Yahoo! Management Case
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Yahoo! Management Case
Executive Summary
Yahoo has recently undergone managerial problems that have driven the company down for the past few years. The company resolved to change leadership to regain its feet and standout in its business again. The main challenge being lay off of employees, which has become rampant in the company. The company’s SWOT analysis features that its strengths lie in strong distribution channels, reliable supplies, and strong cash flows. Simultaneously, weaknesses are pronounced in the current organizational structure, which focuses on the limited scope of business. Its main opportunities are expanding its business to a global level and taking advantage of the emerging technologies for industry. However, the main threat lies in competition from similar companies and the production of counterfeit products. This study also features that employee retention programs, improving competitive rivalry, and expanding the company’s vision are preferred solutions. The company management is urged to device proper ways of employee compensation and benefits to ensure their retention.
Case Facts, Symptoms, and Underlying Problem
Yahoo was under the leadership of Marissa Mayer, who was under pressure to make many Yahoo changes. Stock’s price gradually increased from the time Mayer joined the company, and investors were now unhappy with it and demanded the change of leadership in the company by firing Mayer. However, Mayer was hired to help turn around the company’s floundering business, who did it by putting down strategies to grow through acquisition. One of the inappropriate decisions that have affected Yahoo’s performance is the reluctance in transitioning its offerings mobile devices, which has caused a lot of layoffs and employee dissatisfaction and turnover.
Employee trust in Yahoo crumbled when the company became consistent in laying off workers in August 2014, which instilled a lot of fear in employees since they did not know who is going home next. Some of the workers quit the job because of brain drain. However, Mayer has been improving the hefty retention package to persuade people not to accept job offers from other companies. Sometimes, this is not the case because most of the employees do not believe that Yahoo will improve, and therefore their working morale is diminished. Another reported problem is the Mayer compensation package, which involves executive pay, which is based on Alibaba’s stock price. This is out of Mayer’s control and is a practice that is against the common managerial way of paying people according to their performances.
As much as Mayer appears to be the best boss Yahoo has ever had, there is a continued threat of sale of some parts of the company and more layoffs. The Wall Street Journal adds that Yahoo’s next step may be to initiate a formal sale process, involving setting up of virtual data rooms that outline the company and its business metrics and proactively reaching to the potential buyer. This process would contribute to the complete breakdown of Mayer’s attempts to revive yahoo and maintain its status (Shah, 2011). However, key investors are still waiting to see how Mayer intends to transform Yahoo while others are still unhappy with the strategic direction in place that is already laid. Therefore they demand changes in their style of doing things. A good example is Jeffrey Smith, who suggests dramatically different thinking.
Case SWOT Analysis
Internal strengths
Yahoo has a strong distribution network. It has worked to ensure that it has a reliable distribution network that has reached the majority of its prospective market. It is also composed of a strong base of reliable suppliers shipping in raw materials. This has supported the company to perfect its supply chain and overcome related problems. Yahoo also has adopted automation of its activities, which has brought the fast and consistent quality of products. It has also enabled the company to adjust itself is based on the condition of demand in the market by scaling up and scaling down accordingly. It is commendable that Yahoo has strong cash flows, which ensures that there are enough resources in the company and allows it to expand its potential by incorporating new projects. Yahoo is good at executing these projects, hence creating good returns on capital expenditure by creating additional revenue sources.
Internal weaknesses
The current organizational structure of Yahoo is deprived since it focuses on its compatibility with existing business processes. This is dangerous since it limits the expansion of the business in contiguous product segments. Currently, Yahoo’s technologies are not at par with the company’s vision, so there is a need for the company to invest more in new technologies. This is because it is focused on expanding even into different geographies. Therefore it should set aside more money to acquire these technologies and be able to integrate its processes across the borders. The profitability ratio and percentage of net contribution of the company are below average. The company is also not perfect at forecasting product demand, which has led to several missed opportunities. It ends up keeping the day’s inventory higher both in channel and in-house. The company is also not good at employee retention; hence, they are susceptible to losing qualified employees.
External opportunities
The company’s core capabilities can be successful in other fields of similar products; hence they can exponentially expand its business. There are also vast potential customers from the online channel, which will significantly benefit the company because it has invested in online platforms for the past few years. Decrease transportation cost is also advantageous for the company since it can pass the good news to the customers and gain a more significant market share. The new consumer behavior trends can be a good opportunity for Yahoo to venture into new markets. Finally, the latest technologies arising can allow Yahoo to ease their processes even more (Aufa, 2019).
External threats
Yahoo can face shortages of skilled workforce in specific global markets, posing a threat to its survival. Yahoo can also face liability lawsuits in their markets, given that countries have different liability laws. Due to the emerging low-income markets, there can be a threat to counterfeit production and low-quality products that will put Yahoo at risk. There is also a threat of stiff competition from other similar companies.
Alternative Solutions
Yahoo can improve its state by strengthening employee retention. The management can device appropriate ways of retaining their employees to get the best out of them. This could be in the form of compensations and assuring them of the company’s continuity, even in the face of difficulties. This will help the company to improve its profitability by having competent employees. The main drawback associated with employee retention is the inability to compensate them like other companies who may equally need them.
Yahoo can also its current problems by strengthening its competitive rivalry. The management of Yahoo can support their competition among similar companies by identifying a lucrative industry where companies seriously compete to maintain their power in the industry (Lee et al., 2020). The main advantage of this is that it will be able to compete and maximize its market potential by venturing into lucrative business fairly. However, its attempt to strengthen its competitiveness may be limited by barriers related to the market entrance.
Yahoo can also improve its situation by expanding its vision to match global business processes. Yahoo’s current organizational structure focuses on its compatibility with existing business processes, which is inappropriate since the company aspires to grow beyond that. It is necessary because it will help the company focus on expanding the business in contiguous product segments. However, this can be limited by appropriately identifying a lucrative market and maintaining related demands.
Best Alternative
For Yahoo, the best alternative solution that would curb the present problems is striving for employee retention. The management should be competent enough to execute suitable plans for retaining its employees (Tolman, 2019). If I were among the top management personnel, I would champion various programs to ensure that our employees are trapped in the company. I would also ensure their comfort, both socially and financially, to ensure that they are not lured by other companies, leading them to leave Yahoo. I would organize employees’ benefits and suitable compensations for the excellent work they do. This will persuade them to stay and work with the company for the longest time possible. Suppose there will be any arising problem with this alternative. In that case, the management should restructure its compensation plan and improve employee security by assuring them of their full commitment to growing the company.
References
Aufa, A. (2019). Critical Analysis of a Technology-Based Enterprise: A Case Study of Yahoo!. TIJAB (The International Journal Of Applied Business), 2(1), 39. https://doi.org/10.20473/tijab.v2.i1.2018.39-49
Lee, J., Lee, S., & Jung, K. (2020). Balanced SWOT: Revisiting SWOT Analysis through Failure Management and Success Management. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3612519
Shah, C. (2011). Measuring effectiveness and user satisfaction in Yahoo! Answers. First Monday. https://doi.org/10.5210/fm.v16i2.3092
Tolman, S. (2019). Implement low-cost strategies to retain employees facing shrinking salaries. Recruiting & Retaining Adult Learners, 21(5), 9-9. https://doi.org/10.1002/nsr.30439