USA remains strong,

topping $ 23 billion. (Page 202 / Para 9 row 1)
conjunction with its second quarter results.(Page 202 / Para 8
row 9)
Federal Communication Commission (FCC) adopted flexible
access rules for users and wireless resellers in conjunction
with agencys early 2008 wireless spectrum auction. ( Page
206 / Para 4 row 5)
Increased recognition that consumers spend more and more
of their time online (Page 202 / Para 9 row 5)
0.07
0.02
0.04
0.08
0.
02
0.
08
0.
21
0
.04
0
.12
0
.21
0
.04
0
.12
0.
32
0
.32
1
2
Sub Total
2
3
1.46
1.55
Threat
Economic growth in the USA and the world has slowed amid
crisis in housing and credit market ( Page 202 / Para 8 row 1)
Rising unemployment and problematic geopolitics to the mix
and USA had difficult economic back drop. (Page 202 / Para
8 row 4)
0.04
0.04

companies (including Bankrate Inc, Knot Inc. including
Yahoo!) reported disappointing financial results and lowered
their forward financial outlooks. ( age 202 / Para 8 row 7)
0.04

expressed concerns about deceleration in online growth.
0.04
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)
0.05

than their non-digital counterparts, but have still suffered
0.02
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)
0.05
During 2008, Google had 72% of internet traffic while Yahoo

only possessed 17% followed by MSN at 6% and IACI at 4%
0.06
0.
08
0
.04
0.
08
0
.04
0.
12
0
.04
0.
20
0
.15
0
.02
0
.15
0.
24
0
.18
55

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)
Technical and regulatory makes the projection of its business
viability for existing companies difficult ( Page 207 / Para 1
row 4)
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)
0.02
0.03
0.08
0.
02
0.
03
0
.03
0.
24
0
.08
1.
01
Sub Total
Strengths (Internal Factor)
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 industryleading open platforms that attract developers and publishers.
(Page 201 / Para 3 row 1).
0.11
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)
0.09
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)
0.06
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)
0.06

the most trafficked internet destination worldwide ( Page
201 / Para 2 / row 3)
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)
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)
0.06
0.02
0.06

territories. (Page 201 / Para 2 row 1)
0.03
Part of Yahoos code of ethics Customer Fixation

(Customer Centric) ( Page 202 / Para 6 row 3)
0.01
0.7
3
0.
44
0
.44
0.
36
0
.27
0.
18
0
.24
0.
18
0
.24
0.
04
0
.06
0.
12
0
.24
0.
03
0
.12
0
.01
56
1
.35
Sub Total
1
.62
Weakness
Yahoo resumed discussion with Microsoft about search and
advertising partnership as both firms struggle to compete
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
close twenty video services, including network site Yahoo!
360 and its Web hosting service Geocites. (Page 201 / Para 5
row 1)
Google has 72% of internet traffic while Yahoo only
Yahoo & Microsoft struggle to compete with Google. ( Page
201 / Para 1 row 4)
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)
Yahoo! advertising business is also deteriorating rapidly as
the firms overall revenue fell by 13% in the 2nd quarter of
2009.
Yahoo! lost 1% in rich media revenue, 1% in sponsorship and
2% in percent in 2008. (Page 202 / Para 6 row 1)
0.1
0.07
0.07
0.07
0.06
0.05
0.05
Yahoo!, posted 78% in 1st Qtr 2009 profit decline. ( Page

201 / Para 4 row 1)
0.02
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)
0.01
Sub Total
Total Scores
29.1.
0.
40
0
.40
0
.28
0.
21
0
.28
0.
21
0
.28
0
.18
0.
15
0
.20
0.
15
0
.20
0.
04
0
.08
1
.16
4.98
1
.90
5.80
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
o
1
Case Facts ( Original Sentences)

SO1- Improve service marketing to increase product position among the internet users to
57
2
3
4
5
increase market leadership

SO2- Entice more advertisers to use Yahoo as a marketing solution.(O2,O3,O4,S4,S7)
ST3- Increase R&D continuously to produce new offering to users. ( T8,T9,S2,S5,S7,S8)
WO3- Focus marketing development in USA
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
1.
2.
3.
4.
Case Facts ( Original Sentences)

ST4- System development from 3rd world countries. (T3,T5,T6,T8,S3,S5,S7,S8)
ST5- Gain market share and position in the best place. ( T1,T2,T4,T5,T6,T7,S4,S5,S6)
WO4 - Reduce service charge to increase revenue
ST2 - Buy over small and weak internet service providers for lower price to increase
5.
market leadership
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

Vision and Mission Statement..............................................................................2

Political, Government and Legal Forces.........................................................3

Social, Cultural, Demographic and Natural Environment, Forces...................4

PEST Analysis Summary................................................................................. 5

Competitive Analysis Summary.....................................................................7

Michael Porters Five Forces............................................................................... 11

Rivalry among competitors Search Engine Business.................................11

Entry of new competitor Search Engine Business.....................................12

Substitute products Search Engine Business.............................................12

Bargaining power of suppliers Search Engine Business.............................12

Bargaining power of buyers Search Engine Business................................13

Conclusion of Michael Porters 5 forces........................................................13

List of Opportunities and Threats.......................................................................14

External Factor Evaluation (EFE) Matrix.............................................................16

Competitive Profile Matrix (CPM)........................................................................18

Internal Environment Analysis............................................................................19

Yahoo! Management Assessment Analysis..................................................21

Yahoo!, Marketing Function Assessment Table.............................................22

Financial Condition of Yahoo........................................................................24

Financial Ratio Time Series Data of Yahoo from 2006 to 2008......................25

Production / Operation Assessment................................................................27

Research and Development............................................................................ 28

MIS Function Analysis...................................................................................... 28

Company Value Chain Analysis (VCA).............................................................29

List of All Strengths......................................................................................... 30

List of All Weakness........................................................................................ 31

Internal Factor Evaluation (IEF) Matrix (Strength)...........................................32

Internal Factor Evaluation (IEF) Matrix (Weakness).........................................33

Yahoos Existing Long Term and Short Term Strategic Objectives...................35

Yahoos Existing Corporate Level Strategies...................................................36

Strategy Formulation Tools. (SWOT Analysis)..................................................38

Converting into Strategic Terms......................................................................42

Corporate Level Strategy..........................................................................42

Business Level Strategy............................................................................42

Selected Strategy Original Sentences.......................................................43

Factors that make up the space matrix axes............................................44

Grand Strategy Matrix..................................................................................... 50

Final Conclusion of the results of all the strategy analysis..............................51

Quantitative Strategic Planning Matrix (QSPM)...............................................52

Implementing Strategies: New Management Strategy....................................56

1. Vision and Mission Statement

1. Vision and Mission Statement

Case Fact of Mission Statement

All of us united and Fueled by trust

Political, Government and Legal Forces

conjunction with agencys early 2008 wireless spectrum

Internet advertisement revenue in USA remain strong,

PEST Analysis Summary

Case Facts (Strengths)

Competitive Analysis Summary

Type of Product offering

Search Engine Utilization

Search Engine Utilization

Yahoo, Google & MSN

5. Michael Porters Five Forces

Rivalry among competitors Search Engine Business

Google has 72% of Internet traffic while Yahoo only

The industry has low barrier entry, technical and regulatory

Entry of new competitor Search Engine Business

Substitute products Search Engine Business

There are top 25 Internet Properties, including Yahoo

No Data Provided in Case Study