Strategy at Yahoo Inc - Case Study Example

Strategy at Yahoo! Inc. Yahoo! has over the years developed from humble origins to one of the most used search engines in the world. Through its dedicated corporate governance strategies as well as its influence, it has become one of the most recognizable internet search engines, second only to Google. One of the ideals of Yahoo! as a company that works within a cross-cultural environment such as has been the empowerment of its audience and one of the ways it has managed to achieve this has been giving them forums to air their views concerning what they feel about its different products. The best strategy that Yahoo! has is ensuring that it places a lot of value in the audiences of its products. The homey feeling that has been developed among its employees at the workplace has provided Yahoo! with an added advantage over its rivals because it is able to attract the best talent in the industry to work within its ranks. Yahoo has not allowed itself to be influenced by the impersonal nature of the working environment that has developed in the search engine industry but has instead retained an environment where its employees are provided with the best opportunity to work as well as to be innovative. Thus, Yahoo! has managed to retain a constant stream of success mainly because of its strategy and governance and it is yet to be seen how it navigates the industry in future. From the time of its founding, the strategy of Yahoo! has essentially been an evolutionary one, with the company’s management focusing more on the immediate events taking place in the market rather than making long-term plans for the future (Rindova and Kotha 2001, p.1264). In this way, the strategy of this company meant that there was no immediate strategy and it focused all of its efforts in developing itself in the present. A result of not choosing to have a specific strategy during its first years is that it did not invest too much on future planning and it instead used most of its money in ensuring that it adjusted itself to current circumstances in the market. The lack of a specific strategy also meant that it became more flexible in its dealings not only with its staff members, but also with its customers; ensuring that it catered for the latter’s needs in a more efficient manner than its rivals at the time. The flexible nature of service delivery to its customers meant that Yahoo! was able to ensure that its services came at a faster pace and this attracted even more customers to use its services. As a result of its success, it became possible for Yahoo! to become a leader in the market and this was through its being the major platform upon which a majority of new users in the world were introduced to the internet. Therefore, the initial strategy of this company was to ensure that it had no specific strategy at all and that it dealt with issues as they came up. The initial years of this company were dominated by a need for continued innovation which was meant to ensure that it had an edge over its rivals in the market. While it had no long term strategy on which to rely, this company ensured that it mostly recruited individuals who were highly innovative and whose thinking was not hindered by any specific set of rules that would blunt their innovative skills. The result is that a significant number of products and services were developed for Yahoo! which ensured that the company remained at the top of the market (Cohen-Almagor 2012, p.353). It is essential to note that during this period, this company chose not to announce any new products with much fanfare and it instead adopted a strategy where any new products developed were brought into the market quietly. In this way, Yahoo! products came to be introduced mostly to its regular users and the use of these products essentially spread through word of mouth as well as recommendations from current users to others. The aim was to essentially create a new market where other companies in a similar line of business had not yet gotten into and this ensured that it was able to create a niche which was extremely difficult for its rivals to penetrate in the coming years. Thus, through adopting a highly flexible strategy as well as ensuring that it was constantly innovative, Yahoo! was able to show its highly futuristic outlook and to help its founders and shareholders to make multi-million and billion dollar fortunes. One of the biggest problems that this company came to face was how to deal with unforeseen events. This was especially the case because of its initial decision not to have a specific strategy and instead rely on matters at hand. The need to be able to deal effectively with unforeseen events led Yahoo! to develop a strategy which was designed to make this company excel in the markets of the future rather than focusing on grabbing a share of the current market (Gunn 2007, p.64). At the time that Yahoo! adopted this strategy, a significant number of other companies had gotten into the market and Yahoo! aimed at making sure that it was able to increase its market share while making it possible to take advantage of potential markets through the development of newer products that would be attractive to the latter. The management of this company came to realise that the only way to achieve its aim was to encourage innovation through the development of a flexible work culture. Innovation became a basic aspect of this company and it was fostered to the greatest extent possible, because the maintenance of product viability in the market was found to be paramount especially considering that most of Yahoo!’s products were based on human intellect. Therefore, in order to maximise on its talent, this company ensured that all of its engineering staff worked on every project that was being developed; helping them to gain the experience necessary to come up with even better innovative ideas. The slowdown of the market made Yahoo! move towards positioning itself so that the impact of the slowdown would not be detrimental to its operations but would become an opportunity for it to continue its growth. The result of its need to reposition itself was that Yahoo! came to emphasise on collaboration with other companies in the same line of business because this was one of the ways through which it could ensure its survival. Most of the other players in the industry were essentially too big for Yahoo! to acquire; making this company take on a more focused approach to its operations designed to ensure that it remained organised enough to counter any unforeseen circumstances (Ranganathan et al. 2013, p.195). When the dot.com bubble burst, it led to a serious slowdown to the operations of this company because of the losses that it incurred in 2001 when compared to the previous year when it had made impressive profits. This event can be considered to have been an eye opener for the company because it allowed it for the first time to focus on the development of a contingency plan to deal with business conditions that were unforeseen. It led Yahoo! to shift its focus from dependence on advertising revenues from dot.com companies and it instead chose to diversify its platform in a bid to make sure that it was capable of capturing other parts of the market that it had previously chosen to ignore. The ability of this company to change was realised through the implementation of its diversification programme which was designed to wean it from dependence on only one major source of income. After the dot.com bubble burst and Yahoo! for the first time faced a slowdown on its growth, its management realised that the time had come for the company to change its strategy. This change was to be conducted in such a way that there was greater focus on the manner through which the company could diversify its operations rather than relying completely on one industry for its revenues (Liu and Hsu 2011, p.1510). It was essential that revenue streams be broadened so that the company could be able to not only increase its income, but also withstand any crises that might have the potential of disrupting its operations. In order to achieve this objective, the management of this company chose to focus on those sectors which were normally little affected by economic slowdowns because this would help in the development of stable sources of revenue at all times. Among the sectors that were targeted was the entertainment industry which had continued to thrive despite the slowdown that had occurred and had an adverse effect on other companies. Furthermore, for the first time, Yahoo! came to develop country-specific services in order to ensure that it had greater audiences as well as clients for its products (Diaz 1999, p.136). Previously, most of the services promoted by this company tended to be generalised and for most audiences, they were useless because they did not have any relevance to them. However, with country-specific services, Yahoo! would have an opportunity of increasing its revenues as a result of have a greater number of audiences. This shift to country-specific services, however, also led to Yahoo! redirecting its focus from its search engine services and the vacuum that resulted would later be filled by Google. Yahoo! needed to develop a market where it could be able to ensure that it had a long-term advantage and this was based on the enhancement of its global reach. A global reach could only be achieved if this company developed bases of operations in a diverse number of countries because this would help it in the development of larger audiences. Through setting up operations in different countries, advertisement could target specific audiences in such a way that they would become more responsive to them. Furthermore, this company would be able to reduce the number of generalised or vague advertising in such a way that it would avoid losing revenue in the process. The adoption of this new strategy ensured that Yahoo! was better able to keep up with the needs of its audiences as well as its clients, with the latter being more capable of measuring the results and impact of their advertisements (Bhat et al. 2002, p.97). By being able to measure these results, Yahoo! clients came to know whether they had to change the way their products were presented. This new form of diversified advertising ensured that this company became more capable of taking on a more diversified market where it had an opportunity to strike the right cord with its users. The strategy that was adopted has remained relevant and has allowed Yahoo! to enjoy an advantage over its rivals on the internet because it has created a situation where it has become highly specialised in providing services to its audiences all over the world. The resignation of Timothy Koogle as the CEO of Yahoo! in 2001 highlighted the role of chief executives within companies. This is because while Koogle presided over the initial years of this company, its worst performance during the slowdown came about during his tenure. The result was that he had to be fully accountable to the stakeholders of the company for its performance because it was under his direction that the company came to experience the crisis that it did (Romanova et al. 2012, p.35). The management of Yahoo! came to recognise that the chief executive had the responsibility to make sure that he made a careful study of the market and that all opportunities were taken advantage of and any threats to the company were dealt with swiftly so that they could not hamper operations. While at its initial stages of development, Yahoo! essentially did not have a strategy, this stance has changed as a result of highly fluid economic conditions as well as an increase in the number of competitors in the market who are increasingly seeking to overtake it. The CEOs who have been selected to run this company after Koogle are individuals who are highly responsive and these have guided Yahoo! through the recovery process and back into its role as a major player in the industry. They have accomplished this through the realignment of strategies in response to both short and long term changes in the business environment; ensuring the company’s survival and dominance for years to come. In conclusion, the discussion above has shown that from its period as a start-up, the strategy of Yahoo! has essentially been an evolutionary one, with the company’s management focusing more on the immediate events taking place in the market. During this period, this company were dominated by a need for continued innovation which was meant to ensure that it had an edge over its rivals in the market. Among the biggest problems that Yahoo! came to face was how to deal with unforeseen events. Moreover, the slowdown of the market made Yahoo! move towards positioning itself so that the impact of the slowdown would not be detrimental to its operations. The discussion has shown that after the dot.com bubble burst and Yahoo! for the first time faced a slowdown on its growth, its management realised that the time had come for the company to change its strategy. The result was that Yahoo! needed to develop a market where it could be able to ensure that it had a long-term advantage and this was based on the enhancement of its global reach. Finally, the resignation of Timothy Koogle as the CEO of Yahoo! in 2001 highlighted the role of chief executives within the company and their responsibility towards ensuring its strategy was sound. References Bhat, S., Bevans, M. & Sengupta, S., 2002. "Measuring users web activity to evaluate and enhance advertising effectiveness", Journal of Advertising, 31(3), pp. 97-106. Cohen-Almagor, R., 2012. "Freedom of Expression, Internet Responsibility, and Business Ethics:  The Yahoo! Saga and its Implications." Journal of Business Ethics 106(3), pp.  353-365. Diaz, A.G. 1999, "Spanish reference on the Web", Reference & User Services Quarterly, 39(2), pp. 136-144. Gunn, H., 2007, "Searching the Web with Yahoo! Search." Teacher Librarian, 34(3), pp.  64-65. Liu, H-Y. & Hsu, C-W. 2011, "Antecedents and consequences of corporate diversification", Management Decision, 49(9), pp. 1510-1534. Ranganathan, S.K., Madupu, V., Sen, S. & Brooks, J.R., 2013, "Affective and cognitive antecedents of customer loyalty towards e-mail service providers", The Journal of Services Marketing, 27(3), pp. 195-206. Rindova, V.P. & Kotha, S. 2001, "Continuous "morphing": Competing through dynamic capabilities, form, and function", Academy of Management Journal, 44(6), pp. 1263-1280. Romanova, N., Helms, M.M. & Takeda, M. 2012, "Valuing Internet Companies: A More Accurate, Comprehensive Financial Model", Academy of Entrepreneurship Journal, 18(1), pp. 35-53. Read More