Yahoo’s business strategy (1994-2001)
.The main objective of the company was to become a starting point for the most consumers on the Internet and establish Yahoo as the must buy for the most advertisers. The company initially managed to achieve this target by attracting 180million unique visitors in 2000. The company also become a leading advertising platform for advertiser and its revenue grew from $600 Million to $1.1 Billion 2000 majority of revenue (85%) coming from banner ads and placement fees. By the end of year 2000, the company shares started to fall due to declining of dotcom and soon mainstream advertisers become reluctant to pay high advertisement fees. In parallel, stock brokers started to worry about the top management efficiency causing advert revenue to dry up quickly. The company had a chance to buy eBay, the biggest auction site on the Internet and AOL, but due to CEO?s (Koogle) ambivalence towards this transaction, the company failed to acquire both these profitable companies. In short, due to too much reliance on online advertisement, dotcom companies and poor management structure, the company lagged behind in technological advancement and during this time Google emerged as a leading search portal and overtook Yahoo by a long way.
In respect of internal and external position of the company, SWOT (or SLOT) model is used in this study. Through this model, Yahoo’s resources (its strengths and weaknesses) are evaluated alongside the external environment (the source of opportunities and threats) before determining strategic position of the company.
If we look at the internal strength of Yahoo, the company had over 180 million users in 2000.This made it a very powerful marketing company, with a very well-known brand. In mid to late 90?s Yahoo was probably the most popular website in the World. From internal weakness
point of view, the company suffered from a poor management structure and gradually startedto lose its innovative edge and brand image across the cyber world.In term of external strengths (opportunities), steady growth of internet users? offered tremendous growth potential for Yahoo.
Although, dotcom business was the main source of revenue for Yahoo, generating more funds through new products was also a great opportunityto attract other type of business as well. In addition, to acquire e-bay and AOL was yetanother opportunity for Yahoo to possibly become a biggest auction and search portal in theworld for a long time. In parallel, external threats such as intense competition andtechnological advancement put Yahoo at the back seat.