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The Reasons of Yahoo’s Success Essay


Industry and macroeconomic factors

Inflation and economic recession are some of the economical factors affecting the search engine industry (Jones 2). Since the search industry depends of revenue from companies, any slight performance of these companies affects the performance of the entire industry (Jones 1).

Competitiveness and emergence of other customized portals, such as eBay, get into the search market making traditional players unable to break even (Jones 7). The shifting consumer demand also affects the search engine industry. This is in the sense that players have to adopt capabilities that can deliver on the end user demand (Jones 10).

The future prospect of Yahoo

Yahoo generates substantively its revenue from the sale of advertisements on short-term contracts. By January 2010, Yahoo had the world’s largest market share in online display advertising. Yahoo’s United States market share for display advertising was at 17 percent followed by Microsoft at 11 percent and AOL came in third at 7 percent.

The other competitive advantage is its customized web pages and services that meet the needs of customers (Jones 5). Yahoo’s high standard places the company at sustainable competitive advantage. The new innovative and novel products helped Yahoo set the benchmarks from the onset. Yahoo also has a stake of 40 percent in Alibaba Group Holding Ltd, which is valued at $120 billion (Jones 12).

The success of Yahoo 2011

Table: Yahoo Revenue in millions

Years 2011 2012 2013
Total Revenue $4,984 $4,986 $4,680
Net Income $1,048 $3,944 $1,360

Source: (Frier, Sarah and Aaron Ricadela par. 4).

In the year 2011, social network Facebook overtook Yahoo in becoming the top search engine. The online entry of Facebook greatly reduced the market share. The loss of the top spot is attributed to the leadership strategies. The strategic recommendations by the top managers did not work effectively with the external and internal environments (Frier, Sarah and Aaron Ricadela 4).

The future revenue earning is estimated at over $80 billion from commercial advertisement through its radical business model by 2010-2015 (Frier, Sarah and Aaron Ricadela 5). However, this estimation has been scaled down due to the entry of Facebook, economic recession and other competitors.

In September 2011, Carol Bartz is removed as CEO of the company. This was followed by successive removal and replacement of CEOs within short periods (Jones 11-12). The implementation of strategies by the top management was ineffective and this created wariness amongst the shareholders.

Hence, the company had a challenge of finding a proficient CEO, who would provide effective leadership with innovative, proper vision, mission and policy. Nevertheless, since the hiring of Marissa Mayer as a CEO on July 2012, the company performed successfully. Marissa Mayer was a former executive of the Google Company.

Investment decision

If I had money, I would have invested in the company, because Yahoo has promising future prospects. On July 2013, Yahoo outshined Google due to the number of visits to its websites. During this period, the number of United States visitors clicked at 196 million an increase of 21 percent per year (Womack 7).

In 2012, Yahoo’s shares gained 58 percent. This year, the company plans to acquire San Francisco based Yelp company. Yelp’s shares have gone up by 30 percent (Womack 4). After a prudent analysis of Yahoo profitability and its management, investing in the company is highly recommended. Since the management is targeting and working effectively towards growing revenue, putting funds into the company is a good idea.

Works Cited

Frier, Sarah and Aaron Ricadela. “.” Bloomberg Technology. Web.

Jones, Gareth R. “Is Yahoos Business model Working in 2011.” A case study (2011): pp. 1-13. Web.

Womack, Brian. .” Web.

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IvyPanda. (2019, December 21). The Reasons of Yahoo’s Success. Retrieved from https://ivypanda.com/essays/yahoos-success/

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"The Reasons of Yahoo’s Success." IvyPanda, 21 Dec. 2019, ivypanda.com/essays/yahoos-success/.

1. IvyPanda. "The Reasons of Yahoo’s Success." December 21, 2019. https://ivypanda.com/essays/yahoos-success/.


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IvyPanda. "The Reasons of Yahoo’s Success." December 21, 2019. https://ivypanda.com/essays/yahoos-success/.

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IvyPanda. 2019. "The Reasons of Yahoo’s Success." December 21, 2019. https://ivypanda.com/essays/yahoos-success/.

References

IvyPanda. (2019) 'The Reasons of Yahoo’s Success'. 21 December.

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