Online Giants Essay

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Yahoo vs. Amazon

This report will present a compare and contrast between Yahoo and Amazon. The core business and histories of the two businesses will be discussed. Following that, there will be a description of the key strategic differences between the two and how the respective strategies have impacted the relative success of each form. Two specific examples of these strategies will be covered. The manner in which each company's core competencies help shape their strategies will be described. One functional-level strategy will be recommended for each term. At least three references will be used to describe things along the way. While Yahoo and Amazon are in the same general online portal sphere, how precisely they address the genre and the offshoots they tend to branch into are entirely different.

Analysis

Some information technology companies have been around for a while but most of the Internet-reliant and information firms have been around for about a generation or less. Indeed, the Internet and social media giants of today like Google, Amazon, Yahoo, and others are usually twenty years old or less. Indeed, Amazon was founded in 1995 but has risen to more than 117,000 employees and revenue that was $74 billion a year as of 2013 but has been growing at a $13-14 billion a year clip. Comparatively speaking, Yahoo only has 12,200 employees but they were founded the year before Amazon.com in 1994. While both firms are online in nature and they both their tentacles in a lot of different arenas, Amazon is primarily a sales portal whereas Yahoo is more of an informational portal. Amazon is primarily an online retailer and Yahoo is mostly a web portal (Yahoo Finance, 2015).

In terms of their key strategic differences, Amazon and Yahoo are indeed quite different. Amazon is embracing the use of remote and home-based workers and Yahoo has basically banned the practice. Jeff Bezos, the leader of Amazon, is not prone to run off at the mouth and talk about what he's going to do and why. Rather, he does what he can to give people what they want and he usually does not do so in a public and verbose fashion. On the other hand, Yahoo CEO Marissa Mayer has basically had to talk to the press and the news media over some of the choices she has been making as of late. She may have good personal and business intentions regarding the ending of home-based work. However, some say she is making a short-sighted decision and she herself is making personal use of a flexible work arrangement given she has a nursery in her executive office. Also, Amazon is different in that they are far and away the leader in online sales portals and they are still growing extremely fast. On the other hand, Yahoo is clearly trailing Google and it is not even close. Google has gotten so big that the European Union (EU) is talking about breaking them off much like they tried to do with Microsoft in both the United States and the European Union some years ago. It will probably end up like that did (an expensive fine and not much else) but it is still pending (Yahoo Finance, 2015; Google Finance, 2015).

In the meantime, Yahoo makes less than a third in one year that Google makes in a full year, with those figures coming in at $16.5 billion (3Q2014 for Google) and $4.5 billion for the entire year of 2013 for Yahoo. Further, Yahoo's revenues are falling as they trailed off $300 million from 2012 to 2013 and they were flat for the year before that. Yahoo sticking with a genre that Google clearly owns is one example of Yahoo's strategic direction and Yahoo's ban on home-based work is an indicating that they are bucking the current trends regarding flexible work arrangements. A caveat on the latter is that Ms. Mayer may be concerned about lack of efficiency and human contact. While online web conferences and chat can offset that, it is true that it cannot squelch all of the risks of allowing people to work at home including lack of oversight from managers, potential loss of equipment, lack of information/physical security and so forth. As for Amazon, they make heavy use of home-based employees and they market those jobs on both traditional and non-traditional employment sites as they range from the usual Monster.com and CareerBuilder.com to Flexjobs.com and even some regional employment sites. Even further, some sites are now acting like the Kayak and Trivago of job sites in that they pull and list listings from established sites (like CareerBuilder) rather than creating their own customer base and list (Yahoo Finance, 2015; Google Finance, 2015)

Given that, it is clear that Yahoo is playing catchup and is clearly inferior to Google and perhaps a few other search engines in just about every way whereas Amazon is the industry leader and their reach and capabilities grow by the day. As such, Yahoo is going to have to rely on finding competencies that Google has not yet mastered while Amazon has the resources to find new ones it is interested in and can make money in, not unlike Google.

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Interestingly enough, the author of this report tried to get the Google financials from Yahoo and the links were greyed out. However, they are publicly available figures and they were easy to find on the Google (and other) websites. In the end, Yahoo is surviving under their current business model while Amazon will probably face the same antitrust questions that Microsoft and Google have faced before. That might be true given that Wal-Mart and Wayfair, among others, are still out there and are doing well in the overall retail sphere (or online in the case of Wayfair), but Amazon is clearly the leader. One major thing that makes Amazon different is that they are very open in allowing third party sellers to sell goods as the first point of contact or at least as a new/used option aside from Amazon itself. They get a cut of all those sales and they don't have to handle any of the goods involved (Yahoo Finance, 2015; Google Finance, 2015)

Regarding the manner in which each firm wields its distinctive core competencies, Yahoo is clearly trying to do what Google does but they do it on a much smaller scale and they do not do it nearly as well. Amazon, on the other hand, is either doing what others do but they do it much better or on a much wider scale or they are doing things (or trying to do things) that no one else can or would do. For example, no firm besides Amazon has really tried to stir discussion regarding deliveries from drones. Every other retailer goes through established delivery networks like UPS, DHL, USPS and FedEx. There is talk about the drones and even that Amazon will actually take over the USPS framework for their own and other commercial use given the struggles of USPS in terms of keeping locations open and losing money. Yahoo is a bit player in a very big market whereas Amazon will be the Google of retailing and perhaps shipping if current trends keep going. Further, Amazon is starting to open brick and mortar stores to sell their goods. Basically, they're taking the path of Wal-Mart in reverse in that they are starting online and then moving to ground-based sales while Wal-Mart started with ground sales and the online market didn't even exist when they first started (Yahoo Finance, 2015; Google Finance, 2015).

As for a functional level strategy for each company that can be offered, the author of this report can certainly deliver on that. Regarding Yahoo, it is clear that Google is the current behemoth and taking them on head-to-head is simply not going to work given the four-fold difference in revenues. However, Ms. Mayer's strategy regarding home-based workers is not going to work as Google is doing just fine while using home-based workers and such is the trend of the future. While there are potential downsides to home-based workers, it is less than wise to ban the practice as there are absolutely ways to offset the risks. The big example of this would be employee engagement and hiring the right employees to begin with. To be sure, entry level and lower workers that work from home are going to be more apt to dilly-dally but higher ranked workers are going to bristle when they can easily find home-based work with other firms but they find that Yahoo does not allow the practice. Further, engaging the employee and offering incentives for tasks and performance levels that cannot be faked is the better way to get the desired performance without having to have brick and mortar offices and other expenses that are simply not needed. For example, there is the model of the percentage of time that people are on customer calls or are available for the same.….....

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