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Searching for data in the Internet is almost the only way to learn information in the modern world. In recent years, a sharp rise occurred in the development of Internet technologies. It resulted in a real revolution regarding Internet search, and even created a separate market that made the search on the Internet a whole industry with specialized companies. Despite the rapid development of this market, many companies face strong competition, and the victory is impossible without a developed business strategy. In the conditions of increased competition, only narrowly focused strategic management contributes to the achievement of the company’s superiority in the market of Internet technologies because focusing on one direction allows the owners to achieve a priority in their field of interest.

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Corporate Culture

Yahoo is the representative of the search engine market. Recently, the company has been sold to the Verizon Communications network, due to which the company Altaba appeared. The available current data regarding the sale show that the acquisition was influenced by various kinds of difficulties (Perlroth, 2017). The possible reasons for both these difficulties and past success should be analyzed for developing a set of recommendations.

In regard to the corporate culture, it is one of the main elements of strategic management. The company’s corporate culture is very flexible, which improves staff performance. The culture of the company has been cultivated with the help of a unique combination of professional skills and business experience. First, the company denies the traditional hierarchy. Instead, it supports a decentralized structure and distribution functions. For example, the lack of traditional business suits has caused a tendency of wearing everyday clothes in the offices throughout the country. Secondly, it has a collective decision-making process (Johnson, 2016). Moreover, it controls the recruitment process by checking the employees’ compliance with corporate values.

The company changed its missions from year to year (Macri, 2016). At the beginning of 2017, the company had a slogan: “Do you Yahoo?”, with the mission “Yahoo is a guide for informing, connecting, and entertaining our users” (Macri, 2016). The company’s vision is ambitious enough and affirms its desire to be the most essential global Internet service for consumers and businesses. At the same time, the companys objectives are to provide the best Internet experience for consumers and a platform for advertisers, to expand the markets along with the competitors such as Google, and to have Yahoo as the destination of many consumers (Baker, 2011). Despite the strength of the corporate culture, the companys mission, visions, and objectives show different directions of the movement, which implies a high degree of diversification (Johnson, 2016). On the one hand, this is a positive trend; on the other hand, multidirectionality may not allow management to achieve definite results in any direction.

Strategic Leadership

The first executives were Timothy Koogle, Terry Semel, and Jerry Yang, who ran the company from 1995-2001 and between 2007 and 2009, and they were the first to embody a flexible management model. In the corporate mind of Yahoo, there was an attitude toward denial of the traditional corporate structure and management levels from the very beginning. The company abolished the hierarchical structure. Carol Bartz, who came to the leadership in 2009, and Tim Morse, who succeeded her in 2011, strengthened the policy of distribution functions (Johnson, 2016). It was essential as the management in the company started with this policy (Baker, 2011). The policies of Thompson and Levinsohn (2012) were not innovative, but Marissa Mayer strengthened the encouragement of the creative initiative of the working groups aimed at achieving production goals (Baker, 2011). Marissa Mayer was the CEO of the company before its sale in 2017, after which she was dismissed (Baker, 2011). Now, Thomas McInerney became the CEO of the company.

SWOT Analysis, Competitive Advantages of the Company

The sale of the company and the crisis of the recent years created a broad field for analysis of strengths, weaknesses, threats, and opportunities. Regarding the strengths of the company, they create the competitive advantages, including a simple interface, quick search, and a recognizable brand. However, all these factors can also be attributed to the competitors from the top ten search engines, so a more specific strength is corporate culture, as it takes into account the realities of change. It allows the company to respond flexibly to leadership policies. Production goals are achieved through working groups and the weakening of the hierarchy. This, as well as the decentralized structure, distribution of functions, and the collective decision-making process, fuels the corporate spirit.

The second strength of the company is its management policy. The collective decision-making process motivates the staff, and the hiring process that controls employee compliance with corporate values enhances both skills and teamwork abilities. The purposefulness of the company’s employees is the driving force in maintaining values and foresight. Thus, strong staff with established team values is a competitive advantage of the company.

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Another strength is the experience of competition. The company has begun to develop along with the development of the Internet, overcoming serious competitive resistance. The experience of mistakes shows its quick response to them. For example, the company was a co-owner of Alibaba Group, which sold products derived from sharks. With a negative reaction from the public, the company promptly banned the sale of products on all its platforms (Johnson, 2016). This point of strength demonstrates the companys ability to react to mistakes under the influence of feedback from the outside.

Weaknesses are the most extensive area, as the recent crisis has revealed many weaknesses of the company. First, Yahoo has a weak investment policy. In case of mistakes made by the inside management, Yahoo suffers from the long-term consequences as the company’s management is shortsighted. For example, in 2006, the management refused to buy Facebook, and the deal was rejected (Baker, 2011). The management also negotiated the purchase of YouTube, but did not agree on one point in the contract. Furthermore, the management also rejected the purchase of MySpace as a minor project. Considering the current influence of these companies, it is evident that Yahoo has a weak investment policy and suffers from the flawed and shortsighted management decisions.

The constant change of strategy is another significant weakness of the company. The company changes its own mission and direction of action almost every year. The first example was demonstrated by Semel, who he shifted the emphasis to the media from the technological component. At first, he wanted to develop a search engine. Then, combining Inktomi and Overture technologies, he tried to create a competitor to Google (Johnson, 2016). Then he again changed the vector: he could not decide whether the company is a technology or a media company. Marissa Mayer focused on the search engine, but she had been trying to determine the main product for too long. Then she switched back to the media business (Baker, 2011), at the same time trying to develop video management and buying various start-ups. Thus, the direction of the strategy is very weak as it constantly changes its vector.

A careless financial policy is the next weakness. The chief interviewer and video services news star was offered a $10 million contract, but as the result, Yahoo earned only $3 million with her help (Johnson, 2016). Smartphones and fitness bracelets were gifted to personnel after hiring them, resulting in the expenses of $12 million. Moreover, the Tumblr blog platform cost $1.1 billion for the company, but the platform lost to Instagram and consequently, it lost money (Baker, 2011). It shows that the management does not predict the return on investment accurately. Reducing the numbers of the staff is also the companys weakness. The company fired 1.7 thousand people, reducing the staff by 42% as compared to 2012 (Baker, 2011).

At the same time, the sale of the Verizon Communications network has opened several new opportunities. First, the company can now take advantage of additional investments from the outside. Additional investment capacity can adjust the dynamic direction of financial flows into the most promising products, contribute to the development of innovation, and increase the return on capital. Secondly, the company has the opportunity to reach the markets of the developing countries. Third, the sale of the company opens the possibility of using experience from the outside and developing new integrated products.

Threats for the company primarily include the presence of many competitors. The main competitors are Google, Bing, Baidu, AOL,, Yandex, etc. Search engines of the competitors operate as advertisers, which attracts some of the attention of the public and reduces the share of the Yahoo market. In addition, in many countries, the government limits information content, so the company may be involved in legal difficulties.

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Intellectual Capital and Managing Innovations

Modern business practices have formed an understanding of the human resource as one of the most important one. Understanding this fact is the key to an effective system of managing the human resource in a company. The gap between the book value of Yahoo and its market capitalization has changed significantly during several years. The basis of this gap is the intellectual assets, which relate to the company’s personnel. The company has not only a recognizable brand, but also an excellent hiring policy, as a result of which HR managers check the qualifications of each candidate. At the same time, the company receives highly skilled personnel (Sergio, 2011). Moreover, the hiring policy involves checking for compliance with corporate values, which ultimately leads to the teamwork of highly qualified staff.

However, the management of innovations is performed in a worse way. Management often fails to identify promising innovations. For example, in the early 2000s, Google and Yahoo went in different ways when the business required a rapid scaling. The difference was in approach to the basic architecture that required innovation, and it resulted in Yahoo’s losses. However, Yahoo found a solution in the finished NetApp system, which allowed it to quickly add the additional space on the server and thus to scale the business. As a result, every service that launched Yahoo worked on the basis of NetApp, and the company became one of the largest IT giants.

At this time, Google began to develop its own file system Google File Systems. It was designed as an innovative platform that was rejected by Yahoo. As a result, when the demand continued to grow, Yahoo had to spend more and more resources on engineering and technical work to maintain infrastructure, which led to its loss of leadership.

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The company’s strategy largely explains the existence of its significant number of weaknesses. First, the entrepreneurial strategy of the company implies an increase in the market share of the company (growth strategy) (Ritson, 2011). However, the company used a different approach instead of concentrating on one of the strategies, such as the strategy of concentrated growth, integrated growth strategies, strategy of diversified growth, and strengthening of positions in the market (Ritson, 2011). The strategy of concentrated growth was present in the politics when the company changed its emphasis on the main products, seeking to improve the product in order to produce a new one without changing the industry and searching for opportunities to improve its position in the existing market or to move to a new market. In parallel, the company applied the integrated growth strategy by expanding through adding new platforms for example, Flickr and Tumblr (Ritson, 2011). The strategy of centered diversification was used in the search for and use of additional opportunities for the promotion of new products. Thus, the corporate strategy was not uniform, which focused the company’s efforts in different directions. If to analyze the generic strategy, then the matrix of the competitive strategies of Porter has 2 parameters: the size of the market and the type of competitive advantage (Ritson, 2011). A certain combination should imply the application of a certain strategy. However, the generic strategy of Yahoo does not correlate with the product and the market. The company has a wide market at the same time, it would have to rely either on the leadership in costs (if it were oriented toward cost advantage) or on a differentiation strategy (if it were oriented toward the advantage in the product) (Ritson, 2011). However, the company has continued to change the vector. With Semel and some other representatives of the Board, the company focused on trying to create or acquire a unique product in the industry, and with Mayer, the company’s efforts were aimed at both saving the company, achieving a lower level of costs, and uniqueness of products. Yahoo often formed an impression of a company that does not choose a clear direction for a competitive strategy. This image indicates inefficiency and functioning in an extremely unfavorable competitive situation. The company, without a clear competition strategy, has lost significant market share and inefficiently managed investments when refusing to purchase Youtube and Facebook. As a result, the company lost buyers interested in the novelty of a number of competitors’ products, as it did not concentrate efforts on the development of differentiation or specialization. As a result, it was reflected in the negative financial indicators, which were unprofitable in the period from 2013 to 2015.

Table 1.

Financial ratios of the company






Revenue to gross profit




Total assets to total liabilities




Current ratio




Total debt ratio




Revenue to gross profit is deteriorating by a small amount due to a slowdown in both the revenue and gross profit. The ratio of total assets to total liabilities is also deteriorating due to a simultaneous decrease in assets and an increase in liabilities. The growth of current liabilities affected the deterioration of the current ratio. However, the value of long-term obligations has decreased, so the deterioration of the total debt ratio is explained only by a decrease in assets. A short-term improvement in revenue will not be secured without reviewing and changing the strategy.


Brief key recommendations should be applied by Yahoo. First, the company should determine its own strategy and focus on it. The company should also define a clear vision and reject the products outside this vision (Sergio, 2011). It means determining the emphasis and focusing efforts within this emphasis. Often, the change of strategy will lead to a final collapse, as efforts spread in many directions do not allow the management to succeed in anything. The company must gain advantage over its rivals by focusing on a certain tactic. Taking into account the above data, it can be a competitive strategy of focusing all efforts on a certain narrow group of consumers. Now, the company can use the opportunities for additional investment for innovative developments, so this strategy makes sense. In addition, the company must provide feedback for an adequate assessment of management decisions, stop layoffs to maintain its good staff, and strengthen its innovation policy.

All elements of strategic management were analyzed for the Yahoo company. The firm survived the crisis and the acquisition by another firm. These changes occurred due to poor investment policy and strategy of the management, which often changed and were multidirectional, including focus on media and search engine simultaneously. It made it difficult for the company to achieve and retain the leadership. Vision, mission, objectives, and generic strategy need to be revised and focused on innovation in the face of increased competition in the information technology market. Thus, it confirms the thesis regarding the importance of the narrowly focused strategic management in modern conditions.

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