Developing Strategic Thinking - Essay Example

Developing Strategic Thinking - Case Study on Yahoo This paper aims at analyzing the strategic thinking that has been developed at Yahoo and how it influences the current standing of the company in its competitive arena, keeping in consideration where Yahoo stood a few years back and how it has carried itself from where it was an almost monopolistic situation to a highly competitive arena that exists today. Introduction Yahoo! The one name that gives a complete picture of how information technology has prospered and taken the world from where it was in an imperfect information category to a place where information is widely available in seconds, at touch of fingers. A few years ago, if someone would ask how a pioneer of a business or an innovation can be run out of business or run obsolete to the competition, the first click in mind would have been Yahoo1! Despite having a wider set of services that Yahoo offered, it loss a lot of its business to various competitors, but none of them could compete on a level whereby Yahoo offered the most diversified and extensive range of products so each switching customer was actually moving from one service provider to various. The major competition came with the advent and enhancements of Google as it took the major chunk of the market share from Google, with its ever innovative stance towards its competition and Google did give a tough time to Yahoo. The biggest competition came with the innovative features and benefits that Google mail provided, compared to Yahoo mail. However, after suffering and losing its market share to Google, Yahoo began its revamping projects and today is doing quite well, in the existing competitive arena. What Yahoo does to be SMART? Yahoo can actually be translated to be called as a SMART company2. SMART stands for Specific, Measurable, Achievable, Realistic and Timed3 – SMART objectives seek to define the future of a business alongside control. These are defined to mark long term objectives and long term goals of an organization. Yahoo or any other business would only be defined as SMART if it corporate these towards its strategic objectives. Fundamentally, this implies that the goals are precisely stated (specific), quantifiable (measurable) so easy to compare the achievement level, realizable (achievable) in terms of the possibility to attain them, practical (realistic) in viability, and specifically having a time horizon (timed) associated to it4. The business that sets its strategic goals using this benchmark is considered to be a SMART company. When it comes to the information technology oriented structure of the industry such as the one in which yahoo prevails, the significance of applying SMART objectives increases drastically, mainly because such industries are ever changing with drastic changes coming in, the out of the box ideas bringing in extreme changes over night5. Assuming the example of Bill Gates who aimed at having computer on palms of every user, and palm-tops has gained the momentum of sales today. Such thoughts, when initiated, seem quite un-practical, but these thoughts are what matter most because a long objective gives the push to achieve. When applying to this industry, the objective needs to be altered a little. For instance, while defining objectives, the short term goals should be more specific than the long term objectives because in long run, many unforeseen changes can take place, since technology is ever changing and enhancing. In a simple scenario, a few years back, Yahoo terminated its services known as a Yahoo briefcase. This was done because Google came up with the idea of offering greater space within the mailbox rather than giving a separate storage space such as Yahoo proposed – a briefcase. There were various advantages of this idea and it truly attracted a number of subscribers of yahoo, and they moved towards Google mail. Following the same, Yahoo demolished the briefcase idea and implemented the extra storage model towards its mail box. Many analysts believe that SMART is not just always about being innovative but being second can also be an option whereby a company acknowledges the innovative idea by a competitor and applies the same towards its own business6. Accordingly, in the following sections, Google vs. Yahoo comparisons shall be put forth to analyze the current standing of yahoo in the respective industry. The following section presents the analyses of the fundamental or core strategy differential between Yahoo and Google. Core Strategy – Partnering Vs. Acquisition The gurus of expansion strategizing define two strategies for becoming a dominant force in an industry i.e. strategic alliance or acquisition7. When referred to the phenomenon of strategic alliance, it implies that the firm joins partnership with various categorical competitors, who are not actually directly competing with the firm, but are competing with the competition in different variations of their products and services. Acquisition is simply acquiring another firm in the same business line or in another line to expand the line of products or services initially being offered. Both Yahoo and Google have been using a mix of strategic alliance as well as partnership strategies to compete against one another. Yahoo’s major strategic move is centric around creating partnerships, although an acquisition example of Flickr is present. At the same time Google mainly relies of acquisition, but alliance formation can be witnessed with the presence of Twitter and Youtube in the real time search at Google search engine. Turnaround Strategy Yahoo, at present, is coming up with an innovative idea for a complete turnaround to its present outlook, but the idea is so innovative that it’s difficult for a casual user to comprehend it8. Seemingly, it is a news portal with information, search engine, videos, and so on. Yahoo has always been considered as a pioneer, when Google was not even on anyone’s mind, Yahoo enjoyed almost a monopoly when it came to a well versed and fully equipped information portal that provided real time information, with MSN not even being close to competing with it, and at the face of it, Yahoo is still a very competitive business within itself; from business to sports, and from news to views, from mail box services to messenger services, and from shopping to movies and trading and what not. Yahoo today, still, provides a match for a complete portal for any kind of information. The real issue comes with Yahoo not have been able to match up with the competition in terms of revamping its outlook, not revising its algorithms appropriately to match the well written algorithms of Google, and more than anything the firm’s inability to look towards the future in terms of seeing where the competition is heading; lack of creativity has wiped out tons of businesses from the competitive arena, unless they show that they are not giants for no reason. IBM is a classical example where the director himself suggested that they would show the world that an elephant can dance9. Such examples and such stances taken up by the higher level authorities are what drive the firm ahead in the business. When it comes to competition, too little, is always too late. By no means, Yahoo is a failure today however, the point being highlighted is that Yahoo is not standing where it should have today, with the position it had in the industry some five to seven years ago. Yahoo has a number of resources and structures that can enhance its revenues by huge sums but this all remains untapped at the end of the day10. Interestingly, Yahoo has still been unable to customize advertisements as per the surfer likings. Google on the contrary, keeps a track of the surfer likings and disliking, and accordingly, ads of interests are presented to the surfer, while he or she is surfing across the Google search engine, mailbox and so on. The phenomenon is known as personalizations i.e. giving a personal feel or touch to the customer (a surfer in this case). Social Aggregation Strategy Social Aggregation is a point that has been missing from the Yahoo strategy since a while, but a few months back, the announcement of a ‘plug-in’ known as Facebook Connect really was an innovative feature that would enhance the aggregation of user activities across the world. Technological enhancements to live in the competition is never too late and a single simple strategy can take one business much ahead of the other in real terms. This step would be the first time that Yahoo would bring itself to the socializing platform across the global users. Yahoo plans to open up its platforms for the developers who are developing applications to compete against Facebook and applications such as Mint-on-Yahoo are on cards but such innovative ideas are hard to swallow first for the Yahoo management and then for the end users. But the history of socializing platform suggests that a creative idea can capture masses, just as end users moved from Orkut to Facebook. The Microsoft Offer In the year 2008, Yahoo declined the offer from Microsoft for purchase at $31 per share, the deal mounting to USD 44.6 billion. This was no surprise since the owners of Yahoo want it to be the business they gave birth to, see it being brought up and be the market leader in the future as it has been in the past – through the present circumstances are not very much in favor. Acquisition offer denial is often backed with appropriate evidence of the fact that the firm can do a lot more and can generate a lot more business than the offer that has been made, and definitely, the offer, though seemingly over priced in accordance with the market analysts, but definitely Yahoo has a lot more potential then this offer. Additionally, Yahoo is a giant in the industry – may be a sleeping giant at present, but there are high hopes that with incredible innovation, Yahoo would once more beat its competition, as looked up at similar examples in related industries like IBM. Conclusion While searching various articles and literatures about the existence and the journey of Yahoo from its inception to today, it can be realized that Yahoo needs a radical turnaround. The denial of Yahoo being acquired by the various offers is a clear indication that Yahoo wants to develop its own independent path, and wants to be in the industry as Yahoo! That is not a move but a strategic decision, however, for it to be effective; Yahoo needs to develop radical turnaround strategy. Seemingly, Yahoo needs to bring about energy in its set up – a strategy followed by an appropriate execution. The vision for Yahoo might truly be the best right now but its underlying strategies and their execution is what is lacking apparently. If Yahoo revamps its structure then winning back the end user is not a difficult task because no one is locked in with Google or Google mail for that matter. Yahoo should focus on its core competencies – strategic alliances come later, and even loosely coupled and voluntary usage of external resources should not be an issue until Yahoo an generate its own business and win back its clientele11. The acquisitions and alliances are all part and parcel of the business world today but the core business should not lose its value12. Theoretically, the present structure of Yahoo is not something that would keep it away from the competition, and in fact, a small start up can compete on those values with Yahoo. At present, Yahoo has a significant opportunity to develop alliances and empower start ups that intend to compete with Google and Face-book, and this would ultimately impact the market share of Yahoo in a positive direction. Every now and then, Yahoo has done something or the other that has created an excitement amongst various application developers; some prime examples are Pipes and SearchMonkey13. Now is the time to take it to a higher level, and enhance their offering packages via an appropriate interface. Microsoft had a similar strategy that made them won the era of PCs, and with the right strategy and the right execution, Yahoo can attain similar heights. References Anthony Borelli (2007) Affiliate Millions: Make a Fortune using Search Marketing on Google and Beyond. Wiley Ashok Ranchhod, Calin Gurau. (2007). Marketing Strategies: A Contemporary Approach, 2nd Edition, Pearson Education. Dennis R. Mortensen (2009) Yahoo! Web Analytics: Tracking, Reporting, and Analyzing for Data-Driven Insights. Sybex Fred David, Philip Kotler, Gary Armstrong. (2007). Strategic Management: Concepts and Cases with Principles of Marketing. Pearson Education Fred David (2006) Strategic Management: Concepts and Cases, 11th Edition, Pearson Education. Jay Barney, William Hesterly (2007) Strategic Management and Competitive Advantage Concepts and Cases. 2nd Edition. Pearson Education Peter Doyle & Phil Stern (2006) Marketing Management and Strategy, 4th Edition, Pearson Education. Qontro Business Profiles (2008) Yahoo! Business Profile. Qontro Richard Wagner (2005) Yahoo! SiteBuilder For Dummies (For Dummies (Computer/Tech)). For Dummies Rob Snell (2006) Starting a Yahoo! Business For Dummies. For Dummies Sharon L Cohen, Dana E Blozis (2009) Yahoo Income: How Anyone of Any Age, Location, and/or Background Can Build a Highly Profitable Online Business with Yahoo. Atlantic Publishing Company Tony Loton (2008) Working With Yahoo! Pipes, No Programming Required. CreateSpace Yahoo (2009) The Yahoo! Style Guide: The Ultimate Sourcebook for Writing, Editing, and Creating Content for the Digital World. St. Martin's Griffin Read More