Yahoo Case Study 120

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Market Entry Strategies Case Study


Case Title:

Yahoo! China: Challenges

Publication Year : 2007

Authors: Sandeep Varma, Doris John

Industry: Internet and e-commerce

Region:China

Case Code: MES0065C

Teaching Note: Available

Structured Assignment: Not Available


OR


Yahoo! China released a statement that their President Xie Wen, (Xie) had resigned, only 42 days after he joined the company. This development was just the latest in a series of problems that Yahoo! had faced in China. In the past, Yahoo! China had encountered many hurdles- from regulatory troubles to problems in localization. Yahoo! China was struggling in the Chinese search market. Xie wanted to try a Web 2.0 strategy of addressing the huge demand for user-generated content but Jerry Yang, cofounder Yahoo!, wanted to stick to the company's portal model and was unimpressed by Xie's strategy. This led to a divide in top management and ended in Xie�s resignation.

Yahoo! China had tried management changes, outsourcing, and local tie-ups to establish itself in China, but none of them yielded any results.Yahoo! was one of the first U.S. Internet companies to move into China. In 1999, it entered China by launching a Chinese website, cn.yahoo.com and tied up with a local company through a strategic partnership with Beijing Founder Electronics Co Ltd, a leading information products maker in China, to tap the emerging on-line advertisement market. Yahoo! China faced immense competition from local portals like Sina.com, Sohu.com and Netease.com, who had already won the loyalty of Chinese Net users. By 2003, these three players were thriving while Yahoo! China was struggling to come up. Yahoo! China could not make an impact on the Chinese internet market as it did not localize its strategies. So the company changed directions and purchased a popular local search company, 3721.com, for $120 million. This move did not yield much result and so Yahoo! China tried the new strategy of outsourcing that promised to solve its problem. It decided to team up with a local player who could understand China better. Yahoo! China sold its China operations to Alibaba, the leading B2B Chinese portal. Although Alibaba had achieved significant success in the Chinese e-commerce market, the deal did not yield significant increase in traffic. The main issue the case tries to highlight is how Yahoo! China will face increasing competition in the search engine market in China.

  • To introduce the students to the Internet industry in China
  • To highlight the various stages of Yahoo and challenges faced in China
  • To throw light on the various players in Chinese Internet market.

Yahoo!; Yahoo! China; Internet in China; Market Entry Strategies Case Study; Alibaba Baidu.com; Competition; Marketing; Strategy; Emerging markets; Jack Ma; Jerry Yang; Google; search market in China


Internet in China
Yahoo! China
Takeover and After
CNNIC Statistical Survey Reports
Chinese search engine market share
Services most frequently used
Internet users in China by age
Internet users by marital status

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INTRODUCTION

The company under consideration Yahoo! Inc. (referred to hereinafter as

Yahoo

)

is one of the world’s

largest online network integrated services provider with a combined user base in excess of 500 million.Yahoo provides a whole host of network based services, however over its existence of past 17 years,many such similar service providers have shored up especially after the dot com boom. Some of thesenew players took the path of specializing in a particular form of service while others brought a wholegamut of new services with the old ones.World Wide Web has grown exponentially over the past years giving rise to the intense rivalry betweencompanies involved. This intense rivalry especially with the likes of Google is one of the biggestchallenges for Yahoo.In this case study, we try to first understand the backdrop in which the company is operating including itsmission and vision for the future, its ultimate goals and philosophy regarding its business, its businessmodel, external

analysis based on Porter’s five forces model

and finally internal analysis based ondistinctive competencies, competitive advantage and profitability.This document is prepared based on the information provided in the

case, “Yahoo” (Jones, 2007) as

well

as numerous external sources such as Yahoo’s website and its annual reports circa 2011.

COMPANY OVERVIEW

Yahoo was incorporated as an Internet service provider that would serve both the users and the businessesglobally. Yahoo was founded by two Stanford PhD candidates in January 1994 named Jerry Yang andDavid Filo. However,

today Yahoo has become one of the world’s largest global online network 

integrated services provider. Yahoo today has a user base of 500 million per month. It has a presence inmore than 30 countries worldwide and provides services in more than twenty different languages. Thecompany presently operates out of Sunnyvale, California in the United States.

Yahoo first went public on the NASDAQ (YHOO) in the April of 1996. The stock had opened for $ 13.00

 per share of the company and by the very day’s end; it had reached a

closing of $ 33.00 per share (YahooOverview, 2012). In Dec 1999 the company was also added to the S&P 500 index.Recently, in early 2012, Yahoo had appointed Scott Thompson as the new CEO who was then replacedby Marissa Mayer in the month of May (Perez, 2012). Also in June 2012, the company also hired the

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