Yahoo: Relationship Crisis with Alibaba in China SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Communication
Strategy / MBA Resources
Case Study SWOT Analysis Solution
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 commodity prices, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies,
supply chains are disrupted by pandemic , 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 -
Low bargaining power of suppliers
– Suppliers of Yahoo Alibaba in the sector have low bargaining power. Yahoo: Relationship Crisis with Alibaba in China has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Yahoo Alibaba to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Communication segment
- digital transformation varies from industry to industry. For Yahoo Alibaba digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Yahoo Alibaba 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 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.
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.
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.
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.
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.
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.
Ability to lead change in Communication field
– Yahoo Alibaba is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Yahoo Alibaba in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Yahoo Alibaba has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Yahoo Alibaba to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Yahoo Alibaba has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Yahoo Alibaba 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.
Innovation driven organization
– Yahoo Alibaba is one of the most innovative firm in sector. Manager in Yahoo: Relationship Crisis with Alibaba in China Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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 -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Yahoo: Relationship Crisis with Alibaba in China, it seems that the employees of Yahoo Alibaba don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
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.
Lack of clear differentiation of Yahoo Alibaba products
– To increase the profitability and margins on the products, Yahoo Alibaba needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Yahoo Alibaba 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.
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.
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.
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.
Need for greater diversity
– Yahoo Alibaba 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Yahoo Alibaba is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Yahoo: Relationship Crisis with Alibaba in China can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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 -
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.
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.
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.
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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Yahoo Alibaba to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Leveraging digital technologies
– Yahoo Alibaba can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
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.
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.
Loyalty marketing
– Yahoo Alibaba 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Yahoo Alibaba 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, Yahoo: Relationship Crisis with Alibaba in China, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
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.
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 -
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 .
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.
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 Alibaba in the Communication sector and impact the bottomline of the organization.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Yahoo Alibaba with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Yahoo Alibaba
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Yahoo Alibaba.
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 Alibaba 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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Yahoo Alibaba.
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 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.
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.
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.
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.
