The American web service provider Yahoo! was founded in January 1994, by Jerry Yang and David Filo in the US. It has its headquarters located in Sunnyvale, California. This web portal is operated and managed by Yahoo Inc. Let’s know about Yahoo Competitive Advantages.
In the early internet era of the 1990s, Yahoo was considered one of the pioneers of the internet revolution. The services provided by Yahoo include search engine, web portal, MyYahoo!, Yahoo News, Yahoo Finance, Yahoo Sports, Yahoo Mail, and Yahoo Native. Yahoo has been in the market for 28 years and owned a giant market share.
In the early 1990s, Yahoo was the talk of the town for internet users all over the world. However, with the spreading business of Google and Facebook, its market share was cut out.
Reputation in the market and competitive advantages of Yahoo:
Being in the market for more than 28 years, Yahoo has been successful in achieving a sustainable advantage in the market. Throughout these years the company experienced several changes within the market as well as the company itself.
There was a time when Yahoo was the leading web portal and had little to no competition in the market. But in the later 2000s, things changed.
The competitive advantages of Yahoo can be explained through the following Porter’s Five Forces model:
- The Threat of New Entrants: Though Yahoo holds an enormous amount of market share the threat of newcomers cannot be overseen. However, a large capital amount is required to make a mark in the industry, as far as the entertainment and media industry is concerned.
Making a new entry into the market will not be a cakewalk. And above all, the main requirement is technological innovation. The main competitive advantage of Yahoo is innovation. Innovation requires a whole different level of expertise and capital. This is the reason why the threat of new entrants for Yahoo Inc. is low.
- Bargaining power of the Consumer: The internet service industry is customer-oriented. Hence, it gives an immense amount of power to the hands of the customers. Since the customers have access to a variety of information, they are not supposedly loyal to just one company.
They might switch to whichever is the best in the market. So to deal with this threat, Yahoo joined hands with SBC communications, HotJobs.com, WUF Networks Inc., and Semel. In this way, Yahoo managed to expand its customer base and prevented the current customers from switching to a rival network. The bargaining power of customers over Yahoo is high though.
- Bargaining power of the Supplier: Yahoo Inc. is a business-to-business-oriented organization. In the technology industry, the suppliers play a crucial role in the increase or decrease of profitability of the company.
The company has to deal with the suppliers to extract the raw data for their website. The suppliers might charge any amount for providing the raw data to the company. If the supply is good, the website flourishes.
For this reason, the partner networking site of Yahoo, Semel has greatly improved its site and provides a better and more diverse surfing experience to its users. The bargaining power of suppliers for Yahoo is high.
- The threat of potential substitutes: Through all these years of innovation and development, there has been rapid growth in the technology industry. And in the case of substitutes, the market comprises numerous sites available to serve its customers.
In the later 2000s, Yahoo suffered a rough patch when Google started taking over its market share. The services provided by Google share a lot of resemblance with Yahoo and are almost similar.
Since customers have free availability of these services, they do not hesitate in choosing whatever they wish. In the current scenario too, the threat of substitutes is high for Yahoo Inc.
- Competitive Rivalry in the industry: Once a pioneer of the early internet era, Yahoo is now facing severe rivalry from companies like Google, Facebook, and MSN (Microsoft Network). They have taken up a lot of market shares that were once owned by Yahoo.
Though Yahoo is still in use by many customers all across the world, those numbers are quite less compared to Google’s customer base. In the current situation, the biggest competitor of Yahoo is Google. The competitive rivalry for Yahoo is very high.
Frequently Asked Questions
1. Is Yahoo owned by any organization?
Yes, Yahoo is owned by two parent organizations, namely, Apollo Global Management and Verizon Communications. These are the investment funds that manage and own Yahoo. The share of Apollo Global Management is 90% and Verizon Communications is 10%.
2. Is Yahoo owned by China?
No, Yahoo is not currently owned by China but in 2005 it was owned by the Chinese E-commerce multinational company Alibaba.
3. Does Yahoo charge for email service?
No, Yahoo offers a free email service. But Yahoo Mail Pro charges for its email services.