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Yahoo!’s Rise to Fame Case Study

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Lohith H Gowda (BannerID: @03610073)


Case Study – Yahoo!’s Rise To Fame

The case study – “Yahoo!’s Rise to Fame” traces that Yahoo began as a simple website directory in the year 1994 which was developed by Jerry Yang and David Filo while they were graduate students at Stanford University. Starting from here, it moved on to become world’s best known interactive web portal in 2006, with 11,000 employees and it is averaged over 144 million page views per day and an annual earnings of $2 billion n $6.4 billion revenues.

Yahoo operated in General and also Specific environment. Yahoo was conscious of the importance of monitoring the environment, especially of the competitive organisation, to make the necessary strategic changes and adjustments. Yahoo operated in 3 forces, firstly, the technological forces where – the products and services offered by Yahoo have expanded and changed significantly over time, and are expected to continue to expand and change rapidly in the future to accommodate new technologies and internet advertising solutions and new means of content delivery, such as rich media, audio, video and mobile. In addition, the internet and online services industry is characterized by rapid technological change. The rapidity of change where changes was not only constant but were unpredictable in regard to the technological developments and economic consequences. This environment would be considered both unstable and dynamic because Yahoo! could not rely on a stable supply of resources nor they could predict the way in which various forces affecting that supply would change over time.

Secondly, the economic forces where – advertising was the major source of income, as access became easier and cheaper, economic gain through advertising became greater, shaping Yahoo strategic growth strategy. Since, Yahoo derives most of its revenues from marketing services, any deterioration in economic conditions causes decreases in or delays in advertising spending and is likely to reduce the company’s marketing services revenues and negatively impact its short term ability to grow its revenues. During the bust in the late 1990s and the subsequent economic recession, factors of this strategy had a negative consequence.

In the beginning Yahoo! had very less competitors and its environment was rich as the company was newly rising with very less competition. In overtime competition not only emerged but became fierce when Google came into force which significantly reduced the environmental richness. In addition to this they were also cultural force of web use and access, changes in customers advertising preferences and behaviours. Changing customers taste determines the services that Yahoo provides. The services, products, advertising etc are highly influenced the competitors. All these specific environment influence and pressure organisations to act in certain ways. Therefore, Yahoo!’s operated with a complex environment because technological, economical and social forces were closely linked with each other as there were many forces at work, many differences between forces which were very difficult to manage.



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