Yahoo Strategy Analysis

The evolution of strategyThe evolution of strategy

Vikram JethwaniBusiness Strategy

International Institute of Foreign Trade (IIFT)International Institute of Foreign Trade (IIFT)

Yahoo’s strategy: To what extent it was plannedYahoo s strategy: To what extent it was planned

• In an unidentified marketplace, Yahoo’s strategy was to have no In an unidentified marketplace, Yahoo s strategy was to have no strategy, to began with

• Flexibility – the only strategy, per se, that worked for Yahoo initiallyy y gy, p , y

• It recruited “out-of-the-box” thinking employees

• And let the creative energies make its billion-dollar fortunes

• The essence was to create new market, new products, new industries , p ,- being futuristic in real sense

• Products were launched quietly - without much fanfare

© Grant Thornton International. All rights reserved.

Yahoo’s strategy: To what extent it was plannedYahoo s strategy: To what extent it was planned


Co-founded by Jerry Yang and David Filo

Emergent response to unforeseen eventsEmergent response to unforeseen events

• Yahoo aimed at excelling in future markets and not just to grab its Yahoo aimed at excelling in future markets and not just to grab its share in the existing market

• Its initial strategy was subtle and focused toward branding, gy g,innovation and a flexible work culture

• Innovation was fostered to the extent possible

• In a human intellect based industry, it is critical that the product edge is not lost because of human resource attrition

• To tackle this, Yahoo ensured that every engineer work on every project


Emergent response to unforeseen eventsEmergent response to unforeseen events

• Yahoo aimed at excelling in future markets and not just to grab its Yahoo aimed at excelling in future markets and not just to grab its share in the existing market

• Its initial strategy was subtle and focused toward branding, gy g,innovation and a flexible work culture

• Innovation was fostered to the extent possible

• In a human intellect based industry, it is critical that the product edge is not lost because of human resource attrition

• To tackle this, Yahoo ensured that every engineer work on every project


Positioning for slowdownPositioning for slowdown

• The company emphasized on collaboration, while many of the players The company emphasized on collaboration, while many of the players were too big to be acquired

• Its ‘how-to’ rules helped it to remain clear, focused and organised –p , gthereby enabling to meet unforeseen business conditions

• However, its dependence on advertising revenues from dot com companies resulted in substantial loss (US$84 million against the profit of US$169 million in the corresponding period of previous year) in the first nine months of 2001 – courtesy: the dot com burst

• This was an eye opener


What could be done?What could be done?

• More diversification was required to reduce dependence on one particular q p ptype of industry – dot com companies in this case

• Revenue streams need to be broadened with the change in economic environmentenvironment

• Sector that are relatively less-affected by economic slowdown could be targeted; entertainment being one of them

• Country-specific services could also be promoted

S h i i t b k t ith j f di t • Search engine services were set backstage with major focus on direct revenue generating streams – Google captured this vacuum fast


Source of potential long-term advantageWhere does it come from?Where does it come from?

• Enhanced global reach by setting up operational bases in different countriesg y g p p

• Target-advertising was need of the hour for advertisers seeking to measure results and avoid mass-oriented vague advertising – Yahoo strikes the right cord herecord here

• Yahoo keeps enjoying the first mover advantage on the Internet


Koogle’s resignation: Role of a CEO in a public companycompany

• Full accountability towards stakeholders on company’s performancey p y p

• Responsibility of analysing industry trends, strengths, weaknesses, opportunities and threats

• Being responsive – ignorance is bliss, but for a while!

• Developing and re-aligning strategies in response to near to long term • Developing and re aligning strategies in response to near to long term business environment


Th kThanks.
