Product Positioning Map

The nature of the industry has made the products from the leading companies to be of almost similar nature. In fact, the products on offer have similar target customers with the differences coming in at the provision stage. For instance, both Yahoo and Google, their fiercest competitors, offer products in the advertisement of products online. This therefore means that the companies compete on very similar basis making the outcome very difficult. It is not surprising therefore, that all the three companies under study are on the same position in the product positioning map. Ideally, therefore, the nature of the industry dictates that the level of competition is ostensibly high than in other industries (Angel, 2009).

Despite the homogeneity of the internet information provision industry, each of the companies has different and unique products for its customers. The competition is thus minimized by the very fact that companies have different market niches that they aim to fulfill. Yahoo, therefore, has the opportunity to grow in the market by focusing on products that suit the needs and requirements of its customers. The fact that the competitors are on one side of the product positioning map, does not have negative implications on the company’s growth prospects. The company should align itself to provide solutions that are unique ion their product offering and distinct to its customers. In view of the above developments, Yahoo is in a position to implement effective strategies that can redeem its place in the industry while offsetting competition from Google and MSN.

The product positioning map identifies the position of the company’s product with respect to those of the competitors. Indeed, the products are in similar positions across the different companies owing to the homogeneity of the industry. However, Yahoo has the chance to implement key strategies in order to rebuild its glory that dictated the industry before the entry of Google. In attaining this goal, the company should focus on the increase of its advertising revenues; a division neglected for a very long time. The company’s analysis in view of the product position best suggests a strategy that is built around its key strength of brand recognition (Hof, 2006). The strength has the potential of enforcing a strategy with the capacity of attracting numerous advertisers to the company. However, the attainment of these goals cannot be realized without the upgrading and advancement of the company’s main advertising capabilities.

Strategy Evaluation

The SWOT analysis conducted on the company presents the company with various strategies in the revival of its prospects. These strategies can effectively be tackled by the functional level of management within the company ranks on a need to need basis. Indeed, the top management should encourage their subordinates to take charge of the initiatives suggested with the goal of attaining mini goals. In addition, the mini strategies should be implemented under the oversight and accountability of the subordinates because they are customized for individual divisions within the company. However, the implementation of any of these strategies should follow a thorough process of examination and analysis and should not be based on emotional thinking. Ultimately, therefore, each of the managers should implement the strategies that are relevant to each of their divisions with a collective goal of attaining financial success.

The main strategy involves the company’s ability to increase its advertising revenue. This foresight is based on the challenges facing the company including those related to search. In addition, the competition from Google and other companies is a source of challenge due to the dwindling of its revenues over time. At the current rate, Yahoo is sure to run out of business in the near future if an effective strategy is not implemented to tackle the burgeoning competition. Further, the changes in the nature of portals coupled with inefficient search results have the potential of slowing down the growth of the company. Going forward, the company’s future is dependent on the effectiveness of advertising and search functionalities (Holahan, 2006). The success of the strategy is based around the shift of the company’s core competencies to a strategy based on search algorithm. The current reliance on a portal strategy is one of the main reasons for the collapse of the company. Eventually, the strategy will help in the implementation of the proposed advertising strategies to sustain high revenue generation.

Implementation Plan

In the implementation of the strategy, Yahoo needs to consider the feasibility of the strategy with respect to the different divisions it has. Indeed, each of the divisions has different and unique functioning and the implementation of the strategies in a blind manner would lead to its failure. In this regard, the implementation of the identified strategy should be conducted at the functional level of management to guarantee its success. Each of the managers responsible for a division should be tasked with the identification of the most effective strategies and their implementation over a period of time. In addition, each of these strategies should be prioritized based on their urgency and relevance in the attainment of the company’s collective goal. Ultimately, the implementation of the strategy should be geared towards the solution of the challenges identified through the different tools of analysis.

Yahoo is facing challenges in four areas based around competition from rivals and all related closely to search. Part of the problems facing the company is based on lower revenues due to competitors and Google’s dominance in the search categories of online platform. In addition, the changing face of portals and inefficient search results also plague the progress of the company. The organization needs to realize that its future is dependent on search and intertwined advertising. In effect, the company should first shift their core competencies from a reliance on portal strategy to one that is based on search algorithm. The beauty of such a strategy is that it will enhance its implementation of the advertising strategies that are currently helpful in its revenue generation.

The company, Yahoo, needs to move forward using one core competency of search in the implementation of its new strategy. In so doing, the company requires a concentration of its current resources in the development of an effective algorithm thus aiding in social networks and portal development. The development of such strategies is important in the implementation of a better solution to the problem that plagues the company presently. The company’s ad network will effectively be integrated into the search algorithm thus picking up relevant keywords to link text and content. In addition, the new strategy shall be coupled with webmaster utilization to enhance the benefits of outside publishers through advertising networks. Ultimately, the outside influence will improve the revenue stream for the company in the long term.

Financial projections

The success of the company has been identified as based on its ability to implement the recommended strategy. In fact, the implementation of such a strategy has the immediate effect of improving on the company’s financial performance. Successfully implementing the strategy would result in the significant increase of revenues from the advertising branch of the company. Recent developments in the company should also provide hope for improvements in terms of the company’s financial position. In fact, the challenges faced by the company through stiff competition have not undermined its ability to generate revenue. In the last five years, the company has witnessed a slow but gradual increase in revenue from the different products on offer.  Indeed, the growth has been so convincing that the company is rumored to be heading back on track and competing fairly with companies such as Google and MSN. The year 2016 saw a considerably great increase in revenue with improvements in subsequent quarters.

Each of the first two quarters witnessed revenues above the one billion mark showing the company’s financial capabilities. In addition, the second quarter was an improvement of the first quarter in terms of revenue generation and overall company performance. The revenue of $1.32 billion was better than the projected revenue of $1.08 billion that had been floated by 24 analysts. Perhaps, the projections reflect a lack of confidence among different stakeholders and should point to a need for improved performance to guarantee support of the different players. That notwithstanding, the company’s performance in the second quarter of 2016 was far better that the previous year with earnings improving by more than 25%. The increase in revenue can be attributed to the excellent management of the company under the new CEO. In addition, the company has continually improved its revenue over the last five years with each year producing better results. In 2015, for instance, the total revenue was almost $5 billion; a great improvement from 2014’s figures.

In view of the financial position and its performance in the last few years, it is expected that the company will continue to improve with the implementation of the new strategy. In fact, analysts have cited the new confidence among shareholders as one of the key determinants of the company’s success.  The projections for both 2016 and 2017 surpass the $5 billion mark making them the highest veer figures in the history of Yahoo. Based on the projections in the advertising division of the company, it is possible to surpass the projections identified in the analysis. However, the success of the implementation stage is influential in the determination of the company’s prosperity both in the short and long term periods. Ultimately, Yahoo is bound to increase in the number of customers that hit the search engine translating the same into revenue.

Executive Summary

It is in the general public domain that Yahoo was one of a kind during its nascent years after the unveiling. Indeed, the company was the first to allow its users to maintain tabs with their favorite websites by backing up their history. Unveiled in 1994, the company was a testament of the entrepreneurial and technological spirit of the time. The development of the company took on a successful path with the transformation into a fully fledged web portal. Such was the advancement that it attracted millions of users in successive years through its innovative and fresh services and products never witnessed before. In fact, the company’s development is touted as one of the key reasons for its survival of the crash of the internet bubble in 2000. Today, the company is enjoying success at the top of the industry because it remains one of the most frequently visited sites globally. However, the position has been under threat and the company toppled by new entrant Google.

Yahoo has a variety of products on offer ranging from emails to maps, sports to classifieds, news to horoscopes. However, the mere existence of these products has not guaranteed the company of success in part due to a lack of the innovation that witnessed its growth in former years. The company can be used as a classical case of an organization that allowed comfort to toll its path leading to poor management decisions. Although the company is increasingly expanding its user base, stiff competition from companies such as Google and MSN continually prove to be a challenge.  In fact, the lack of success in the midst of competition has rendered the once successful business model irrelevant in today’s dynamic world of competition. The company’s premium services are increasingly losing their popularity with the provision of similar but free services by other companies. Moreover, the overdependence on revenue from these services coupled with a lack of diversification has hurt the company further. Google’s focus on advertising revenue generation is more efficient that Yahoo’s premium services.

The company must rethink its business model if it harbors the goal of remaining competitive in the industry. Matters are worsened by the fact that the internet technology industry is ever changing thus requiring the implementation of effective strategies. This paper analyses the company and brings out different strategic issues faced by the company. Specifically, the paper identifies the need for a new system based on advertising revenue, expansion of the company’s user base as well as the reduction in fee based premium services. Although these issues may not be interrelated in totality, their individual and collective solutions are based on the same strategies. Ideally, therefore, the company must cease its reliance on its users’ loyalty in the current world where such services are offered free of charge. Eventually, the once successful company is on the verge of crashing in the fast paced internet industry. The company must be quick and fast in regaining its originality and ingenuity in a bid to guarantee success.

The company’s analysis is organized into sections each with a specific aspect to tackle. The paper begins with an introduction of the company including its description and history as well as the mission and vision statements. Next, the paper conducts an external analysis of the company with a focus on the position of the company among the competitors. The EFE matrix, Competitive profile matrix and the SWOT analysis provide important insights into the company’s external performance. Google and MSN are identified as the main competitors with yahoo trailing Yahoo and leading MSN in performance. The internal assessment is conducted through the IFE matrix as well as the financial ratios. The strategic issues facing the company are identified and the solutions recommended in subsequent sections of the paper. Ultimately, the recommended strategy is evaluated for its effectiveness and an implementation plan proposed.

References

Angel, K. (2012). Inside Yahoo!: Reinvention and the road ahead. New York: John Wiley & Sons.

Baker, L. (2010). Yahoo & Google’s mission statements: Do they connect?. Search Engine Journal, Retrieved from https://www.searchenginejournal.com/yahoo-googles-mission-statements-do-they-connect/4924/

Blozis, D. E., & Cohen, S. (2009). Yahoo income: How anyone of any age, location, and/or background can build a highly profitable online business with Yahoo. Ocala, Fla: Atlantic Pub. Group.

Hof , R. (2006, December 7). Five Steps to Get Yahoo Back on Track. Business Week Online, 10. Retrieved July 15, 2016, from Business Source Elite database

Holahan, C. (2006, December 26). Why Yahoo’s Panama Won’t be Enough. BusinessWeek Online, 9. Retrieved July 15, 2016, from Business Source Elite database.

Whitney, D. (2007, February 5). Yahoo Looks to Build Upon Its Strengths. TelevisionWeek, 26, 12. Retrieved March 15, 2007, from Business Source Elite database.

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