YAHOO!’ S GROWTH STRATEGY: CASE STUDY
Yahoo international enjoys a lot of managerial economies of scale. As a growth strategy, the company has also developed a new organization structure to enable it expand its activities and operations. The growth strategies the company has adopted are aimed at facilitating its accountability and decision making process. In addition, they are aimed at reducing the bureaucracies that tend to slow the company’s progress. In order to maintain these strategies, the company aimed at facilitating sustainable innovation and recruiting, developing and retaining highly skilled and qualified staff. Such staff is capable of ensuring continued growth that is important for the success of the company.
The first growth strategy adopted by Yahoo was moving all its advertisers to a new ranking model. This model was called Panama. Panama’s main aim was to regain its customers that had shifted to Google. According to this model, advertisements were to be ranked based on the highest bids according to the search keywords as well as on the number of clicks (Dunn et al., 2003). According to analysts, the panama model provided yahoo with an advantage of defeating Google. Reviews from customers and advertisers were encouraging about panama. It is worth noting that there was a strong feedback on the panama model. In addition, the click -through rates achieved was higher than the anticipated.
Another growth strategy was the re-organization of the organization structure of Yahoo. This was due to the fact that Yahoo was unable to raise sufficient revenue despite the fact that it was highly visited. In the former structure, the company used search related advertising. The search-related advertising made the company’s online searches reduce from 30.5% to 28.8% (Karnitschnig & Vascellaro, 2008). This represented a decrease in income from $ 1896.22 million to $ 751 million between the years 2001 to 2006 (Karnitschnig & Vascellaro, 2008). The reduction in income can be attributed fact that to Yahoo lacked focus on any particular product.
According to the new organization structure, yahoo was divided into three operating units. These units included the audience group, the technology group and the advertiser and the publisher group. The advertiser and publisher group focused on the advertisers, the technology group on the technology while the audience group focused on customers. Each unit had its head, and all the heads reported to the chairman and chief executive officer of Yahoo. The integration of the Panama and the new organization structure would enable yahoo to regain its lost customers and market. Reorganization of the Yahoo was geared towards eliminating bureaucracies in the company.
Another strategy that Yahoo adopted was that of Brand universe. Through this strategy, the company would be able to develop certain sites that would be dedicated to entertainment brands of high profile (Efrati, 2010). This strategy would link various entertainment contents of yahoo websites and services. In addition, various entertainment partners would be able to know the number of customers that their contents attracted, or its market. In order to expand its regional exposure, Yahoo entered into an agreement with a consortium of nine companies. The other growth strategy that Yahoo could successfully use is to merge with other good performing companies such as Microsoft or AOL.
Dunn, D.; Probstein, J., & Sidney, C., 2003. “Marketing High Tech Services.” Review of Business, Vol. 24, Issue. 1.
Efrati, A., 2010. “Yahoo to Offer Media Links.” The Wall Street Journal.
Karnitschnig, M., & Vascellaro, J., (2008). “Yahoo Ends Talks With Microsoft, Signs Search-Ad Deal with Google”. Wall Street Journal.