Yahoo! in Trouble|Business Strategy|Case Study|Case Studies

Yahoo! in Trouble

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Case Details:

Case Code : BSTR025
Case Length : 9 Pages
Period : 1994 - 2001
Organization : Yahoo
Pub Date : 2002
Teaching Note : Available
Countries : Japan
Industry : IT

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

Yahoo was started by Jerry Yang (Yang) and David Filo (Filo) (Ph.D. in electrical engineering from Stanford University), who began exploring the Internet as a hobby after finishing their doctoral thesis.

In April 1994, they created a directory to keep track of their personal interests on the Internet. Gradually, they began to spend more and more time on their directory. Later, Yang and Filo started categorizing websites as a way to keep track of all the sites they had visited. They posted this list on the web as "Jerry and David's Guide to the Worldwide Web." The guide became very popular and it became the first choice for people browsing the web to find sites intelligently. It helped people to find useful, interesting and entertaining content on the Internet. In late 1994, the duo changed the name of the guide to Yahoo,2 positioning it as a customized database designed to serve different users. They developed customized software to help locate, identify and edit material stored on the Internet.

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Yahoo rapidly became popular and attracted a lot of media attention. To strengthen its competitive position, Yahoo formed partnerships with leading companies such as Microsoft, AOL and Prodigy. Yahoo was formally incorporated in March 1995 and by mid-1995, it had implemented a business plan modeled on traditional broadcast media companies.

In early 1996, Yahoo paid Netscape $5 million to become one of the five search engines which visitors could use to conduct a search from the Netscape site. During the same year, Yahoo strengthened its management team by appointing Koogle as the CEO. Koogle was an engineering graduate from Stanford University and had spent 9 years in Motorola before joining Yahoo. Yahoo was the first company to set up an online navigational guide on the Internet. It offered media content, communication, personalized information and commerce services on its website (Refer Table II). Yahoo generated its revenues mainly through advertisements, promotions, sponsorships, direct advertising and merchandising. The company offered many forms of advertising at different prices...

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2] Yahoo! was the abbreviation for Yet Another Hierarchical Officious Oracle.


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