Yahoo! Internal Analysis
The Company When Yahoo! was founded in 1994 by Stanford Ph. D. students, David Filo and Jerry Yang, it began as their hobby and has evolved into a global brand that has changed the way people communicate with each other, find and access information, and make purchases.
Today, Yahoo! Inc. is the Internet’s leading global consumer and business Services Company, offering a comprehensive network of essential services for Web users around the globe as well as businesses of all sizes. As the first online navigational guide to the Web, Yahoo! www. yahoo. com) is the leader in traffic, advertising, household and business user reach. Yahoo! is also the most recognized and valuable Internet brand globally, reaching over 345 million unique users in 25 countries and 13 languages.
The Only Place Anyone Needs To Go Find Anything, Communicate With Anyone, or Buy Anything Serving the world’s largest Web audience, Yahoo! remains focused on becoming increasingly essential to the lives of consumers. Starting with its comprehensive, hand-built directory as well as the popular My Yahoo! ervice, Yahoo! offers a broad and deep array of communications, commerce and content services in over 100 distinct properties that lead consumers to make Yahoo! their home on the Internet and wireless devices. Fitting the lifestyles of the mobile consumer, Yahoo! offers an increasing array of essential, personalized, localized and timely information on wireless devices, including wireless phones, two-way pagers and personal digital assistants. Committed to extending content and services beyond the desktop, Yahoo! as the largest global mobile audience and the greatest breadth of wireless products and services of any Web content provider. Becoming Increasingly Essential to Businesses & Enterprises Worldwide As the No. 1 Internet network on corporate desktops, surpassing a 70 percent reach in the U.
S. workplace, Yahoo! also offers a range of services for businesses and enterprises of all sizes. Corporate Yahoo! is an information portal solution that enables companies to communicate and interact directly with their employees, customers and shareholders over a secure and scalable platform. Yahoo!
Broadcast Services is the leading provider of Internet audio and video streaming solutions for corporate and consumer communications, delivering thousands of live and on-demand, corporate events including: product launches, marketing programs, training/distance learning, keynote addresses, annual shareholder meetings, and quarterly earnings calls. Yahoo! ‘s Small Business services enable small businesses and professionals to establish and grow a business presence with services such as Yahoo! Domains, Yahoo! Website Services, Yahoo! Servers and Yahoo! Store.
An industry leader in online advertising, Yahoo! ffers an integrated set of marketing services through Yahoo! Fusion Marketing that unite Yahoo! ‘s media, e-commerce, direct marketing, broadcast, and communication tools to allow clients to find any audience, connect with anyone, and sell anything. Yahoo! ‘s data driven services provide unparalleled targeting and measurement capabilities far beyond banners, clicks, and conversions. Customized to integrate clients’ traditional marketing programs online, Yahoo! Fusion Marketing programs generate greater customer acquisition and retention, extended brand value, and increased sales in today’s global marketplace. SWOT Analysis
The external environment includes all the factors outside the organization which provide opportunities or pose threats to the organization. The internal environment refers to all the factors within an organization which impart strengths or cause weakness of a strategic nature . The environment in which an organization exists can be, therefore defined as the opportunities and threats operating in the external environment apart from the strengths and weakness existing in the internal environment.
A systematic approach to understand the environment of Yahoo is the SWOT analysis. Internal Factor Analysis (IFA) of the Yahoo Corporation
Strengths The strength is an inherent capacity which an organization uses to gain a strategic and competitive advantage. The strengths of Yahoo Corporation are: * Yahoo! ‘s Overture is a tremendously profitable Internet advertising business. It focuses on affiliate advertising for large advertising accounts, in the same way as Google‘s Adsense programme.
This is an important income stream for Yahoo!. * Yahoo! has over 500 million users of its services and solutions. This makes it a very powerful marketing company, with a very well known brand. Some reports indicate that it is the most popular website in the World. A key long-term strength is Yahoo! ‘s international business presence. As the Internet expands and it is adopted by more nations the opportunities for Internet brands begin to emerge.
Yahoo! is well placed to take advantage of these opportunities with its strategic business units in Asia, Europe and Australia. * The Yahoo! Directory is an original source of structured information. It has built over the last decade, and unlike mainstream search engines, its content is moderated (i. e. sites are vetted before their inclusion). Weaknesses: A weakness is an inherent limitation or constraint which creates strategic disadvantages for the company.
It is overdependence on a single product line, which is potentially risky. The weaknesses of Yahoo are: * As per Jan 2012 data, a survey says yahoo’s market share in search engine is only 6% * Google already has more than 50% market share and the immediate competitors are Baidu which has same 6% and bing has 4% in search engine * Google being the leading the service provider on the internet , is grabbing the revenues from advertisements * Most of the services provided by Yahoo are unknown in the internet space. * Yahoo is ranked 5th in visitors among video sites. Youtube was first owned by Google.
There has been near about 3 % slump per year in Yahoo’s image search. * Google search results produce double revenues as compared to Yahoo. * Yahoo is losing its market share in mailing services very gradually due to Google’s strong presence in search engine market and it related product portfolio complementing to search engine services * For Yahoo, differentiation is difficult. Almost all of its services are available from other sources such as Mail services, news, shopping, financial data and business directory services are provided by many others like MSN, CNN, e-bay, Money control etc. The future of Yahoo is uncertain as the technology develops and new unforeseen advertising media emerges.
* Financial health of the company is not so promising for the investors. The company’s assets both in terms of intangible and tangible are on the declining side. Matching analysis Match the external factors against the internal factors of YAHOO! Opportunities| Threats| * Internet video advertising spending expected to increase by 82% to $610 million by 2009. * Yahoo! Inc has purchased Flickr. * Broadband expansion. * Yahoo! as a strong and talented employee base.
* Yahoo! has penetrated markets that are still untouched by competitors. | * Google commands about 50% of all online searches and Yahoo! has only 24% according to Neilson/NetRating. * Consumer attitudes towards online advertising may become more negative. * Increasing strength of competitors. * Social websites such as MySpace and Facebook are now breaking into the online advertising market. * Google is surpassing Yahoo! in revenues. | Strengths| Weaknesses| * Yahoo! Inc. has beaten Google in the mobile market. * Yahoo!
has many more auxiliary products compared to the competition. * Yahoo! Inc. has strong brand recognition. * Partnerships with MLB, VISA and NFL. * Access is available to anyone with internet access.
| * Yahoo! is ranked 5th in visitors among video sites. YouTube which is owned by Google is ranked 1st. * Yahoo! image search has been declining 3% per year. * Google search results generate twice as much revenue as Yahoo!. * Advertising revenues are falling due to Google and other competitors in the market.
| Alternative strategies or Recommendations
It is clear that the Yahoo Corporation has faced some major challenges in staying on top of the Internet market. It is suggested that the corporation should continue to grow its customer base. The corporation can grow its customer base by successfully capturing the international market. In addition, Yahoo can enlarge its target customer statistics by including customers outside the age group of 18-34 like people of above 55 years. Yahoo has to distinguish itself from the rest of its competitors in the Internet market in order to successfully accomplish these objectives.
The alternative strategy that the Yahoo Corporation can adopt is: Capturing the international market: In capturing the international market, Yahoo has been comparatively unsuccessful. Though, Yahoo provides its services in a variety of languages but it has been unable to contend with national companies of other countries. For example, in China, Yahoo holds less than 5% of the total Chinese market share. The majority of the China market is dominated by Chinese search engine known as Baidu. com.
In August 2005, Google, the American rival has captured a significant portion i. . approximately 33% of the Chinese market. Moreover, near about 71. 3% of the overall international market has been captured by Google. Some of this percentage was grabbed from Yahoo.
Yahoo must ensure that internet access is available to its target market in order to strategically grow its customer base. If the target market does not have the means or ability to access services, Yahoo will not be successful. It is important for Yahoo Corporation to capture international customers during the exposure to the Internet. This can create a comfort-zone for its new users.
Yahoo also, should become familiar with the likes, dislikes, habits and other characteristics of each niche of the international market. The company should use appropriate marketing channels to create the demand in international market.
The marketing techniques like sales promotion, advertising, publicity, etc. will work more effectively to capture international market. Expanding the target market: To become successful, it is important for the Yahoo Corporation to expand its target market. It is important that Yahoo tries to capture those who are its first-time Internet users.
Through partnerships with telecommunications providers and cable companies, Yahoo should work to become a primary part of a new Internet service package.
Yahoo can successfully get new web users to begin their Internet use. The users use the internet because it allows them to communicate with their friends and family members who are separated geographically. Furthermore, people like the Internet because it allows them to find information and items that they can’t find elsewhere. With this demographic, travel, leisure and financial information tend to be popular.
Yahoo should promote its different offerings in publications and media to achieve the best reach and to focus on the particular areas. Yahoo should publicize itself as a source of health information as well as a site that provides travel information for those who plan for retirement.
Yahoo should portray itself as a portal of information. Differentiation: To remain competitive, Yahoo should adopt and initiate new projects. The company should begin as a search engine and expand its offerings by including finance, personals and hot Jobs and other activities.
For example, Yahoo has realized that the potential users of Yahoo music consequently acquire a significant share of the online music industry. The ability to differentiate itself from its competitors is the main reason for the success of Yahoo. To promote new products, Yahoo is able to take advantage of its brand equity and its large user base.
Yahoo should not limit itself to fixed media sites. Yahoo should attempt to commence a multimedia Internet project called runner. This video-intensive and web-based reality TV project will focus on a fugitive crisscrossing the country.
Yahoo Corporation should also expand its Internet-based market to compete against traditional media. Conclusion Thus, it is concluded that in the dynamic Internet market, Yahoo is a strong and relatively established company. Its core competence includes focus on young adult users, regularly improving fixed web sites, driving advertising revenue and encouraging employees to be practical.
All this points have been a formula for its success. Yahoo must apply aggressive strategies and maintain healthy financial statement to remain competitive.
It is important that Yahoo carefully review all these strategies and examine the timing of its initiatives. The company can achieve its target and growth by hiring competent managers and experienced consultants as well as by remaining focused on its core competencies. By maintaining the strategies, Yahoo will be able to position itself to become a leader in the race for multimedia domination. An understanding of the external environment in terms of opportunities and threats and the internal environment in term of strengths and weaknesses is important for the existence, growth and profitability of Yahoo Corporation.