Yahoo Strategic Business Planning

Presentation

This presentation is based on Case Study of Yahoo! Inc. which prepared by Hamid Kazeroony in year
2009. All reported facts and data was correct during that time.
Yahoo! Inc.

Our Vision and Mission

VISION STATEMENT
Yahoo! powers and delights our communities of users, advertisers, and
publishers all of us united in creating indispensable experiences,
and fueled by trust.
MISSION STATEMENT
To connect people to their passions, their communities, and the world's
knowledge. To ensure this, Yahoo offers a broad and deep array of
products and services to create unique and differentiated user
experiences and consumer insights by leveraging connections, data,
and user participation

*Actual statement by Yahoo! Inc. in 2009

Yahoo! Inc.

Our Shared Values

Excellence:
We are committed to winning with integrity. We know leadership is hard
won and should never be taken for granted. We aspire to flawless
execution and don't take shortcuts on quality. We seek the best talent
and promote its development. We are flexible and learn from our
mistakes.
Innovation:
We thrive on creativity and ingenuity. We seek the innovations and
ideas that can change the world. We anticipate market trends and
move quickly to embrace them. We are not afraid to take informed,
responsible risk.
Customer Fixation:
We respect our customers above all else and never forget that they
come to us by choice. We share a personal responsibility to maintain
our customers' loyalty and trust. We listen and respond to our
customers and seek to exceed their expectations.
*Actual statement by Yahoo! Inc. in 2009
Yahoo! Inc.

Our Shared Values

Teamwork:
We treat one another with respect and communicate openly. We foster
collaboration while maintaining individual accountability. We encourage
the best ideas to surface from anywhere within the organization. We
appreciate the value of multiple perspectives and diverse expertise.

Community:
We share an infectious sense of mission to make an impact on society
and empower consumers in ways never before possible. We are
committed to serving both the Internet community and our own
communities.
Fun:
We believe humor is essential to success. We applaud irreverence and
don't take ourselves too seriously. We celebrate achievement.

*Actual statement by Yahoo! Inc. in 2009

Yahoo! Inc.

Internal and External Audit

In order for the company to formulate this year strategy, it is imperative for us to
understand and audit the current state internally and externally, ensuring the
direction towards our vision and mission. The Management team has completed
the following analysis:
1. SWOT Analysis
2. TOWS Matrix
3. PESTLE Analysis
4. Porters 5 Forces Analysis
5. BCG Matrix
6. SPACE Matrix
7. IE Matrix
8. Porters Generic Competitive Analysis
9. Value Chain Analysis
10. Ishikawa and Pareto Analysis
11. McKinseys 7S Framework and Analysis
12. Strategy Map
Yahoo! Inc.

SWOT Analysis (Internal) (1/5)

A SWOT analysis is a structured planning method used to evaluate the strengths,
weaknesses, opportunities and threats involved in a project or in a business venture.
No
Key Internal Factor
Strength
1
The core of Yahoos strategy and operations is to become the starting point for
internet users, to provide must buy solutions for the worlds largest advertisers and
to deliver industry-leading open platforms that attract developers and publishers.
2
Yahoo!s full year revenue in 2008 exceeded by $ 2.2 billion compared to 2007.
3
For the 2nd quarter of 2009 cost cutting allowed Yahoo! to post 7% increase in profit
up to $ 141.4 million.
4
Revenue generated by Yahoo! marketing activities has always being increasing
between 8% from 2006 to 2007 and 4 % from 2007 to 2008.
5
Yahoo is the second leading global internet brand and one of the most trafficked
internet destinations worldwide.
6
Yahoo, together with its owned and operated online properties and services; it also
provides advertising offerings and access to internet users beyond Yahoo through its
distribution network of 3rd party entities.
7
Vast product offering
8
Yahoo has offices in more than 25 countries, province or territories.
9
Part of Yahoos code of ethics Customer Fixation (Customer Centric)
Yahoo! Inc.

Q1

SWOT Analysis (Internal) (2/5)

No
Key Internal Factor
Weakness
1
Failure to strike partnership with Microsoft.
2
Declining business in certain area (closing twenty video services, including network
site Yahoo! 360 and its Web hosting service)
3
Declining internet traffic.
5
Decline in Net Income of Yahoo in 2008 was $ 424,298
6
Yahoo! advertising business is also deteriorating rapidly.
7
Yahoo! lost 1% in rich media revenue, 1% in sponsorship and 2% in percent in
2008.
8
Yahoo! posted 78% in 1st Qtr. 2009 profit decline.
9
Stock raise to high of $ 120 in 2000 but for most 2009 it has been trading under $
14.

Q1
Yahoo! Inc.

SWOT Analysis (External) (3/5)

No.

Key External Factors

Opportunities
Yahoo is the second leading global internet brand and one of the most trafficked
1
internet destinations worldwide.
2

There are 1.1 billion internet users around the world and 211 million in the USA as
of end of 2006

4
5

Growth in internet advertisement.

Broadband price drop (cheaper).

Internet advertisement revenue in USA remains strong, topping $ 23 billion.

Federal Communication Commission (FCC) adopted flexible access rules for users
and wireless resellers in conjunction with agencys early 2008 wireless spectrum
auction.

Increased recognition that consumers spend more and more of their time online.

Q1
Yahoo! Inc.

SWOT Analysis (External) (4/5)

Threat (1/2)
1
2

Economic growth in the USA and the world has slowed amid crisis in housing and
credit market.
Rising unemployment and problematic geopolitics to the mix and USA had
difficult economic back drop.

In 2009, number of internet content and advertisement companies reported

disappointing financial results and lowered their forward financial outlooks.

Yahoo operates in the internet products, services and content markets, which are
highly competitive and characterized by rapid change, converging technologies
and increasing competition.

Although internet related business have perhaps held better than their non-digital
counterparts, but have still suffered from macroeconomics malaise.

From its first year of operation as a public company (2004), Google has
increased its operating profit to $ 6.7 billion from a modest $ 852 million.
Q1
Yahoo! Inc.

SWOT Analysis (External) (5/5)

Threat (2/2)
8

During 2008, Google had 72% of internet traffic while Yahoo only possessed 17%
followed by MSN at 6% and IACI at 4%.

Due to changes in legislative requirements concerning technology sharing, patents

rights and information security, future expenses and profitability of the companies
operating with the industry are harder to predict.

10
11

Technical and regulatory makes the projection of its business viability for existing
companies difficult.
Future innovations and shifts in technology also make long term strategies regarding
the internet and software services industry difficult

SWOT Analysis enables Company to take stock of internal and external factors affecting
the Company. Limitation of this tool are it doesn't prioritise issues, doesn't provide
solutions or offer alternative decisions, can generate too many ideas but not help you
choose which one is best, and can produce a lot of information, but not all of it is useful.

Q1
Yahoo! Inc.

TOWS Matrix (1/2)

TOWS analysis is useful to get a better understanding of the strategic
choice, in identifying strategic alternatives that address the following
additional questions:

1. Strengths and Opportunities (SO) How can you use your

strengths to take advantage of the opportunities?
2. Strengths and Threats (ST) How can you take advantage of your
strengths to avoid real and potential threats?
3. Weaknesses and Opportunities (WO) How can you use your
opportunities to overcome the weaknesses you are experiencing?
4. Weaknesses and Threats (WT) How can you minimize your
weaknesses and avoid threats?
See our TOWS analysis in the next page

Q2
Yahoo! Inc.

TOWS Matrix (2/2)

Strengths

Weakness

Refer Slides 8.

Refer Slides 9.

Opportunities

S-O Strategies

W-O Strategies

Refer Slides 10.

1. Implement a vertical or
horizontal integration (forward
or backward) of a company
that has global presence
2. Increase advertising spending
by additional 10% on fee
based segments.
3. Cutback prices on advertising
and fee based segment by
2%.

1. Acquire innovative technology /

Internet related businesses
using a combination of cash
and debt.
2. Sell off low profit segments and
pay down the long term debt.

Threat

S-T Strategies

W-T Strategies

Refer Slides 1112.

1. Offer new marketing data

collection for advertisers.
2. Create additional bundling
partnership for sound or video
streaming.

1. Improve innovation to protect

the companys technology,
patent rights and information
security.

Yahoo! Inc.

Q2

PESTLE Analysis (1/5)

Q3
Yahoo! Inc.

PESTLE Analysis (2/5)

Political, Government and Legal Forces
No
1

Identified Factors
Federal Communication Commission (FCC) adopted flexible access rules for
users and wireless resellers in conjunction with agencys early 2008 wireless
spectrum auction.
Due to changes in legislative requirements concerning technology sharing,
patents rights and information security, future expenses and profitability of the
companies operating with the industry are harder to predict.
Technical and regulatory makes the projection of its business viability for existing
companies difficult

Economic Forces
No
1
2
3

Identified Factors
Yahoo is the second leading global internet brand and one of the most trafficked
internet destination worldwide
There are 1.1 billion internet users around the world and 211 million in the USA as
of end of 2006
Economic growth in the USA and the world has slowed amid crisis in housing and
credit market
Yahoo! Inc.

Q3

PESTLE Analysis (3/5)

Economic Forces
No Identified Factors
4 Rising unemployment and problematic geopolitics to the mix and USA had difficult
economic back drop
5 Although internet related business have perhaps held better than their non-digital
counterparts, but have still suffered from macroeconomics malaise.
6 In 2009, number of internet content and advertisement companies (including
Bankrate Inc., Knot Inc. including Yahoo!) reported disappointing financial results
and lowered their forward financial outlooks.
7 Internet media and market research firm comScore Inc., expressed concerns about
deceleration in online growth.
8 Internet advertisement continues to grow though in slower pace
9 Broadband prices fall
10 Internet advertisement revenue in USA remain strong, topping $ 23 billion

Q3
Yahoo! Inc.

PESTLE Analysis (4/5)

Economic Forces
No Identified Factors
11 Even Google Inc., expressed economic related caution in conjunction with its
second quarter results
12 Yahoo operates in the internet products, services and content markets, which are
highly competitive and characterized by rapid change, converging technologies and
increasing competition.
13 From its first year of operation as a public company (2004), Google has increased
its operating profit to $ 6.7 billion from a modest $ 852 million.
14 During 2008, Google had 72% of internet traffic while Yahoo only possessed 17%
followed by MSN at 6% and IACI at 4%, Google had 72% of Internet traffic while
Yahoo only possessed 17%.

Q3
Yahoo! Inc.

PESTLE Analysis (5/5)

Social, Cultural, Demographic and Natural Environment, Forces
No
1

Identified Factors
Increased recognition that consumers spend more and more of their time online

Technological Forces
No
1

Identified Factors
Future innovations and shifts in technology also make long term strategies
regarding the internet and software services industry difficult.

Summary
We have opportunity and threat where our internet business have performed better than
their non-digital counterparts but on the whole businesses were affected by the economy
depression. Internet business has performed better than their non-digital counterparts are
an opportunity and economy depression is a threat.

Q3
Yahoo! Inc.

Porters Five Force Model

Q4
Yahoo! Inc.

Relationship between PESTLE

and Porters Five Forces Model
PESTLE

Porters 5 Forces
Model

External, Micro
External, Macro
Q5
Yahoo! Inc.

BCG Matrix
BCG Matrix is that it draws attention to the cash flow, investment characteristics and needs
of an organizations various divisions. Also, there is no industry growth rate data given in
the case study, hence, this test cannot be conducted.

Q6
Yahoo! Inc.

SPACE Matrix (1/5)

No Financial Position (FP)
Yahoos revenue from 2007 to 2008 increased by 3.4% to $7.2 billion. But net income decreased by
1 35.7% to $ 424 million.
Liquidity Ratio
2 Current ratio is > 1, Quick ratio is > 1 in 2006 and 2008,
3

6
7

Leverage Ratio:
Debt to total asset ratio decreased from 8% in 2006 to 2% in 2008
Long term debt to equity ratio decreased from 9.5% in 2006
Activity Ratio:
Fixed asset turnover ratio for was good 2006 reading 7.14 but dropped by 2.11 and ending with 5.03 in
2008, Total asset turnover ratio is low at 0.56 from 2006 and ended with 0.53 in 2008
Profitability Ratio:
Gross profit margin is within 59% to 58%, this shows cost of revenue is in the region of 40% of the
sales generated.
Operating profit ratio decreased from 18% in 2006 to 9.5% in 2008.
Net profit margin in 2006 was 12% and decreased by 50% to end at 6% in 2008.
ROA decreased by 3.5% from 2006 to 2008
ROE decreased by 50% from 2006 ending at 4% in 2008
EPS has decreased from 0.52 in 2006 to 0.29 in 2009
Price earnings ratio was 41.38 in 2009
Growth Ratio
Sales started 100% in 2006 and ended up at 112% in 2008, each year sales increase by 8% in 2007
and 3% in 2008

Total
*Assumption: Ratings given based on the international benchmarking exercise.

Yahoo! Inc.

Ratings
1

1
1

1
3

13
Q7

SPACE Matrix (2/5)

No
1
2
3
4
5
6
7

Stability Position ( SP)

Ratings
Yahoo operates in the Internet products, services and content markets, which are highly
-4
competitive and characterized by rapid change, converging technologies and increasing
competition.
Internet advertising continues to grow, albeit slower pace.
-3
Add rising unemployment and problematic geopolitics to the mix and we have a difficult
economic back drop to say least.
-4
Each company in the industry is committed to attract as many visitors (as Exhibit 8
-4
demonstrates) as possible.
Although internet related business have perhaps held up better than their non-digital
-3
counterparts, they have still suffered from macroeconomics malaise.
Google has 72% of Internet traffic while Yahoo only possessed 17% followed by MSN at 6% am
-1
IACI at 4%.
Future innovations and shift in technology also make long term strategies regarding the Internet
-3
and software services industry difficult.
Total
-22

*Assumption: Ratings given based on the international benchmarking exercise.

Yahoo! Inc.

Q7

SPACE Matrix (3/5)

No
1

3
4
5
6

Competitive Position ( CP)

Ratings
Yahoo, together with its owned and operated online properties and services; it also provides
advertising offerings and access to internet users beyond Yahoo through its distribution network
-2
of 3rd party entities.
Vast product offering -Yahoo offering include Yahoo Group, Yahoo Answer and search offering
include Yahoo Search, Yahoo Local, Yahoo Yellow Page & Yahoo Maps are available free to
-2
users. Yahoo communication segment include Yahoo Mail, Zimbra Mail and Yahoo Messenger
Yahoo is the second leading global internet brand and one of the most trafficked internet
-1
destination worldwide.
Yahoo has offices in more than 25 countries, province or territories.
-2
Yahoo! sites has 140,080,000 unique visitors sharing the same number as Google.
-2
The core of Yahoos strategy and operations is to become the starting point for internet users, to
-3
provide must buy solutions for the worlds largest advertisers and to deliver industry-leading
open platforms that attract developers and publishers.
Total
-12

*Assumption: Ratings given based on the international benchmarking exercise.

Yahoo! Inc.

Q7

SPACE Matrix (4/5)

No
1
2

3
4
5

Industry Position ( IP)

Ratings
This trend confirms marketers increased recognition that consumers spend more and more of
5
their time online.
Internet advertising revenues in the united states remain strong, topping $23 billion, according to
the 2008 Internet Advertising Revenue Report, released by Interactive Advertising Bureau and
4
PricewaterhouseCoopers LLP (Pwc).
Federal Communication Commission (FCC) adopted flexible access rules for users and wireless
4
resellers in conjunction with the agencys early 2008 wireless spectrum auction.
As broadband prices fall, ISPs are pursuing new business strategies, such as bundling Internet
3
access with voice and video services.
The industry, due to its low barrier entry-technical and regulatory makes the projection of its
3
business viability for existing companies difficult.
There are 1.1 billion internet users around the world and 211 million in the USA as of end of
7
2006.
Total
26
SP Average : -22 7 = -3.14
CP Average : -14 6 = -2.3
Directional vector coordinates

IP Average : 266 = 4.3

FP Average : 137 = 1.86
X- axis -2.3 (+ 4.3) = 2
Y axis -3.14(+1.88) = -1.26
Yahoo should opt for competitive strategy

Q7
Yahoo! Inc.

SPACE Matrix (5/5)

FS

CS

IS

Possible strategy:
Horizontal Integration
Market Penetration
Market Development
Product Development

ES

Q7
Yahoo! Inc.

IFE Matrix (1/6)

No

Key Internal Factor

Weight Rating

Strength
1 The core of Yahoos strategy and operations is to become the starting
point for internet users, to provide must buy solutions for the worlds
largest advertisers and to deliver industry-leading open platforms that
attract developers and publishers.
2 Yahoo!s full year revenue in 2008 exceeded by $ 2.2 billion compared
to 2007.
3 For the 2nd quarter of 2009 cost cutting allowed Yahoo! to post 7%
increase in profit up to $ 141.4 million.
4 Revenue generated by Yahoo! marketing activities has always being
increasing between 8% from 2006 to 2007 and 4 % from 2007 to 2008.
5 Yahoo is the second leading global internet brand and one of the most
trafficked internet destinations worldwide.
6 Yahoo, together with its owned and operated online properties and
services; it also provides advertising offerings and access to internet
users beyond Yahoo through its distribution network of 3rd party
entities.
7 Vast product offering
8 Yahoo has offices in more than 25 countries, province or territories.
9 Part of Yahoos code of ethics Customer Fixation (Customer Centric)
*Assumption: Weightage given based on the international benchmarking exercise.

Yahoo! Inc.

Weighted
Score

0.10

0.40

0.10

0.40

0.06

0.24

0.06

0.24

0.08

0.32

0.02

0.06

0.12
0.02
0.02

4
3
3

0.48
0.06
0.06
Q8

IFE Matrix (2/6)

No

Key Internal Factor

Weakness
1 Failure to strike partnership with Microsoft.
2 Declining business in certain area (closing twenty video
services, including network site Yahoo! 360 and its Web hosting
service)
3 Declining internet traffic.
5 Decline in Net Income of Yahoo in 2008 was $ 424,298
6 Yahoo! advertising business is also deteriorating rapidly.
7 Yahoo! lost 1% in rich media revenue, 1% in sponsorship and
2% in percent in 2008.
8 Yahoo! posted 78% in 1st Qtr. 2009 profit decline.
9 Stock raise to high of $ 120 in 2000 but for most 2009 it has
been trading under $ 14.
Total

Weight

Rating

Weighted
Score

0.17

0.34

0.05

0.10

0.05
0.05
0.04

2
2
2

0.10
0.10
0.08

0.03

0.06

0.01

0.02

0.02

0.02

3.08

IFE Matrix summarizes and evaluates the major strength and weakness in the functional
areas of business, identifying and evaluating relationship among those areas. Our IFE total
weighted score stands at 3.08 which indicate we have a strong internal position (> 2.5),
with several areas of improvement.
*Notes: Regardless of how many factors, the total weighted score from a low of 1.0 to high of 4.0, with the average score being 2.5.
Total weighted score below 2.5 characterise Company that are weak internally and vice versa. Weightage is based on international
benchmarking exercise.
Yahoo! Inc.

Q8

EFE Matrix (3/6)

No.

Key External Factors

Weight

Rating

Weighed
Score

Opportunities
1

Yahoo is the second leading global internet brand and one of the
most trafficked internet destinations worldwide.

0.20

0.8

There are 1.1 billion internet users around the world and 211
million in the USA as of end of 2006

0.10

0.40

Growth in internet advertisement.

0.16

0.64

Broadband price drop (cheaper).

0.04

0.08

Internet advertisement revenue in USA remains strong, topping $

23 billion.

0.05

0.15

Federal Communication Commission (FCC) adopted flexible

access rules for users and wireless resellers in conjunction with
agencys early 2008 wireless spectrum auction.

0.04

0.08

Increased recognition that consumers spend more and more of

their time online.

0.02

0.08

Q8
Yahoo! Inc.

EFE Matrix (4/6)

Threat (1/2)

Weight

Rating

Weighed
Score

Economic growth in the USA and the world has slowed amid crisis
in housing and credit market.

0.02

0.04

Rising unemployment and problematic geopolitics to the mix and

USA had difficult economic back drop.

0.02

0.04

In 2009, number of internet content and advertisement companies

reported disappointing financial results and lowered their forward
financial outlooks.

0.04

0.16

Yahoo operates in the internet products, services and content

markets, which are highly competitive and characterized by rapid
change, converging technologies and increasing competition.

0.05

0.2

Although internet related business have perhaps held better than

their non-digital counterparts, but have still suffered from
macroeconomics malaise.

0.06

0.06

From its first year of operation as a public company (2004), Google

has increased its operating profit to $ 6.7 billion from a modest $
852 million.

0.05

0.15

Assumption: Weightage given is based on international benchmarking exercise.

Yahoo! Inc.

Q8

EFE Matrix (5/6)

Threat (2/2)
During 2008, Google had 72% of internet traffic while Yahoo
only possessed 17% followed by MSN at 6% and IACI at 4%.
Due to changes in legislative requirements concerning
technology sharing, patents rights and information security,
9
future expenses and profitability of the companies operating
with the industry are harder to predict.
Technical and regulatory makes the projection of its business
10
viability for existing companies difficult.
Future innovations and shifts in technology also make long
11 term strategies regarding the internet and software services
industry difficult
Total
8

Weight

Rating

Weighed
Score

0.05

0.20

0.02

0.02

0.03

0.03

0.05

0.15

3.28

EFE Matrix allow us to summarize and evaluate economic, social, cultural, demographic,
environmental, political, governmental, legal, technological, and competitive information.
Our IFE total weighted score stands at 3.08, which indicate we responding in good ways to
existing opportunities and threats, with several areas of improvements.

Q8
Yahoo! Inc.

IE Matrix (6/6)
Dimension

IFE Matrix

IFE = 3.08
EFE = 3.28

STRONG
(3.00 - 4.00)

AVERAGE
(2.00 2.99)

WEAK
(1.00 1.99)

HIGH
(3.00 4.00)

I
Grow

II
And

III
Build

MEDIUM
(2.00 2.99)

IV
Hold

V
And

VI
Maintain

LOW
(1.00 1.99)

VII
Harvest

VII
Or

IX
Digest

Based on the IE matrix,

intensive (market
penetration, market
development, and product
development) or integrative
(backward, forward, or
horizontal integration)
strategies can be most
appropriate for Yahoo..

EFE Matrix

For instances, Yahoo need to

compete in market and
product development in
addressing new millennial
lifestyles and mobile
revolutions, in addition to
seamless integration.

*IE matrix summarised two dimension of key findings which are internal (IFE), and external
(EFE). It is easy to understand, focused to internal and external, and have multipurpose.
Yahoo! Inc.

Q8

Q9

Generic Competitive Model

Q10
Yahoo! Inc.

Value chain
SUPPORT
ACTIVITIES

General Administration

Human Resource Management

Product R&D, Technology and Systems Development
Procurement
Supply
Chain
Managem
ent

Operatio
ns

Distributio
ns

Sales &
Marketing

Service and
Support

PRIMARY ACTIVITIES

Assumption: Yahoo is going to listen more from customer from emerging third world country.
Yahoo! Inc.

Q11

Ishikawa method and Pareto

Rule (1/4)
Ishikawa is a thought process to frame the cause and effect and mainly
used in identifying the root cause of the effect. Like a mind map, the
outcome of this exercise is in fishbone diagram.
Pareto Principle (also known as the 80/20 rule) the idea that by doing
20% of the work you can generate 80% of the benefit of doing the entire
job where, 20% is the ROOT CAUSE and 80% is the EFFECT

Q12
Yahoo! Inc.

Framing cause and effect (2/4)

Bad Remuneration

Budget Restriction

Strict Culture

Long Working Hours

Lost to Competitors

Many Competitors

LACK OF
TALENT
Departure Of Head HR

Passive Hiring

Yahoo not their 1st choice

Lack of Good
Candidate

Losing Market share

Low Popularity
Q13
Yahoo! Inc.

Pareto Analysis (3/4)

FACTORS

RATING
WEIGHT WEIGHTED RANKING
(Company (Market RATING
Evaluation) Survey)

CUM. %

Strict Culture

50%

4.00

51%

51%

Bad Remuneration

30%

2.70

35%

86%

Passive Hiring

5%

0.40

5%

91%

Lack of Good
Candidate

5%

0.30

4%

95%

Lost to Competitors

5%

0.25

3%

98%

Low Popularity

5%

0.15

2%

100%

7.80

100%

Q13
Yahoo! Inc.

Pareto Analysis (4/4)

PARETO DIAGRAM
60%

120%

Vital Few

Trivial Many

50%

100%

40%

80%

30%

60%

RANKING

Cumulative %
20%

40%

10%

20%

0%

0%

Strict Culture

Bad
Remuneration

Passive Hiring

Lack of Good
Candidate

Yahoo! Inc.

Lost to
Competitors

Poor Company
Future Outlooks

Q13

Evaluating Possible M&A

using 7s McKinsey
Framework (1/2)

Q14
Yahoo! Inc.

Evaluating Possibility of M&A (2/2)

Dimensio
n

Issue

Risk

Alignment

Compliance

Yahoo

Alibaba

Yahoo

Alibaba

Yahoo

Alibaba

Yahoo

Alibaba

Strategy

Planned

Opportunistic

Lost of IP

Transfer of
Knowledge

Strong legal
bind with
protection

National Law
protection to
encourage
innovation

Not complied
as fail to
negotiate with
Gov.

Not complied
as regulated
by China.

Structure

Elitist

Pluralist

Less control

Respect

Cross cultural
staff swap

Cross cultural
staff swap

Complied

Not complied
as regulated
by China

Systems

Mandatory

Discretionary

Lost of IP

Transfer of
Knowledge

Strong legal
bind

National Law
protection to
encourage
innovation

Not complied
as fail to
negotiate with
Gov.

Not complied
as regulated
by China.

Staff

Individuality

Collegiality

Self interest

National spirit

Team building

Team building

Complied

Complied

Style

Transformat
ional

Managerial

Company
Interest

National interest
(communism)

Universal
Cultural Belief

Universal
Cultural Belief

Complied

Complied with
modification

Skills

"Meta-Mize"

Maximize

Talent
retention

Talent
Deployment
based on
national interest

Staffs
Exchange

Staffs Exchange

Complied

Complied

Shared
Values

Hard Minds

Soft Minds

Clash of
values

Clash of values

Universal
Cultural Belief

Universal
Cultural Belief

Complied

Complied

The merger between Yahoo and Alibaba is not possible where both party unable to
agree on several dimension i.e. strategy, structure, and system.
*Assumption: Board asked Yahoo Management team to study the impact if Yahoo to merge with Alibaba due to growing list of
buyer and seller in Asia.
Yahoo! Inc.

Q14

Strategy Map

Yahoo! powers and delights our communities of users, advertisers, and publishers all of us
united in creating indispensable experiences, and fueled by trust
To connect people to their passions, their communities, and the world's knowledge. To ensure t
his, Yahoo offers a broad and deep array of products and services to create unique and
differentiated user experiences and consumer insights by leveraging connections, data, and use
participation

Vision:

Mission:

Financial
Perspective

Sustained Shareholder
Productivity Strategy
Revenue Growth Strategy
Value
Improve Cost
Structure

Enhance
Customer
Value

Increase Asset
Utilisation

Expand
Revenue
Opportunities

Customer Value
Proposition

Customer
Perspective
Price

Quality

Availabilit
y

Selection

Function

Service

Production Service Attributes

Internal
Perspective

Learning &
Growth
Perspective

Operations Mgmt.
Processes
Processes that produce
and deliver products
and services

Human Capital
Skills
Training
Knowledge

Relationship

Customer Mgmt.
Processes

Innovative Processes

Processes that enhance

customer value

Processes that create

new products and
services

Partnershi
p

Information Capital
Systems
Databases
Networks
Yahoo! Inc.

Brand

Image

Regulatory and Social

Processes
Processes that improve
communities and the
environment

Organisational Capital
Skills / Training
Knowledge
Teamwork

Q15

Yahoo! Inc.