Reorganizing Yahoo!

Dolmatzi Stavroula

Mission Statement & ObjectivesMission StatementOur vision is to deliver your world, your way. We do that by using technology, insights, and intuition to create deeply personal digital experiences that keep more than half a billion people connected to what matters the most to them – across devices, on every continent, in more than 30 languages. And we connect advertisers to the consumers who matter to them most – the ones who will build their businesses – through our unique combination of Science + Art + Scale.

ObjectivesKey objectives of reorganization:•Expand customer-centric culture and capabilities•Create leading social media environments •Lead in next-generation advertising platforms•Drive organizational effectiveness and scale

Strategic Audit HeadingAnalysis

(+) Factors (-) Factors

I. Current Situation

Serves approximately 700 million people in more than 20 countries.

•Internet users spend more time with competitors.•Cannot keep up with changing technology.

A. Past Corporate Performance Indexes

ROI: increase from 2001 -2005. Then ROI drops within a year from 22.09% to 7.82%.After 2008 it started increasing again, but in a more stable way.

B. Strategic Posture Current Mission:

Current Objectives:

Current Strategies:

Current Policies:

“Our vision is to deliver your world, your way”.

4 objectives of reorganization of the company.

Strategic Audit

Strategic Audit HeadingAnalysis

(+) FactorsSWOT Analysis Begins:II. Corporate Governance The Board of Directors sets high standards for the

employees, officers and directors. The Board must be committed to monitor the effectiveness of policy and decision making both at the Board and management level, with a view to enhancing long-term stockholder value.

A. Board of Directors A director is expected to spend the time and effort necessary to properly discharge such director’s responsibilities. The Board’s goals are generally to build long-term value for the Company’s stockholders and to assure the vitality of the Company for its customers, employees and the other individuals and organizations that depend on the company.

B. Top Management Scott Thompson – Chief Executive OfficerMichael J. Callahan – Executive Vice President, General Counsel and SecretaryDavid Dibble – Executive Vice President, Service Engineering and OperationsDavid Filo – Co-founder and Chief Yahoo e.t.c.

Strategic Audit

Strategic Audit HeadingAnalysis

(+) Factors (-) Factors

III. External Environment (EFAS): Opportunities & Threats(SWOT)

A. Societal Environment •Become more organized & more simple. •“Brand Universe” for high-profile entertainment brands will be viewed..

B. Task Environment Industry Analysis

•Most visited website worldwide.

•Many strong competitors. Low revenues •Customers tend to seek for something more simple in use when it comes to their website, since it is easy to navigate at.

Strategic Audit

Strategic Audit Heading

Analysis(+) Factors (-) Factors

IV. Internal Environment (IFAS):Strengths and Weaknesses(SWOT) A. Corporate Structure

Yahoo has a complex organization structure and no clear strategic direction

B. Corporate Culture At Yahoo! they value excellence and are

committed to winning with integrity and don’t take shortcuts on quality. They value Teamwork and treat one another with respect and communicate openly. They Value innovation and thrive on creativity and ingenuity. The Value community and share an infectious sense of mission to make an impact on society and empower consumers in ways never before possible, etc.

Strategic Audit

Strategic Audit Heading

Analysis(+) Factors (-) Factors

1. Marketing No revenues from search-related advertising (dotcoms)

2. Finance The company’s financial information can be found easily.

3. Research and Development

The R&D make it possible for Yahoo! to be a premier digital media company.

4. Operations and Logistics

Many partnership deals, but couldn’t work with some.

5. Human Resources

Teams in the company could not work with each other; problems, people felt they were not encouraged to be creative.

6. Information Systems

“The Technology Group" controls Yahoo’s global investments (create new technology & advertising policies).

Strategic Audit

External Factor Analysis Summary (EFAS)

External Factors Weight RatingWeighted Score Comments

OpportunitiesRanking model “Panama” .05 3 .15

A chance to challenge Google

Regain lost glory .10 3 .30From Panama and the reorganization

Yahoo Slurp .10 3 .30Not using Google’s search engine anymore.

The peanut butter manifesto .15 4 .60

Informed about changes that would benefit Yahoo.

The reorganization program .15 4 .60

The chance for Yahoo to take control and be well-structured.

ThreatsCompetition’s strength .20 2 .40 GoogleDecreasing market growth .15 3 .45 Less searches.

New competition .10 3 .30Facebook, Myspace, Youtube

Total Scores 1 3.01

Internal Factor Analysis Summary (IFAS)

Internal FactorsWeight Rating

Weighted Score Comments

Strengths

Brand recognition .10 3 .30 Worldwide known brand name.Accessible .10 4 .40 Easy to usePartnership with many companies & Overture .15 4 .60

Expected to dominate in the search advertising market.

Most visited website .10 3 .30 160 million users per month.

WeaknessesReduced revenues .10 2 .20 Half than Google.Not clear strategic direction .15 2 .30

Not focusing on a specific strategy.

Complex organization structure .10 2 .20

They had to reorganize the company 3 times.

Complicated Website .10 2 .20 Offers all servicesNon encouraged employees .10 3 .30

Company does not encourage creativity

Total Scores 1 2.80

Strategy Factors

Weight

Rating

Weighted score

Short

Intermediate

Long

Comments

S01 Brand recognition

.15 3 .45 X Worldwide known brand name.

S3 Partnership with many companies & Overture

.15 3 .45 X Expected to dominate in the search advertising market.

W2 Not clear strategic direction

.20 3 .60 X Not focusing on a specific strategy.

W4 Complicated Website

.15 3 .45 X X Offers all services

O3 Yahoo Slurp .10 4 .40 X Not using Google’s search engine.

O5 The reorganization program

.10 4 .40 X The chance for Yahoo to take control and be well-structured.

T1 Competition’s strength

.15 2 .30 X Google

Total Score 1.00 3,05

Analysis of Strategic Factors (SFAS)

Core & Distinctive Competencies

Yahoo!’s core competency is the websites wide selection of services provided to its users that helped attract millions of users to the portal. Many users prefer Yahoo! because it allows them to access many different services without needing to go to different websites. On the other hand, Yahoo!’s distinctive competency is the fact that it started off as a handmade directory of interesting websites and quickly grew into the first and biggest web portal.

How Yahoo! Lost its Identity in the Market Place. Can it Develop a Sustainable Strategy & Regain it?

If Yahoo develops a sustainable strategy, then it will be able to regain control and its identity. Through their reorganization program in 2006, they are already a step closer to achieving this goal. The company is better structured, they have a plan of how they want to operate, they have identified their target market and make the right decisions when it comes to partnerships, such as working with CBS on video streams. They also launched Panama, which decreases the numbers of clicks in the advertisements and creates more revenues.

Financial Ratios

Financial Analysis

Financial Ratios

Financial Analysis – Annual Income Statement

Financial Ratios

Financial Analysis – Financials

Financial Ratios

Financial Analysis – Efficiency Ratios

Financial Ratios

Financial Analysis – Profitability Ratios

Strategic recommendations

In order to become more successful and gain back its reputation, Yahoo! should consider some strategic recommendations for the company.

The research and development sector should research the competition and find ways to better themselves.

The company can learn a lot about customers’ needs just by studying their competitions success.

Next, Yahoo must try and maintain their successful online services in areas such as finance and sports.

Another recommendation would be to start small and then expand the target market.

For example, Yahoo! should be aiming to regain or attract customers from smaller competitors such as MSN and ask.com instead of targeting the larger and more popular Google.

•Yahoo! is considered to be one of the web’s best-known brands.

• A number of potential buyers (investors and firms) are looking for the chance to take over parts or perhaps the entire company.

•Currently, Yahoo! has many assets that boost the company’s value which include a 35% stake in Yahoo!

•In the first 6 months of 2011, revenue from display ads was essentially flat, at $1 billion, while the online ad industry grew at about 27 percent.

•Yahoo!’s main problem is that Internet users prefer and are spending more of their time with Yahoo’s competitors.

•According to eMarketer, it is likely that Yahoo! will lose its lead in the market for online display advertising in America.

•In October of 2011, the company partnered with Walt Disney’s ABC unit to showcase articles and videos from ABC News, and to create a co-branded website for “Good Morning America.”

Yahoo! In 2011