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David Filo and Jerry Yang are the founders of Yahoo, it was started in February 1994 in a

campus. In April 1995, it was funded by Sequoia Capital with an investment of about
$2million and it went on public in April 1996, its headquarter is situated in Sunnyvale, CA.
Yahoo! Main focus is on developing content, communication and community platform that
delivers rich consumers experiences and advertising solutions across the screens of peoples
live(Yahoo!, 2011). On the other hand, Googles focus is to gather worlds data and make it
easily available and useful (Google, 2011).Yahoo! and Google both dominate the cyberspace
with their different strategies.
This report will perform analysis on yahoo using Michael Porters five forces framework.
Porter five forces Framework:1) Rivalry among existing firms: Google, Microsoft, Bing and AOL etc are the main
competitors in internet search engines of Yahoo!, there are other rivals also but they
have negligible amount of traffic flow. Large industries may lead to decrease in
profits, no customer switching cost between internet search engines enhances rivalry.
Yahoo operates in the cyber world it deals with products, accommodation and content
markets which are characterised by rapid change, conversing technologies and
increasing competition. Yahoos main competition is Google and Microsoft. The
amount of rivalry of Yahoo is Google with 82% and MSN (Bing today) with 6%.
On the whole, there is a huge competition between Yahoo! and Google which keeps
both these companies busy and force them to innovate, introduce new products to
attract users and gain market share.
2) Bargaining power of suppliers:- There is a strong risk of forward integration as many
search engines may not work efficiently with new Microsoft or Apple software. These
organisation can create their own search engines to prevent other search engines from
performing well. Online search engines can purchase their Pcs and system

administration devices from numerous suppliers, bringing down supplier power.


Search engines depends on organisation to provide advertisements and on users to
view promotions so as to make benefits. Subsequently, firms must maintain firmsupplier dealer relationship to keep force of suppliers low (Clarke, C, 2011).
Overall, the bargaining power of suppliers is low as there are numerous available
suppliers and a low exchanging cost. Nevertheless, this is constantly traded off by
forward integration as Microsoft and Apple programming can take search engines out
of business.
3) Bargaining power of buyers: Various web users and no exchanging cost between
search engines lowers power of buyers. Web users require and demand more complex
internet searchers and additional services to stay loyal to a organization. Since, web
engines are free many firm rely on the amount of streaming to receive money from
advertising companies. Higher or lower activity traffic flow implies that promotion
firms will pay more or less to search engines organisation respectively. Buyers are not
very powerful but rather firm cannot increase price as there are numerous online
search engines accessible to web users. As a result, customers have no other choice
than using search engines due to this bargaining power is automatically lowered.
However, companies must keep improving their search tool, provide additional
services to gain customers and achieve market share.
4) Threat of subtitles:- The risk of subtitle is low as there are no genuine subtitle for
internet search engines. Possible substitutes are encyclopaedias and online reference
books. However, there are not a major risk to web engine industry. It is very difficult
for customers to switch choices as encyclopaedias are expensive as there may be an
extra charge for libraries. However, web search engines are. As a result, this shows
that there is no major threat to online industry from subtitles.
5) Threats of new entry: It is very difficult for new entrants to gain market share as
present contenders have huge reputation in market as it is very hard to pull customers

of Yahoo! and Google. Developing markets require more refined search algorithms.
There is no perfect search engine, so there is always a chance of better search engines
being introduced in the business. Yahoo! and Google gives users a extra service to
establish a strategic lock-in that is Google and Yahoo! gives users email and social
networking which holds users to their sites. As a result, there is a very low risk of new
entry as internet users are addicted to Yahoo! and Google because of their extra
service. Likewise, it is very difficult for new entrants to assemble enough information
and gain users attraction quickly. On the other hand, it is important to note that when
Google began in 1998, Yahoo!, Altavista and Excite were the market leaders and still
Google overcome them (Viney, D, 2007).
Discussion:-

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