Yahoo Strategic Analysis And Terry Semel – Case Study Example
Yahoos Original Strategy In 1994 two PhD candi s, David Filo and Jerry Yang came up with the idea of keeping a track of their favorite links on the internet by coming up with their own home brewed website which could store those links. Before long, Yahoo! was developed which is an acronym for "Yet Another Hierarchical Officious Oracle" as thousands of people started to visit their website and use the links of other websites from Yahoo!.
Yahoos Under Terry Semel
Yahoo under Terry Semel condensed its business priorities and the focus was also laid on the advertising on the websites space so that maximum amount of revenue can be generated. It became a website with maximum content in terms of not just links but creative contents like music, games and email accounts with premium statuses. He was adamant on increasing the user rate of the website.
Steps Semel took to reconfigure Yahoos activities to support the company’s new strategy
Semel was focused on getting Yahoo! noticed on the map more than it was at that moment. He began focusing on team building and acquiring partners with companies to support his strategy to focus on consumer desires. He established partnerships with companies like AT&T so that maximum revenue could be extracted when the user rate of the company would grow. Companies like Verizon, British Telecom and Rogers Communications also teamed up with Yahoo! later for this same vision. Moreover, Yahoo! focused on getting in the search engine line of business to achieve the goal of more advertising by acquiring Inktomi and Overture. It also acquired HotJobs.com in 2002 to boast job listings on the website.
How did Semel use his experience from the entertainment industry to turn things around at yahoo?
In the entertainment industry, it was crucial to land good partnerships and for the focus to be on what the customers would want. Thus, Semel used that experience in guiding companies to partner up with Yahoo! as well as put a lot of media related items and searches on Yahoo! so that maximum number of people visit the site. Moreover, he had a vision to charge for the music, interactive games and the job listings etc. Entertainment industry required maximum usage by the customers and Semel wanted the same here by coaxing the people online to stay on Yahoo! for extended period of time so that they would be more likely to avail both free and paid services.
Why did Semel fail to satisfy shareholders with yahoos performance? What challenge does the firm still face?
The problem was that Yahoo! started to fray too much from its goal of the navigation and guide strategy to being obsessed with becoming a very intense media and entertainment website. This was at a time when the world was just beginning to realize the search and navigation feature of the internet was incredible and companies like Google were starting to step up. The failure to buy Google didn’t help matters. Moreover, Yahoo! also had a chance to buy Facebook and the deal slipped out of hand when Semel lowered his buying price and Mark Zuckerberg walked. The company struggled to make decisions on time which were vital to its growth which led to deals slipping out of hands and the company’s growth stagnated including the Microsoft buyout of Yahoo at $40 a share at the time which the Semel rejected. This also resulted in a lawsuit and the company’s shares dropped further. Right now, the company is facing challenges of revamping the image of Yahoo! in the common people’s minds including their customer services and the ability to innovate and compete more effectively with Google. The idea is to remain useful to the consumers who are now more concerned with spending time on social networking sites. Yahoo! has to focus on providing effective tools of social networking as well as things like news, search etc. increase its user rate.