E.

Assumptions
1. General Environment Stability
Markets:
At least 1.575 billion visitors yearly by 2008.
global network of Yahoo! websites receives an average of 3.4 billion page views per day as
of October 2007
Competitors:
Google
American Online (AOL).
Segments:
It operates the web portal which provides content including the latest news,
entertainment, sports, and it also gives users a quick access to other Yahoo! services
like the Yahoo! Mail, Yahoo! Maps, Yahoo! Finance, Yahoo! Groups and the Yahoo!
Messenger.
services are available globally in more than 20 languages.
Communication
Yahoo! provides internet communication services such as Yahoo! Messenger and
Yahoo! Mail which has become the largest e-mail service in the world.
On March 2007, Yahoo! announced that this service would offer unlimited storage
space. It also offers social networking services and user-generated content such as
Yahoo! Personals, Flick, Yahoo! Buzz and the like.
Content
Yahoo! partners with hundreds of leading content providers on sports, finance
music, movies, news, answers and games to provide media content, news and
information
It also provides personalized services which enables users to collect their own
favorite Yahoo! features, content feeds and information into a single page.
Mobile
Yahoo!Mobile includes services for on-the-go messaging such as email, instant
messaging, and mobile blogging.
It also offers mobile applications like games, ringtones, search and alerts, etc.
OneSearch
OneSearch is an internet search system introduced by Yahoo! that was developed
for mobile phones on March 20, 2007.
The results, based on the calculations that Yahoo! computers make on the
information that the user is seeking, are listed on single page and are prioritized into
categories.

Commerce
Yahoo! offers commerce services like Yahoo! Shopping, Yahoo! Autos, Yahoo! Real
Estate and Yahoo! Travel.
It enables users to gather relevant information, make business transactions, and
purchases online.
In addition, it offers an e-commerce platform called Yahoo! Merchant Solutions (or
Yahoo! Store).
It hosts Top 500 internet retailers that any other e-commerce platforms.
Small Business
Yahoo! provides services for small business owners and professionals to allow them
to build their own online stores using Yahoo!s tools
It also offers HotJobs to help recruiters find the talent they seek.
Advertising
Yahoo! Search Marketing provides services that let different businesses advertise
their products and services on the Yahoo! network.
Yahoo! Publisher Network is an advertising tool for online publishers to place
advertisements relevant to their content
In addition, a new internet advertisement sales system was launched on 2007 called
Panama which allows advertisers to bid for search terms based on their popularity
to display their ads on search results pages.
Yahoo! BOSS
This is a new service that allows developers to build search applications based on
Yahoos search technology.
Yahoo!Meme
This is a beta social service which is similar to the popular networking site, Twitter.
Yahoo! Next
This is currently in its beta testing phase. It contains forums for Yahoo! users to give
feedback for the development of the future Yahoo! technologies and platforms.
III. PROBLEM STATEMENT
Declining revenue
1. Time Context : Year 2009
2. View point:

CEO

IV. ALTERNATIVE COURSES OF ACTIONS

1. SWOT MATRIX
Strengths

Weaknesses

1. Increase in revenue
from 2007 to 2008 by

1. The net income

decreased by 35.7

2.
3.

4.

5.

6.

7.

Opportunities

1.1 billion Internet users

around the world as of
2006 and it is still
growing
2. Internet advertising
revenues in the U.S.
remains strong, topping
$23 billion in 2008
3. Consumers are
spending more of their
time online
1.

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
With additional lay-offs,
the company
anticipating to have a
better profitability for the
next few years
Within Internet base
service, Yahoo! has
several revenue
generated segments
such as Search, Display
Related, Classified,
Referrals / Lead
Generation and Email.
Companys quick ratio is
2.78, above industry
average

S-O Strategies
1. Implement a vertical or
horizontal integration
(forward or backward) of a
company that has global
presence (S2, S6, S7, O1,
O2, O3, O4, O5)
2. Increase advertising
spending by additional
10% on fee based
segments (S7, O4)
3. Cutback prices on
advertising and fee based

percent to $424 million.

2. Overall advertising
revenue dropped by 13
percent in the 2nd
quarter of 2009
compare to the prior
year
3. 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
4. Companys capital lease
and other long-term
liabilities increased by
over $48 million
5. Microsoft has tried to
acquire Yahoo! twice for
the last three years

W-O Strategies
1. Acquire innovative
technology / Internet
related businesses using
a combination of cash and
debt (W3, W5, O2, O4,
O5)
2. Sell off low profit
segments and pay down
the long term debt (W4,
O1)

New business
strategies such as
bundling Internet
access with voice and
video services are
increasing
5. Innovativeness in
technology is the driving
force in Internet-based
businesses
6. Many businesses
overseas are finding
advertising on Internet
less expensive and
more responsive
7. Countries such as
China and India have
stronger economic
status and accordingly,
the companies are able
to spend more
advertising dollars via
Internet
4.

Threats

Due to weak economic

conditions, Internet
related businesses also
have suffered
2. In 2009, a number of
Internet content and
advertising companies
reported disappointing
financial results and
lowered their forward
financial outlooks
3. Low entry barrier makes
the viability of existing
Internet based
businesses difficult
4. Changes in legislative
requirements
concerning technology
sharing, patent rights
and information security
could increase future
1.

segment by 2% (S7, O1,

O2)

W-T Strategies
S-T Strategies
1. Offer new marketing data 1. Improve innovation to
collection for advertisers
protect the companys
(S2, S6, T2)
technology, patent rights
2. Create additional bundling
and information security
partnership for sound or
(W3, W4, T4)
video streaming (S3, T3,
T5)

expenses and lower

profitability
5. Constant technology
changes causes
difficulty to be up-todate all the time
6. Consolidations among
Internet-based
providers could make
the competition to be
strong
2. SPACE Matrix

FS
Conservative

Aggressive

7
6
5
4
3
2
1

CS

IS
-7

-6

-5

-4

-3

-2

-1

-1
-2
-3
-4
-5
-6
-7

Defensive

Competitive

ES
Financial Stability (FS)
Return on Investment
Leverage
Liquidity
Working Capital

6
5
6
6

Environmental Stability (ES)

Unemployment
Technological Changes
Price Elasticity of Demand
Competitive Pressure

-5
-3
-3
-2

Cash Flow
Financial Stability (FS) Average

5.8

Competitive Stability (CS)

Market Share
Product Quality
Customer Loyalty
Competitions Capacity Utilization
Technological Know-How

-1
-1
-2
-2
-2

Competitive Stability (CS)

Average

-1.6

Barriers to Entry

-6

Environmental Stability (ES)

Average

-3.8

Industry Stability (IS)

Growth Potential
Financial Stability
Ease of Market Entry
Resource Utilization
Profit Potential

6
5
2
5
6

Industry Stability (IS) Average

4.8

Y-axis: FS + ES = 5.8 + (-3.8) = 2.0

X-axis: CS + IS = (-1.6) + (4.8) = 3.2

Grand Strategy Matrix

Rapid Market Growth
Quadrant I

Quadrant II

Strong
Competitive
Position

Weak Competitive Position

Quadrant III

1. Market Development
2. Market Penetration
3. Product Development

Slow Market Growth

Quadrant IV

4.
5.
6.
7.

Forward Integration
Backward Integration
Horizontal Integration
Related Diversification

The Internal-External (IE) Matrix

The IFE Total Weighted Score

Strong
3.0 to 4.0
I

Average
2.0 to 2.99
II

Weak
1.0 to 1.99
III

IV

IV

VI

High
3.0 to
3.99

The EFE
Total
Weighte
d Score

Yahoo! Stores,
Inc.

Medium
2.0 to
2.99
VII

VIII

IX

Low
1.0 to
1.99

3. EFE Matrix

Key External Factors

Opportunities

Weight

Rating

Weighted
Score

1. 1.1 billion Internet users around the world as of

2006 and it is still growing
2. Internet advertising revenues in the U.S. remains
strong, topping $23 billion in 2008
3. Consumers are spending more of their time online
4. New business strategies such as bundling Internet
access with voice and video services are
increasing
5. Innovativeness in technology is the driving force in
Internet-based businesses
6. Many businesses overseas are finding advertising
on Internet less expensive and more responsive
7. Countries such as China and India have stronger
economic status and accordingly, the companies
are able to spend more advertising dollars via
Internet
Threats
1. Due to weak economic conditions, Internet related
businesses also have suffered
2. In 2009, a number of Internet content and
advertising companies reported disappointing
financial results and lowered their forward financial
outlooks
3. Low entry barrier makes the viability of existing
Internet based businesses difficult
4. Changes in legislative requirements concerning
technology sharing, patent rights and information
security could increase future expenses and lower
profitability
5. Constant technology changes causes difficulty to
be up-to-date all the time
6. Consolidations among Internet-based providers
could make the competition to be strong

Total

Internal Factor Evaluation (IFE) Matrix

0.1

0.4

0.08

0.24

0.08

0.24

0.09

0.18

0.07

0.14

0.09

0.27

0.07

0.14

0.09

0.27

0.07

0.14

0.06

0.12

0.07

0.21

0.08

0.16

0.05

0.1

1.00

2.61

Key Internal Factors

Weight

Rating

Weighted
Score

1. Increase in revenue from 2007 to 2008 by 3.4

percent to $7.2 billion
2. Yahoo is the second leading global Internet brand

0.07

0.14

0.1

0.4

3. Other than offering advertising and online

properties, the company offers Internet access
through third-party entities
4. Other than advertising fees, Yahoo generates
additional revenue by charging fees for a range of
premium services
5. With additional lay-offs, the company anticipating to
have a better profitability for the next few years
6. Within Internet base service, Yahoo! has several
revenue generated segments such as Search,
Display Related, Classified, Referrals / Lead
Generation and Email.
7. Company's quick ratio is 2.78, above industry
average
Weaknesses

0.07

0.28

0.09

0.27

0.06

0.24

0.08

0.32

0.1

0.4

1. The net income decreased by 35.7 percent to $424

million.
2. Overall advertising revenue dropped by 13 percent
in the 2nd quarter of 2009 compare to the prior year
3. 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 Geo Cities
4. Company's capital lease and other long-term
liabilities increased by over $48 million
5. Microsoft has tried to acquire Yahoo! twice for the
last three years

0.08

0.16

0.1

0.2

0.08

0.16

0.08

0.16

0.09

0.18

Total

1.00

Strengths

2.91