Yahoo! Inc.: Workforce Planning Analysis

Introduction

The influence of an organization’s workforce on its general performance makes it necessary for executives to ensure the selection and strategic positioning of its employees. The competitive nature of the environment wherein organizations operate requires a continuous change in the strategic positioning of the organization’s workforce. Influential and successful companies usually consider the internal and external factors influencing their organization when developing workforce planning strategies. In order to understand the concept of strategic workforce development, it is important to consider the workforce strategy applied by an established organization. This paper focuses on analyzing the workforce planning strategy implemented by Yahoo! The paper is divided into three parts. The first part of the paper presents a GAP analysis in relation to Yahoo!’s human resource strategy; the second section of the paper presents a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis in relationship to Yahoo!’s workface management; and the third part analyzes the influence of the two examinations on Yahoo!’s current and potential employee performance efficiency.

Company History

Yahoo! Inc. was established in 1994 by two Jerry Yang and David Filo, both Stanford PhD students. The company has grown to become the biggest internet based network and integrated services provider and has more than 800 million users globally (Friesner, 2014). Yahoo! currently has a presence in over than twenty regions and markets globally and is most popular for its search engine and numerous other services, such as electronic mail, finance, social media, advertising, etc.

The company was established as a personal online directory by two PhD students of Stanford University. The founders became aware of the prospect of generating funds from the website by permitting firms to market their services on their online catalog. In a short while, Yahoo became popular enough to catch the attention of a major investment organization, Sequoia capital. Sequoia offered the much required capital to the company, and Tim Koogle, an executive of Motorola was employed as the CEO of the company. His outstanding management abilities and foresight ensured Yahoo!’s success. The company’s share price grew from $5 per share to nearly $244 a share by 1999 (Burnham, 2014). Nonetheless, inspire of the exceptional leadership that Yahoo! enjoyed during its early days, the company over the past years appears to be losing market share to its arch rival Google Inc.

Google has been performing better than Yahoo in the past many years now, gaining shares in the market share and expanding its consumer base manifolds. In the last years however, Yahoo! Inc. has made considerable changes in its goals, strategic approach and to its internal, external environment and approach to boost its delivery and recover lost advantage to its major rival, Google.

GAP Analysis

A gap analysis is an analytic comparison of the current position or performance of an organization, with the potential performance of the organization. Gap analysis seeks to identify the potential of a company is yet to achieve based on the resources currently in the company’s possession.

Yahoo! is yet to record any financial growth in the last number of years. Marisa Mayer became the Chief Executive Officer of Yahoo! in July, 2012. In terms of profitability, Yahoo! has not performed effectively. In the last four quarters, Yahoo! has not recorded any notable improvement in its income and has actually reported a reduction in its operating profitability owing to an increase in non-recurring expenditure (Yahoo Income Statement, 2013). Nevertheless, since Marissa Mayer became the new CEO of the company in 2012, she has launched a new strategic approach of expanding the company through mergers and acquisitions and by taking other significant decisions. The strategic move by Yahoo to employ two executive staffs of rival companies is an indication of Yahoo!’s understanding of the significance of the competition posed by other companies in the online business industry. This move has resulted in a more proactive senior management team. Recently, Yahoo!’s CEO, Marissa Mayer traded part of Yahoo!’s stake in Chinese online marketplace, Alibaba and used parts of the proceeds to purchase BrightRoll, an online based video advertising company. She explains that the deal will lead to a dramatic rejuvenation of Yahoo!’s video advertising market (Yahoo! seals first major deal since Alibaba windfall, 2014).

It is obvious that Yahoo! is better positioned on its internal environment than its external environment. In order to improve its external positioning, Yahoo! needs to improve its brand and assets to increase its market share and its general performance. In 2012, Yahoo! decided to call all remote employees back to the office. This resulted in the company shedding 14% of its workforce. This strategy was the beginning of Yahoo!’s refocusing of its activities towards its core competencies, which include solution innovation and expansion.

While Yahoo! currently understands its position in the online business market, it is important for the company to consider other characteristic features of the company before rolling out new strategies. A SWOT analysis is an effective tool used to present a picture of the organization both externally and internally.

SWOT Analysis

A SWOT analysis is a review of the strengths, weaknesses, opportunities, and threats of an organization. For the purpose of this report, the SWOT analysis is related to Yahoo!’s human resource management strategy.

Strengths

One of the major strengths of Yahoo! is that it serves as a highly profitable online advertising venture. Yahoo! concentrates on affiliate marketing for major marketing accounts, similar to Google’s Adsense system. This serves as a major source of income for the company. Currently, more than 350 million people and businesses use Yahoo!’s services and systems. This positions Yahoo! as a formidable company in the industry. Yahoo! has been reported as the most known website globally (Burnham, 2014). Yahoo! initially employed numerous employees and allowed them to work remotely from their homes, which meant that employees had to manage their work habits and general work behavior. The results were disadvantageous for the company as indicated its ban on remote employment. Considering the number and diversity of Yahoo! users, it is important for the company to ensure a unified working policy that allows users to get the same user experience and service opportunities. Yahoo! also has a considerably high level of employee diversity, which serves as an advantage to the company. Considering that Yahoo!’s users come from various parts of the world, it is necessary for the company to have a culturally diverse workforce. The high rate of employee diversity in Yahoo! enables the company to attend to users that cut across different demographic areas.

Opportunities

Yahoo! has tremendous opportunity in the global market. Google, Microsoft and Yahoo!, are currently buying over various small business venture within and around Asia. China’s citizens are more than 1.2 billion and other countries, such as India, provide remarkable expansion opportunities. The creation of Yahoo!’s Directory has prospects for new business and revenue generation sources. Over 30% of the companies in Europe, Japan and North America are SMEs, which are all prospective directory marketers. Mobile tools provide another prospect for Yahoo!. Currently, the internet is accessed using computers however in future the internet will be accessed majorly using mobile phones, TVs, PDAs, portable music recorders, etc. The future mobile gadgets will require solutions and services and Yahoo! will be efficiently positioned to offer numerous solutions. Yahoo!’s initial employment approach gives it an edge in utilizing these opportunities since it allowed employees to work from any part of the world, which increased the company’s sources of information.

Threats

The major threat faced by Yahoo!, and other all other internet-based companies, is the high rate of competition in the industry. Enormous profitability in the industry draws financers, developers, and businesspersons. The dotcom buzz is still present and is presently more concentrated on profitability. Each service offered by Yahoo! has a competing product offered by either of its rivals, which include Google, Bing, AOL, etc. Global, culture particular rivals may affect Yahoo! eventually, except strategic partnerships are created. China and India have both developed dedicated search engines. It is therefore possible that users will prefer to use search engines that are based on their cultural and geographical dispositions instead of using Yahoo!, which is an American based organization. For Yahoo! to remain a global brand, it must offer different competitive benefits. The threats Yahoo! is faced with will be better appreciated if the situation is compared with the global auto market.

Weaknesses

One of the major weaknesses faced by Yahoo! is that it finds it difficult to achieve differentiation. Yahoo! provides services and solutions that are usually provided by other competing organizations. For example, Yahoo!’s search engine solution is also provided by Google and MSN; Yahoo!’s free e-mail profiles are also provided by other competitors, such as Gmail (by Google) Hotmail (by MSN), AOL, etc.; Yahoo!’s news facility also faces high competition from BBC and CNN; Yahoo!’s shopping system faces high competition from eBay, Amazon (by Google), etc.

Internet based advertising has offered a new source of revenue for Yahoo!, Google, MSN, and other online companies. Income from advertising actives has formed a major source of revenue for such organizations. Nevertheless, advancement in technology results in new unexpected advertising media, which make the future bleak for the various income sources. This weakness is not only experienced by Yahoo! but is also experienced by its rivals. One other source of income that has been important for Yahoo! is the partnership it develops with telecommunication companies. For instance, some telecommunication companies offer internet services that have dedicated fees for Yahoo! solutions. Any disadvantage faced by these telecommunication companies will lead to an automatic disadvantage in Yahoo!’s income stream.

Summary and Conclusion

The purpose of the paper was to present a workforce planning analysis applied by Yahoo! Inc. A workforce planning analysis reviews the strategy applies by a company to ensure that its human resources are well positioned to respond to internal and external characteristics experienced by the company. Yahoo! Inc. is a major player in an industry that is characterized by a highly level of competition. All the companies in the online business industry are exposed to significant competition and must promptly identify and respond to competition in order to remain competitive and profitable. A company will remain competitive in a highly competitive industry by employing a proactive workforce. Yahoo! understands the importance of a formidable workforce for effective competition. Yahoo!’s utilizes its workforce planning strategy to ensure that it attracts employees that have knowledge of competing organizations. Yahoo!’s choice of CEO and CFO in 2012 is an evidence of the company’s understanding of the need to understand and respond to the strategies of the competitors in the industry it operates. Yahoo! hired two management staff from the executive team of its major rival, Google. This workforce planning strategy was developed as a direct response to Yahoo!’s declining sales and competitive position due to the high rate of competition it faced, especially from Google.

Even though it took a long time for the positive effects of this strategy to be felt, it appears as though the strategy is yielding positive results. Yahoo! recently purchased BrightRoll for $640 million. BrightRoll is reported to yield $100 million annually. This deal is expected to boost Yahoo!’s strength in the area of online video advertisement and increase its ability to compete with Google’s YouTube. While it is early to state the feasibility of Yahoo!’s workforce planning strategy, it is safe to conclude that the prospects of the strategy are positive. However, it is important that Yahoo! does not only apply a workforce planning strategy that reacts to the issues identified in the industry. Yahoo! should also seek a workforce planning strategy that is proactive and is developed based on anticipated events.

References

Burnham, K. (2014). Yahoo trumps google as most-visited website.

Friesner, T. (2014). SWOT Analysis Yahoo! 

Yahoo Income Statement. (2013). Web.

Yahoo! seals first major deal since Alibaba windfall. (2014)

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