Philippine Christian University

Graduate School of Business and Management

Sampaloc I, Dasmariñas, Cavite

Strategic Management 1

Case Study on
Yahoo! Inc.

Submitted to:
Mr. Meynard Jowell F. Bitas, PhD

Submitted by:
Alvin C. Samonte

In Partial Fulfilment of
the requirements for the Degree of
Masters in Business Administration

2020
I. SUMMARY

• 2009, Carol Bartz replaced Jerry Yang as Yahoo!’s CEO.

• Yahoo! Has resumed discussions with Microsoft about search

and advertising partnerships as both firms struggle to compete
with Google.

• Yahoo! Is the second leading global internet brand and one of

the most trafficked internet destinations worldwide.

• Aside from Yahoo’s owned and operated online properties and

services, it also provides advertising offerings and access to
internet users beyond Yahoo! through its distribution network of
third-parties, who have integrated its advertising offerings into
their websites.

• Yahoo! generates revenues by providing marketing services to

advertisers across hundreds of websites.

• Almost majority of services of Yahoo! provides to users are free,

hence, they do charges for a range of premium services.

• First Quarter of 2009, Yahoo! posted a 78% profit decline and

reacted by eliminating 675 jobs or 5% of its total workforce on
top of 2,500 jobs cut in 2008.

• On the same quarter, Yahoo’s revenue dropped by 13%.

• Second Quarter, Yahoo!’s online advertising business is also

deteriorating rapidly as the firm’s overall revenue fell 13%.

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• Due to aggressive cost cutting, Yahoo! allowed to post a 7%
increase in profit.

• On the same quarter, Yahoo! laid off another 700 employees to

end with 13,000 employees.

• July 2009, Yahoo! closed its third video property, Maven

Network, based in Cambridge, Massachusetts.

• Yahoo! plans to close twenty video services, including its social

network site Yahoo! 360 and its web hosting service GeoCities.

II. TIME CONTEXT

2009

III. VIEWPOINT

Consultant

IV. CENTRAL PROBLEM

Yahoo! Inc. has lacking Marketing Strategy and Product Development

that has resulted to decrease in revenue.

The lacking of Marketing Strategy of Yahoo! Inc. has resulted to

significant decrease in revenue.

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V. OBJECTIVES
5.a. To increase the revenue of Yahoo! Inc. by introducing an effective
marketing strategy for communities of users, advertisers, and
publishers.

5.b. To be the leading online advertisement tool accessible for the

businesses.

VI. AREAS OF CONSIDERATION

A. Company Background

• Yahoo! begun as a student hobby and evolved into a global brand

that has changed the way people communicate with each other,
find and access information, and purchase things.

• On 1994, the two founders of Yahoo!, David Filo and Jerry Yang,
were PhD candidates in electrical engineering at Stanford
University, started this company in a campus trailer as a way to
keep track of their personal interests on the internet.

• These two men were spending more time on their home-brewed

lists of favourite links than on their doctoral dissertations.

• Eventually, Jerry and David’s lists became too long and unwieldy,
and they broke them out into categories. When the categories
became too full, they developed subcategories and the core
concept behind Yahoo! was born.

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• The website started out as “Jerry and David’s Guide to the World
Wide Web” but eventually received a new moniker with the help of
a dictionary.

• The name Yahoo! is an acronym for “Yet Another Hierarchical

Officious Oracle,” but Filo and Yang insisted that they selected the
name because they linked the general definition of yahoo: “rude,
unsophisticated, uncouth.”

• Yahoo! itself first resided on Yang’s student workstation, “Akebono,”

while the software was lodged on Filo’s computer, “Konishiki” –
both named after legendary sumo wrestlers.

• Yahoo! was incorporated in 1995 in Delaware and launched a

highly successful initial public offering IPO in April 1996 with a total
of 49 employees.

• Its stock rose to the high of $120 in 2000 but for most of 2009 has
been trading under $14.

B. Situation Analysis

1. General Environmental Analysis

A. Political Factors
• Geopolitics causes economic backdrop, although,
internet-related businesses have held up better that non digital
counterparts, they have still suffered from macroeconomic malaise.

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B. Economic Factors
• Unemployment – this caused the deceleration in online
spending growth.

• Economic growth in the United States and around the

world has slowed amid crisis in the housing and credit
markets.

• The prices of consumables, from fuel to food

commodities, are near all-time highs, yet the values of
personal assets, like homes and property, have fallen
dramatically.

C. Social Factors
• Changing behaviours of consumers.

• Increasing demands for Internet Related Businesses

• Demographics

D. Technology Factors
• Recent technological developments by Yahoo! Inc.
competitors.

• Technology's impact on product offerings.

• Impact on cost structure in Internet Information Providers

industry

E. Environment Factors
• Waste management in Technology sector

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• Attitudes toward and support for renewable energy

F. Legal Factors

• Anti-trust law in Internet Information Providers industry

and overall in the country.

• Discrimination law

• Copyright, patents / Intellectual property law

• Consumer protection and e-commerce

• Employment law

• Health and safety law

• Data Protection

2. Industry Analysis

Porter’s Five Forces Model

• Supplier Power – Low, due to presence of other suppliers

and competitors.

• Buyer Power – High, due to increasing and innovative

number of competitors in the same field.

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• Potential Entrants – High, due to stronger and more
innovative competitors like Google

• Threats of substitutes – High, markets may tend to

change demands to other market.
3. SWOT Analysis

Strength

• Increase in revenue from 2007 to 2008 by 3.4 percent to $7.2

billion

• Yahoo is the second leading global Internet brand

• Other than offering advertising and online properties, the

company offers Internet access through third-party entities

• Other than advertising fees, Yahoo generates additional

revenue by charging fees for a range of premium services

• Aggressive cost cutting – an increase of 7% in profit (%141.4M)

but with layoffs another 700 employees to end with 13,000
employees

• Closing of non performing assets – Maven Networks, plan to

close 20 video services, social network Yahoo! 360, web
hosting GeoCities that will increase their profit from the sold
properties.

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• Within Internet base service, Yahoo! has several revenue
generated segments such as Search, Display Related,
Classified, Referrals / Lead Generation and Email.

Weaknesses

• The net income decreased by 35.7 percent to $424 million.

• Overall advertising revenue dropped by 13 percent in the 2 nd
quarter of 2009 compare to the prior year

• Yahoo! closed several of its video properties and is planning to

close twenty video services including its social network site
Yahoo! 360 and its Web hosting service GeoCities

• Company’s capital lease and other long-term liabilities

increased by over $48 million

• Microsoft has tried to acquire Yahoo! twice for the last three
years

Opportunities

• Based on 2008 Internet Advertising Revenue Report, internet

advertising continues to grow, although at a slower pace.

• 1.1 billion Internet users around the world as of 2006 and it is

still growing

• Internet advertising revenues in the U.S. remains strong,

topping $23 billion in 2008

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• Consumers are spending more of their time online

• New business strategies such as bundling Internet access with

voice and video services are increasing

• Innovativeness in technology is the driving force in Internet-

based businesses

• Many businesses overseas are finding advertising on Internet

less expensive and more responsive

• Countries such as China and India have stronger economic

status and accordingly, the companies are able to spend more
advertising dollars via Internet

Threat

• Due to weak economic conditions, Internet related businesses also

have suffered

• In 2009, a number of Internet content and advertising companies

reported disappointing financial results and lowered their forward
financial outlooks

• Low entry barrier makes the viability of existing Internet based

businesses difficult

• Changes in legislative requirements concerning technology sharing,

patent rights and information security could increase future
expenses and lower profitability

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• Constant technology changes causes difficulty to be up-to-date all
the time

• Consolidations among Internet-based providers could make the

competition to be strong

B. ALTERNATIVE COURSES OF ACTION (ACA)

ACA 1
Introduce lean management that can reduce cost by 5 percent.

Advantages:
• Will be able to reduce waste activities
• Improving productivity & efficiency
• Smarter process (pull system)
• Better use of resources

Disadvantage:
• The Problem of Inventory
• Difficult to Change Over
• High Implementation Cost
• The Temptation to Over-Structure

ACA 2
Market development in countries like China and India with billions of
people.

Advantages:
• Gaining new customers in huge foreign countries
• Company Growth

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• Increase revenue

Disadvantage:
• Risky
• Costly

ACA 3

Develop a mobile application that offers the Yahoo! Inc. Products and
Services.

Advantages:
• Take advantage of a high growing mobile ad spending and customer’s
choice of using more mobile devices to access internet.
• Capture large segment of customers using mobile phone anywhere in the
world.
• Easy access to information.

Disadvantage:
• Mobile application requires update more frequent compared to websites.

C. RECOMMENDATION
ACA 3: Develop a mobile application that offers the Yahoo! Inc. Products
and Services.

• Mobile apps can be accessed offline

Apps provide information in a faster manner by tapping on the icon of the
app even in offline mode. Users can use basic functions and content
without connecting to the internet. But when it comes to websites, users
need live internet connection to load and access information. The speed of
access is also dependant on the Internet speed.

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• Personalization
A mobile app allows users to set preferences based on their interest. Apps
provide customized content to users depending on their preferences,
searches and location. Websites provide large amount of information
which is not personalized.
Any kind of personalization can help increase conversion rate.

• Direct communication through mobile app notifications

In-app and push notifications play important role in communicating with
users. In-app messages are received when a person is using an app while
push notifications are received at any time. Short notifications are a good
marketing tool that reaches directly to users and attract customer’s
attention. While for emails, open rates are lesser and people ignore them
without opening.

• Use of mobile features

Apps use multimedia features such as camera, contact list, GPS etc, more
efficiently. Such features can make user experience more fun, interactive
and also reduce efforts. It reduces the time taken to perform a particular
task and also boost conversions.

• Brand presence and new marketing experience

Brands can launch their own apps exclusively for communicating directly
with their users. By providing good features and user experience in their
apps, brands can raise their value. It also offers the chance to collect and
analyse behaviour and activity more effectively than a website.

• Freedom in designing
Mobile apps allow you to customize its appearance, usage and layout
while websites depend on browsers to perform primary functions. An app

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is more flexible and offer functions like swipe, drag, tap, hold and more.
This kind of functionality provides a positive experience for users.

• Increase conversion rate

Unlike websites, apps would always be in a phone once installed. It helps
in providing a personalized experience, and can also send notifications to
the user. This constant interaction and availability itself increases the
chance of conversion.

• Apps works faster than websites

A framework that supports mobile apps is more responsive and faster than
websites based on JavaScript codes. Fast loading apps are more
convenient than slow loading websites. Apps helps users to complete
tasks much quickly.

• Increased Security
Mobile apps easily integrate with existing security systems to ensure the
high levels of security. Within mobile devices, you can safely access,
modify and share data.

• Improved Productivity and Reduced Cost

Mobile apps make communication easier and quicker. Apps increase
productivity and this can create extra time to generate additional business
and revenue. Mobile apps are effective at handling and manipulating
complex data, producing charts, reports etc. Websites, on the other hand,
are generally slow and difficult to optimize.

The benefits of a mobile app are far more extensive than that of mobile
websites as they provide an easier, faster way for users to access
information on a more secure platform.

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D. PLAN OF ACTION
GANTT CHART
Concerned
No. Activities Person/ Objective Timeline
Department
1 Hire highly HR To identify consumer’s needs and 2 weeks
qualified behavior.
employees To develop appropriate applications
(display, content, easiness to use,
customer support.
Run efficient marketing campaigns
Run data mining of the whole
database and isolate the mobile
segment to further analyze
behavior of internet use and most
of all analyze spending behavior to
capitalize on core competencies
(search tool, display and search
advertizing, e-commerce) and to
match supply with demand
2 Planning Developers This involves dividing up the list of 1 week
Phase tasks to be implemented during the
current iteration. Each task needs
clearly defined requirements. Once
these requirements are understood
by developers, they will often
estimate the time needed to
complete each task, so that the
tasks can be evenly distributed to
ensure a balanced workload during
the sprint.
Developers also begin planning
their approach to solving their
assigned problems during this
phase. Skilled software developers
find ways to intelligently reuse code
throughout an application. This is
especially important for
implementing styles and shared
functionality. If a design needs to
be changed (believe me, something
will change), you don’t want to have
to go and update code in numerous
places. Instead, well designed
software can be changed in select
places to make these sorts of
sweeping changes.

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3 Development The development team will begin 3 months
Phase implementing the styles and
functionality of your app. As they
are completed, they are assigned
back to a project manager or QA
tester for review. Good project
managers are able to fully optimize
developer workloads during this
process by properly redistributing
assignments throughout the sprint.
It is important that your
development team fully understand
the goals of the application as a
whole and for the specific feature
they are working on. Nobody is
more in-tune with that particular
feature than the assigned
developer. They should understand
the intent of the requirements. If
something starts to not make
sense, it is often developers who
will be the first to let you know.
4 Testing Phase Developers Most testing should be performed 1 week
by non-developers or at least
people who are not app’s primary
developer. This will help ensure a
more genuine testing experience.
There are several types of testing
that should occur during each
sprint. These typically include the
following:
Functional Testing - Testing to
ensure the feature works as
described in the requirements.
Usually, a QA team will have a test
plan with a list of actions and the
desired app behavior.
Usability Testing - Testing to
ensure the feature is user-friendly
and is as intuitive as possible.
Often it is helpful to bring in new
testers for a “first-use” experience
during this step.
Performance Testing - The app
might work perfectly, but if it takes
20 seconds to display a simple list,
nobody is going to use it.
Performance testing is typically
more important in later sprints, but
keep an eye on the app’s
responsiveness as you move along.

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Fit and Finish Testing - Designers
should review each feature and
ensure that their vision was
implemented as described in the
design. This is another reason why
having one agency for both design
and development is so beneficial.
Regression Testing - QA teams will
have a list of tests to perform at the
end of each sprint, which will
include tests from previous sprints.
Device-Specific Testing - Make
sure to try out the app on numerous
screen sizes and OS versions.

User Acceptance Testing - This is

testing performed by either the app
owner or future app users.
Remember who you are building
this app for and get their feedback
throughout the process.
As problems are discovered in this
phase, reassign tasks back to
developers so that the problems
can be resolved and the issues
closed out.
5 Review Analyst At the end of each sprint talk with 1 week
each of the stakeholders and
determine how the sprint went. If
there were difficulties, try to
eliminate similar issues from future
sprints. If things went well in one
area, try to apply them elsewhere.

No two projects are the exact

same and everyone should always
be advancing in their roles, so aim
to improve, while iterate. Once
review is complete, begin again
with the planning phase and repeat
this process until the app is done!
6 Extended Analyst At this point the app should be fully 3 days
Review testable and feature complete.
Before spend a sizable amount of
time and money on marketing, take
the time to test the app with a
sample of potential users.

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7 Focus Groups Focus groups involve conducting
an interview with a tester or group
of testers who have never seen the
app before and conduct an
interview. We want to understand
who these testers are, how they
learn about new apps, and if they
use similar apps already. Try to get
some background info out of them
before even getting into the
product. Next, let the testers begin
using the app. They should not be
coached during this process.
Instead, let them use the app as if
they had just found it in the app
store. See how they use the app,
and look for common frustrations.

After they are done using the app,

get their feedback. Remember to
not be too strongly guided by any
one tester, but combine feedback
and make intelligent decisions
using all available feedback.
8 Beta Testing Marketing Beta tests involve getting a group 1 week
of testers to user the app in the real
world. They use the app just as if it
had launched, but in much smaller
numbers. Often these beta testers
will be power users, early adopters,
and possibly the best customers.

Make sure they feel valued and

respected. Give them ample
opportunities to provide feedback
and let them know when and how
we are changing the app. Also,
beta testing is a great time to see
how the app performs on various
devices, locations, operating
systems, and network conditions. It
is imperative that we sound crash
reporting for this step. It does no
good if something goes wrong, but
is not discovered and diagnosed.
9 Refinement Developers After these extended review 1 week
periods, it is common to have a
final development sprint to address
any newly discovered issues.

Continue beta testing during this

process and ensure that crash and
issue reports are declining. Once
we have the all-clear from the
testers, it is time to begin preparing
for deployment.

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10 Deployment Marketing Deploring the mobile app to the 1 week
and IT world

11 Monitoring IT Updates include fixes, performance Day to day

improvements, changes, and new monitoring
features. Thorough monitoring is
essential to best understand what
sort of updates are needed.

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