Yahoo: Relationship Crisis with Alibaba in China SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Yahoo: Relationship Crisis with Alibaba in China
In October 2005, Yahoo! Inc. ("Yahoo") formed a partnership with Alibaba Group Holding Limited ("Alibaba"), the country's biggest e-commerce firm. The company invested US$1 billion in Alibaba for a 40% stake and transferred the ownership of Yahoo! China ("Yahoo China") to Alibaba. However, some media outlets have described the two companies' relationship since 2005 as being anywhere from rocky to downright ugly. Yahoo's decision in mid-2009 to switch to Microsoft's Bing search technology has prompted Alibaba to adopt a search engine from Yahoo's local competitor Sohu.com. Then Alibaba collaborates with eBay Inc. instead of Yahoo in entering the US business-to-business market. Meanwhile, Yahoo directly competes with Yahoo! China for advertisers by soliciting companies in southern China to advertise on Yahoo's Hong Kong website. Alibaba has been taking a loss in its operations since 2006, and the search revenue share of Yahoo! China has dropped from 27% in 2005 to an insignificant level in 2010. But Yahoo! has turned down Alibaba's offer to buy back its stake because it would like to wait for the IPOs of Alibaba's two major subsidiaries before any exit. In light of growing tension with Alibaba, Yahoo's board would like to review its approach to managing this partnership and figure out what should be done to mend the ties.
Swot Analysis of "Yahoo: Relationship Crisis with Alibaba in China" written by Zhigang Tao, Penelope Chan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Yahoo Alibaba facing as an external strategic factors. Some of the topics covered in Yahoo: Relationship Crisis with Alibaba in China case study are - Strategic Management Strategies, Cross-cultural management, Joint ventures, Managing people and Communication.
Some of the macro environment factors that can be used to understand the Yahoo: Relationship Crisis with Alibaba in China casestudy better are - – increasing energy prices, talent flight as more people leaving formal jobs, there is backlash against globalization, there is increasing trade war between United States & China, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings,
digital marketing is dominated by two big players Facebook and Google, technology disruption, etc
Introduction to SWOT Analysis of Yahoo: Relationship Crisis with Alibaba in China
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Yahoo: Relationship Crisis with Alibaba in China case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Yahoo Alibaba, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Yahoo Alibaba 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 Yahoo: Relationship Crisis with Alibaba in China can be done for the following purposes –
1. Strategic planning using facts provided in Yahoo: Relationship Crisis with Alibaba in China case study
2. Improving business portfolio management of Yahoo Alibaba
3. Assessing feasibility of the new initiative in Communication field.
4. Making a Communication topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Yahoo Alibaba
Strengths Yahoo: Relationship Crisis with Alibaba in China | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Yahoo Alibaba in Yahoo: Relationship Crisis with Alibaba in China Harvard Business Review case study are -
Ability to recruit top talent
– Yahoo Alibaba is one of the leading recruiters in the industry. Managers in the Yahoo: Relationship Crisis with Alibaba in China are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Yahoo Alibaba is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Yahoo Alibaba is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Yahoo: Relationship Crisis with Alibaba in China Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Yahoo Alibaba in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Communication industry
– Yahoo: Relationship Crisis with Alibaba in China firm has clearly differentiated products in the market place. This has enabled Yahoo Alibaba to fetch slight price premium compare to the competitors in the Communication industry. The sustainable margins have also helped Yahoo Alibaba to invest into research and development (R&D) and innovation.
Strong track record of project management
– Yahoo Alibaba is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Yahoo Alibaba is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Zhigang Tao, Penelope Chan can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Training and development
– Yahoo Alibaba has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Yahoo: Relationship Crisis with Alibaba in China Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Highly skilled collaborators
– Yahoo Alibaba 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 Yahoo: Relationship Crisis with Alibaba in China HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Yahoo Alibaba 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.
Operational resilience
– The operational resilience strategy in the Yahoo: Relationship Crisis with Alibaba in China Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Effective Research and Development (R&D)
– Yahoo Alibaba 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 Yahoo: Relationship Crisis with Alibaba in China - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Yahoo Alibaba
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Yahoo Alibaba does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Yahoo: Relationship Crisis with Alibaba in China | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Yahoo: Relationship Crisis with Alibaba in China are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Yahoo: Relationship Crisis with Alibaba in China HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Yahoo Alibaba has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Zhigang Tao, Penelope Chan suggests that, Yahoo Alibaba is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Interest costs
– Compare to the competition, Yahoo Alibaba 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.
Skills based hiring
– The stress on hiring functional specialists at Yahoo Alibaba 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.
High cash cycle compare to competitors
Yahoo Alibaba 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.
Increasing silos among functional specialists
– The organizational structure of Yahoo Alibaba is dominated by functional specialists. It is not different from other players in the Communication segment. Yahoo Alibaba needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Yahoo Alibaba to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Yahoo Alibaba 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.
Slow to strategic competitive environment developments
– As Yahoo: Relationship Crisis with Alibaba in China HBR case study mentions - Yahoo Alibaba 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.
Low market penetration in new markets
– Outside its home market of Yahoo Alibaba, firm in the HBR case study Yahoo: Relationship Crisis with Alibaba in China needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study Yahoo: Relationship Crisis with Alibaba in China 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 Alibaba 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Yahoo: Relationship Crisis with Alibaba in China, is just above the industry average. Yahoo Alibaba needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities Yahoo: Relationship Crisis with Alibaba in China | 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 Yahoo: Relationship Crisis with Alibaba in China are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Communication industry, but it has also influenced the consumer preferences. Yahoo Alibaba can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Alibaba in the consumer business. Now Yahoo Alibaba can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Yahoo Alibaba 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 Alibaba to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Yahoo Alibaba 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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Yahoo Alibaba can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Yahoo Alibaba is facing challenges because of the dominance of functional experts in the organization. Yahoo: Relationship Crisis with Alibaba in China case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of Yahoo Alibaba has opened avenues for new revenue streams for the organization in the industry. This can help Yahoo Alibaba to build a more holistic ecosystem as suggested in the Yahoo: Relationship Crisis with Alibaba in China case study. Yahoo Alibaba can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Yahoo Alibaba has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Yahoo: Relationship Crisis with Alibaba in China - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Yahoo Alibaba to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Communication industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Yahoo Alibaba 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 Alibaba 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.
Manufacturing automation
– Yahoo Alibaba can use the latest technology developments to improve its manufacturing and designing process in Communication segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Better consumer reach
– The expansion of the 5G network will help Yahoo Alibaba to increase its market reach. Yahoo Alibaba 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.
Developing new processes and practices
– Yahoo Alibaba can develop new processes and procedures in Communication industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Learning at scale
– Online learning technologies has now opened space for Yahoo Alibaba 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.
Threats Yahoo: Relationship Crisis with Alibaba in China External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Yahoo: Relationship Crisis with Alibaba in China are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Yahoo Alibaba in the Communication industry. The Communication 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.
High dependence on third party suppliers
– Yahoo Alibaba 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.
Environmental challenges
– Yahoo Alibaba needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Yahoo Alibaba can take advantage of this fund but it will also bring new competitors in the Communication industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Yahoo: Relationship Crisis with Alibaba in China, Yahoo Alibaba may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Communication .
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Yahoo Alibaba can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Yahoo: Relationship Crisis with Alibaba in China .
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 Alibaba needs to understand the core reasons impacting the Communication industry. This will help it in building a better workplace.
Consumer confidence and its impact on Yahoo Alibaba 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.
Regulatory challenges
– Yahoo Alibaba 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 Communication industry regulations.
Shortening product life cycle
– it is one of the major threat that Yahoo Alibaba is facing in Communication sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Yahoo Alibaba 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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Yahoo Alibaba business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Yahoo Alibaba has witnessed rapid integration of technology during Covid-19 in the Communication industry. As one of the leading players in the industry, Yahoo Alibaba needs to keep up with the evolution of technology in the Communication 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.
Weighted SWOT Analysis of Yahoo: Relationship Crisis with Alibaba in China 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 Yahoo: Relationship Crisis with Alibaba in China 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 Yahoo: Relationship Crisis with Alibaba in China 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 Yahoo: Relationship Crisis with Alibaba in China 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 Yahoo: Relationship Crisis with Alibaba in China 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 Alibaba needs to make to build a sustainable competitive advantage.