Yahoo Case Assignment - Critical Thinking Analysis

Yahoo Case Assignment: Critical Thinking Analysis

Cullen Bryant Estes

Principles of Management

Dr. Hillary Schloemer

Abstract

The decline of Yahoo has been extremely intriguing to observe. I have only been around and able to keep up with this information way past the peak of this forgotten Silicon Valley juggernaut. Yahoo used to be a household name in the industry and was valued at $100 billion dollars during its prime in 2000 (Lee, 2016). It goes to show that with all of the competitive forces and external factors at work, even great companies can fall victim to complacency and failure. This is exactly what happened to Yahoo. In a cut throat environment like the ever-adapting technology and media industries, Yahoo simply could not keep up in the long-haul.

Critical Factors in Macro environment

        One can see how the shifting trends affected Yahoo negatively over time. The brutal nature of the industry makes for extremely difficult to thrive. At one point, Yahoo had achieved success; however, they simply could not maintain it. Some of the factors in the Macro environment that were detrimental to this company were things such as: Technological changes, Economic Factors, and demographics (Competition 10, 2016).

        Yahoo was competing in a market with top players such as Apple and Microsoft and frankly they were just better. In the article “Verizon’s purchase of Yahoo, explained,” author Timothy B. Lee illustrates how these companies were simply recruiting the best programmers and developers (Lee, 2016). Their rigorous recruiting process allowed for them to utilize technology better than Yahoo. This may be due to the fact that Yahoo, created in 1994, did not identify as a technological company but as a ‘media company’, yet they were competing in the technological industry (Lee, 2016). This led to lackadaisical hiring practices and complacency with their level of technology. As we all know, technology is constantly adapting and improving, so for a tech company to take this languorous approach soon became a recipe for disaster as it can be next to impossible to catch up once you have fallen behind.

        In my opinion, falling behind in technology also caused them to lag behind in other departments as well because they were not able to adapt to the new generations. Their inability to be successful among varying demographics inhibited them from maintaining a large, diversified market share. This is extremely apparent in the failure of Yahoo’s search engine and decline of user’s on Tumblr. Other product rollouts also failed. Another example from my own observations is when Yahoo presented a Fantasy Football platform which is completely inferior to ESPN’s platform. They tried to compete in many facets of the business but ultimately failed because they could not appeal to evolving demographics and therefore, lost its users.

        The last external factors that led to their demise were the economic factors. Resource allocation blunders by former CEO Marissa Mayer, were mainly to blame on this front. The company was failing. That is except for the lone investment in Asia into a tech start-up called ‘Alibaba’—everything else at Yahoo seemed to be “worth less than nothing” Lee states (Lee, 2016). The worst part about the investment being successful was that in order to reinvest or distribute the income amongst shareholders, the IRS was going to charge billions of dollars. This is obviously something no company likes to see happen especially when this money would only be reinvested into an otherwise failing company. Pressure from Board Members then caused Yahoo to look for a company, i.e. Verizon, to acquire them (Lee, 2016).

Critical Factors in the Competitive Environment

        As I have previously stated, the market that Yahoo competed in is littered with failed startups and fading powerhouse companies because of the adapting field of play. Companies like Apple, Facebook, and Google have devoured a lion’s portion of the market share in this industry leaving less dominant companies to grab up what is left. Yahoo was hit big in every aspect of this business as many competitive factors crept in to slowly destroy them. Factors such as competition from direct competitors, shifting trends in Media/ Digital Content, and lack of differentiation across multiple interests (Kessler, 2016).

        Competitors like Google beat Yahoo in their search engine, Facebook beat them on a social media platform, ESPN beat them on sport’s coverage (Mack, 2016). Yahoo could not differentiate itself in any aspect of its business and therefore, were constantly being outperformed by its competitors. In my opinion, Yahoo spread its company too thin. They tried to compete in too many industries and instead became average at them all. Yahoo was a Jack of all trades, but a Master of none. All of the industries in which they divided themselves into only split their resources, causing them to not focus necessary attention and develop in any of these areas of concentration. They could not adapt to the trends in digital content because they were too busy catching up to what their competitors were doing. This wasn’t written in an article I read, it is just my observation that Yahoo picked fights with specialists in every industry, who were simply better at their craft. A quote that I believe clearly sums up Yahoo’s failures in the competitive market is from Netflix’s House of Cards: “Never start a war you know you are going to lose” (Spacey, 2014).

Mission Statement Confusion

        The failed integration and success across many varying markets is indicative of who Yahoo is. And who is Yahoo, you may ask? I do not know and neither do they. They do not know who they are at the core of their company and therefore cannot have a clear purpose of how they should compete in the marketplace.  By this I mean that they do not have clearly defined and stable goals as they have altered their own mission statement 25 times in the past 22 years. This is a major blunder by the company, as they lack a point of reference for themselves. In any market, when a company finds itself at a crossroads or does not know the appropriate direction to proceed in, they should always look back to who they are at their core; they should refer back to the mission statement. With this many changes to that statement it is hard for the company to have a clear vision and purpose. Dr. Kathy Lloyd came in and spoke during one of my class periods. One of the things she said that stuck with me were the characteristics of a successful company which included: Top Level buy-in, clearly defined purpose, realistic goals. She was absolutely correct as I can notice that Yahoo is all over the marketplace because they have not set themselves up for realistic success and they obviously do not have a purpose.