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Yahoo! INC
Yahoo! Inc: Marissa Mayer’s Challenge
Tiffine C. Bourland
Business 4993
02/15/17
Yahoo! Inc: Marissa Mayer’s Challenge
Marissa Mayer became the CEO of Yahoo! back in 2012 after serving in Google as a top executive for more than a decade. Mayer joined Yahoo! at a time when the company faced various financial challenges that led to multiple rounds of staff layoffs. Moreover, the organization struggled with competition from other companies like Google and Microsoft, which surpassed Yahoo in market share and revenues. To ensure the survival of Yahoo! Mayer needs to find solutions to key challenges facing the organization. The primary issues affecting Yahoo! include the company’s identity, the participation of Yahoo in mobile platforms, the acquisition of companies in Asian and African markets, and the best use of proceeds from the sales of Alibaba.
Yahoo! faces a challenge with its identity and Mayer needs to make a definite decision to define the company’s stand in the market. It is essential for any organization to clearly spell out its role in the market, and ensure that all its employees understand this stand. Yahoo began as a technology company back in the 90’s but by the mid 2000’s, advertising became the largest source of revenue for the organization (Pearce & Robinson, 2015). The situation created a challenge on whether Yahoo needs to identify as a technology or media company. A technology company is an institution that deals with the development and manufacturing of tech products while a media company is in the business of mass media enterprise like motion pictures, broadcasting and publishing among others. The best decision is to identify Yahoo! as a technology platform that incorporates advertising as a major revenue earner. Classifying the company as a media organization will create challenge because Yahoo’s only media function is advertising and internet broadcasting. Moreover, Mayer’s background in technology while working at Google creates an opportunity for the company to improve its performance as a tech company rather than as a media organization.
The second challenge facing Mayer is on the best use of the funds acquired from the sales of Yahoo’s Alibaba shares. Mayer initially intended to use the capital to acquire critical acquisitions in the market, but other shareholder in the company quickly discouraged the decision. The best way to use the funds acquired from Alibaba’s sale is to ascertain Yahoo’s market position as a technology company that heavily relies on advertising to make major revenues. Yahoo’s mobile presence remains limited, a limitation that creates an opportunity for the organization. Majority of revenues from Yahoo’s media category come from advertising done online.
Reports show that the fastest growing sector in online advertising is mobile advertising with reported earning totalling $1.6 billion in 2010 in the United States. Internet advertising revenues for the same year were $ 31.7 billion (Pearce & Robinson, 2015). It is expected that the role of mobile platforms in adverting will increase as many users worldwide shift towards the platform. For example, many people in the world prefer to access the internet on their mobile devices when compared to computers owing to their portability and access. Therefore, Mayer needs to channel a considerable amount of funds acquired through the sales of Yahoo’s Alibaba shares to build its mobile platform and related products. The investment will enable Yahoo to compete with organizations like Google that use mobile platforms to reach a larger audience. Additionally, funding Yahoo’s mobile platform will increase the company’s revenue acquired through advertising as the market anticipates continuous growth in mobile advertising in the coming years.
Yahoo faces a challenge in dealing with its global market as various regions receive Yahoo’s products differently. Currently, Yahoo operates in sixty countries in forty-five different languages (Pearce & Robinson, 2015). Furthermore, the organization classifies its global market into three geographical segments, which are Americas, Asia Pacific and EMEA (Europe, Middle East and Africa). Revenues from the American market decreased since 2009 to 2011 while they increased in the EMEA market. In Asia Pacific, the revenues increased between 2009 and 2010, but declined in 2011 (Pearce & Robinson, 2015). Mayer’s challenge is that the Africa and Asia are the only growing markets for Yahoo, yet the company’s presence in the two regions is weak.
Mayer needs to ensure Yahoo takes advantage of the growing African and Asia markets in technology. Various technology companies benefit from investing in rising Asian and African markets. However, the companies often tailor-make products to suit the market’s economic and social context. Similarly, Yahoo must invest in technology platforms that recognize the unique aspects of Africa and Asia. For example, African countries use technology to ensure small farmers access information on agriculture. Therefore, Yahoo can become a platform that uses mobile technology to tap into Africa’s growing agricultural economy. The organization needs to invest some of the proceeds gained in Alibaba to penetrate the growing markets. Additionally, it is essential for Yahoo to utilize the advertising realm in Asia and Africa to gain high revenues. While the two markets give Yahoo relatively small returns, they have the capacity to translate into formidable revenues in the future
The analysis shows that Mayer needs to make strategic decisions to save Yahoo from failure. Investing capital in the right avenues such as mobile advertising will make the organization more competitive and increase its revenue base. Furthermore, investing in emerging technology markets in Asia and Africa will ensure that Yahoo gains a decent proportion of the market share presented in the two regions. While Mayer needs to focus on advertising, it is important that Yahoo retain its identity as a technology company.
References
Pearce, J. A., & Robinson, R. B. (2015).Strategic management (14th ed.). New York, NY:
McGraw Hill.
