Group 6
Nguyen Lam Thanh Truc - MA2N0229
Tran Le Yen Ha – MA2N0235
Introduction
• Founded in 1994 by
David Filo and Jerry
Yang.
• An Internet site that
provides hierarchically
organized of link to site
on the World Wide Web.
• The name of YAHOO
including:
Yet Another Hierarchical
Officious Oracle
Question 1:
What make Yahoo an attractive
opportunity ( not just a business idea)?
Answer:
• It solves a problem:
At that time, the Web browser Mosaic allow people to
book mark interesting pages. However, with the
popularity of the Web increases, so does the number of
sites, which lead to the increased number of interesting
pages they want to bookmark . The list of bookmarked
pages would go long and unsorted. Yahoo solve this
problem by introduce a software that allows users to
group their bookmark into subject areas.(p572)
Answer (cont)
• observing trend, (the technology advance)
The opportunty arrives as the popularity of the
internet increases and there are many internet
users want to surf the internet to find out its
content
• New product,
made by human not by machine
Answer (cont)
• Huge demand:
approximately 40 millions of users of the internet
8 millions of users have access to the internet
and the world wide web
40% of home and 80% of business in the US will
have access to the internet
200 millions of user of the internet by the year of
2000.(p 581, Business Plan excerpt)
Question 2:
HOW WILL YAHOO! MAKE MONEY?
• Yahoo offer free service for users, that
means it doesn’t charge a fee for using the
website. So the price for using its
service/product would be zero. However,
Yahoo still can make money by selling
advertising space for other company.
• It has been improved
to become one of the
search websites and
provide users the
greatest mailboxes as
Yahoo! mail.
• Yahoo! may generate
revenue through
advertising banners.
• Yahoo! cooperate
with other companies
like Window (Window
Live Messenger) in
order to launch an
biggest messaging
community in the
world.
• In 2013, Yahoo has paid 1,1 billion USD for
purchase Tubmlr, the most favourite social network
website at that time. Thereby, Yahoo! also capture
revenue opportunities to profit through advertising
business in social networks like Facebook or
Myspace.
Question 3:
Identify the major risks in each of these
categories: Technology, market, team and
financial. Rank order them
Technology risks:
• Using any innovation technology
architecture to expand and adapt to the
needs of users and the rapid change of
technology may adversely affect business.
"The number of inquiries to Yahoo
increase dramatically. Within a month, the
number of hits jump from thousand to
hundred thousand daily. The Standford
university – where they use the serverstart to get overloaded. If the demand of
traffic outgrow the bandwith the server, the
response rate may be slow, lead to
customer disatisfaction.”
So they have to find a way to increase
capacity of the server.
• The idea of expanding technology or
applications, new software was invented,
easily to be stolen or destroyed by
hackers.
• Personal information of users easily stolen
by the obsolete security services, not
catch up with the development of modern
technology.
Financial risk:
• Need fund to expand.
• Fluctuations in foreign currency exchange
rates affect to operating results in U.S.
dollar terms.
• Yahoo's stock price has experienced a
dramatically fluctuation since 2008.
• Purchase Tumblr with $ 1.1 billion can
bring great financial risk for Yahoo!
• Unstable economic situation also affected
the profitability of Yahoo!.
Market risk:
• Yahoo! faces fierce competition with other
strong companies like Google, Microsoft.
• Maintaining reputation by buying other
companies couldn't help revive Yahoo
after the failure.
Market risk:
• No innovation in business strategy, and
Yahoo! become obsolete and lost support
in the market.
“The growth of the internet industry slows
significantly, and the use of the internet as
a platform for advertising doesnot grow as
predicted.”
Team risk:
• The staffs and the new CEO of Yahoo! that can
help companies increase profits, if they have the
new direction for the operational model of
Yahoo!.
• Founders of Yahoo are two graduate
students, who:
strong background in technology
really know what people want.
However, they may not have the business
knowledge nessecary to operate Yahoo
when it grow further.
Question 4:
The advantages and disadvantages of
each funding option they could pursue.
Option 1:Accept Sequoia’s offer and
launch Yahoo as their own business.
Advantages:
Disadvantages:
• Sequoia is a company
give up 25% share of
with long tradition of
the company for the
success in the
fund, which is quite
venture capital
significant.
• Provide a substantial
amount of money to
survive and develop.
• Offer help to
assemble
management team.
Option 2: Cooperate Sponsorship
Advantages
• Offer money, stock,
possible management
positions.
• Retain 100%
ownership of Yahoo
Disadvantages
• potential taint that
goes with the
sponsorship because
Yahoo! Has started
as a freecommercialization.
Option 3: Merge with an existing
cooperation.
Advantages:
Disadvantages
• Nescape is close to its
IPO so it can provide a lot
of money for the founders
in next couple of years
• Nescape has high profile
founders and backers
that would guarantee the
success of the company.
• Become part of Nescape
and cannot decide its
own fate.
• Opportunity cost
Option 4: Wait for future opportunities
Advantages:
• Can get a better offer
Disadvantages:
• Lose current
opportunity