Microsoft's Attempt to Acquire Yahoo: A Case in Letters SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Microsoft's Attempt to Acquire Yahoo: A Case in Letters
On January 31, 2008, Microsoft CEO Steve Balmer wrote a letter to YAHOO seeking to acquire the company at a 62% premium above that day's closing stock price. Yahoo's board, led by CEO Jerry Yang, unanimously declined this first offer-prompting Microsoft to make several subsequent attempts to close a deal. This case outlines the negotiating process over a three-year period between Microsoft and Yahoo, asking student to analyze whether Microsoft's offering prices were in line with Yahoo's value.
Swot Analysis of "Microsoft's Attempt to Acquire Yahoo: A Case in Letters" written by Wei Jiang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Yahoo Yahoo's facing as an external strategic factors. Some of the topics covered in Microsoft's Attempt to Acquire Yahoo: A Case in Letters case study are - Strategic Management Strategies, Financial analysis, Financial markets, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Microsoft's Attempt to Acquire Yahoo: A Case in Letters casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, increasing energy prices,
increasing commodity prices, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Microsoft's Attempt to Acquire Yahoo: A Case in Letters
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Microsoft's Attempt to Acquire Yahoo: A Case in Letters case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Yahoo Yahoo's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Yahoo Yahoo's operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Microsoft's Attempt to Acquire Yahoo: A Case in Letters can be done for the following purposes –
1. Strategic planning using facts provided in Microsoft's Attempt to Acquire Yahoo: A Case in Letters case study
2. Improving business portfolio management of Yahoo Yahoo's
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Yahoo Yahoo's
Strengths Microsoft's Attempt to Acquire Yahoo: A Case in Letters | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Yahoo Yahoo's in Microsoft's Attempt to Acquire Yahoo: A Case in Letters Harvard Business Review case study are -
Strong track record of project management
– Yahoo Yahoo's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Yahoo Yahoo's are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Yahoo Yahoo's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Yahoo Yahoo's has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Highly skilled collaborators
– Yahoo Yahoo's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Microsoft's Attempt to Acquire Yahoo: A Case in Letters HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Yahoo Yahoo's has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Microsoft's Attempt to Acquire Yahoo: A Case in Letters - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Finance & Accounting industry
– Microsoft's Attempt to Acquire Yahoo: A Case in Letters firm has clearly differentiated products in the market place. This has enabled Yahoo Yahoo's to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Yahoo Yahoo's to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Yahoo Yahoo's in the sector have low bargaining power. Microsoft's Attempt to Acquire Yahoo: A Case in Letters has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Yahoo Yahoo's to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Yahoo Yahoo's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Yahoo Yahoo's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Yahoo Yahoo's is present in almost all the verticals within the industry. This has provided firm in Microsoft's Attempt to Acquire Yahoo: A Case in Letters case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High switching costs
– The high switching costs that Yahoo Yahoo's has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
High brand equity
– Yahoo Yahoo's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Yahoo Yahoo's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Yahoo Yahoo's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Yahoo Yahoo's has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses Microsoft's Attempt to Acquire Yahoo: A Case in Letters | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Microsoft's Attempt to Acquire Yahoo: A Case in Letters are -
Workers concerns about automation
– As automation is fast increasing in the segment, Yahoo Yahoo's needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Interest costs
– Compare to the competition, Yahoo Yahoo's has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
No frontier risks strategy
– After analyzing the HBR case study Microsoft's Attempt to Acquire Yahoo: A Case in Letters, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Capital Spending Reduction
– Even during the low interest decade, Yahoo Yahoo's has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High operating costs
– Compare to the competitors, firm in the HBR case study Microsoft's Attempt to Acquire Yahoo: A Case in Letters has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Yahoo Yahoo's 's lucrative customers.
Slow to strategic competitive environment developments
– As Microsoft's Attempt to Acquire Yahoo: A Case in Letters HBR case study mentions - Yahoo Yahoo's takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Skills based hiring
– The stress on hiring functional specialists at Yahoo Yahoo's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Need for greater diversity
– Yahoo Yahoo's has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High cash cycle compare to competitors
Yahoo Yahoo's has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Yahoo Yahoo's products
– To increase the profitability and margins on the products, Yahoo Yahoo's needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Microsoft's Attempt to Acquire Yahoo: A Case in Letters that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Microsoft's Attempt to Acquire Yahoo: A Case in Letters can leverage the sales team experience to cultivate customer relationships as Yahoo Yahoo's is planning to shift buying processes online.
Opportunities Microsoft's Attempt to Acquire Yahoo: A Case in Letters | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Microsoft's Attempt to Acquire Yahoo: A Case in Letters are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Yahoo Yahoo's to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Yahoo Yahoo's to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Yahoo Yahoo's to increase its market reach. Yahoo Yahoo's will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Yahoo Yahoo's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Yahoo Yahoo's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Yahoo Yahoo's can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Yahoo Yahoo's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Yahoo Yahoo's can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Yahoo Yahoo's can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Yahoo Yahoo's can use these opportunities to build new business models that can help the communities that Yahoo Yahoo's operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Loyalty marketing
– Yahoo Yahoo's has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Learning at scale
– Online learning technologies has now opened space for Yahoo Yahoo's to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Yahoo Yahoo's in the consumer business. Now Yahoo Yahoo's can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Yahoo Yahoo's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Microsoft's Attempt to Acquire Yahoo: A Case in Letters suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Yahoo Yahoo's can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Microsoft's Attempt to Acquire Yahoo: A Case in Letters, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Microsoft's Attempt to Acquire Yahoo: A Case in Letters External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Microsoft's Attempt to Acquire Yahoo: A Case in Letters are -
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Yahoo Yahoo's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Yahoo Yahoo's will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Yahoo Yahoo's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Yahoo Yahoo's is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Yahoo Yahoo's has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Yahoo Yahoo's needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Regulatory challenges
– Yahoo Yahoo's needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Yahoo Yahoo's in the Finance & Accounting sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Yahoo Yahoo's high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Yahoo Yahoo's in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Yahoo Yahoo's needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Yahoo Yahoo's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Yahoo Yahoo's demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of Microsoft's Attempt to Acquire Yahoo: A Case in Letters Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Microsoft's Attempt to Acquire Yahoo: A Case in Letters needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Microsoft's Attempt to Acquire Yahoo: A Case in Letters is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Microsoft's Attempt to Acquire Yahoo: A Case in Letters is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Microsoft's Attempt to Acquire Yahoo: A Case in Letters is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Yahoo Yahoo's needs to make to build a sustainable competitive advantage.