Yahoo's to rise fame - Essay Example

Number Paper Yahoo’s Rise to Fame Yahoo! Inc is an international, American internet company which provides internet services to users and businesses internationally. It was founded by Jerry Yang and David Filo. Its business model that helped it grow to such great heights was based on using their online directory for commercial purpose.In order to maintain the company’s expansion, Yahoo needed to strengthen its core source of income and hired experts such as Tim Koogle and Jeffrey Mallet to run the company.

Srinija Srinivasan was hired to help recruit IT software engineers to improve and expand the capacity and usefulness of the portal. The development of other Yahoo portals outside the U.S. which replicated its business model helped the company to develop. The portals could be accessed by users in twelve different languages. They were also customized to the desire of local users. This increased Yahoo’s number of users greatly, a very important factor as it was user traffic that generated revenues (Jones, 453).

The vision by Yahoo to become a global communication, media and retail company led them to go into e-commerce. This strategy was necessary so as to diversify their sources of revenue. The idea was to conduct e-commerce and take a small percentage of revenue as fees. In 1998, Yahoo store was established in line with this strategy. Heavy advertising through radio and television made Yahoo popular. These strategies worked greatly as the number of registered users rose from 26 million to 50 million by the end of 1998.

Its share price also rose from $5 to $244 in early 1999 during the dot-com boom (Jones,456). A new strategy to lock in users was developed to reduce the movement of users to other portals. Yahoo allowed users to customize their pages. High degree of customization caused high switching costs and thus making it difficult for users to change. Attractive web content, which was free, also increased traffic to its portal and provided more advert revenues. However, during the dot-com bubble burst, advert revenues fell.

This resulted in a fall in the stock price. Competition from new entrants such as MySpace, Monster.com and YouTube further worsened the situation. Google, a new search engine, was also becoming popular. Customized portals such as Amazon .com and social networking portals which entered the market were a further upset to Yahoo. Its content driven strategy came into question as other companies offered for free what Yahoo offered at a fee (Jones, 459). Many analysts believed that it was the over reliance on advertisement as a source of income that caused problems for Yahoo.

In 2006 management shakeup was conducted to streamline operations at yahoo. Structural changes, which divided yahoo’s services into main primary products to cater for its website’s audience, advertising network, and develop new technology were also introduced. New systems of advertisement were introduced in order to increase ad revenues and turnaround the company. With the opinion of analysts indicating an increase in global advertisements via the internet in the coming years as compared to other advertisement methods, the future looks bright for Yahoo despite the current challenges that may be facing the company.

Works CitedJones, Gareth. Organizational Theory, Design and Change.6th ed. New York: Prentice Hall, 2010.Print.