Expert answer:answer questions for Yahoo!/Microsoft
Answer & Explanation:Yahoo!/MicrosoftThe Yahoo/Microsoft partnership, while the Silicon Valley talk, has employees concerned at Yahoo about more layoffs in the Yahoo search department. The deal teams of two of the biggest technology companies against Google for the lucrative control of the internet search market. Analyst believe that, in the short term, Google would has little to worry about but in the long term they may depending on how advertisers respond to the idea of a larger #2 in the search advertising market.Google, currently, has 65% of the market while Yahoo has almost 20% and Microsoft at a distant third with less than 10%. The managing editor for CRN Magazine considers this absolute steal for Microsoft in that Yahoo wins the ability to stay an independent company with a huge new friend. Reporters say consumers won’t notice changes right away but the partnership will benefit consumers over the long run because it doesn’t hurt to have a very strong #2 in search. With consumers receptive to the move, analysts believe that it will boost Bing’s exposure to Yahoo’s audience giving Microsoft its desire for a greater share of Internet advertising. Yahoo is reserving the right to retain control of the user interface which will control the look and feel of how the search results will be presented but the technology is all done by Microsoft. Analysts predict a tie in to remind people that Bing is what’s providing the results which is key to branding for Microsoft. Also check out http://www.microsoft.com/en-us/default.aspx and http://www.yahoo.com/What kind of competitive advantage is created through the Microsoft/Yahoo cooperative strategy? Explain..What kind of strategic alliance has occurred with Microsoft and Yahoo? Explain your answer. For what reasons do you think they developed such an alliance?Now that Microsoft and Yahoo have partnered, what business-level cooperative strategies do you think we can expect from them? Why? Explain.What corporate-level cooperative strategies do you think we can expect? Why? Explain.example answer 1.docx example answer 2.docx Please read the two case files. The answer(Argument) should be similar with the two files.
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1.
What kind of competitive advantage is created through the Microsoft/Yahoo cooperative
strategy? Explain.
A strategy in which firms work together to achieve a shared objective, since two company
cooperative, they combined there resources, capabilities and core competencies, that benefit to
both of company.
Cooperating with other firms is a strategy that helps to creates value for a customer and exceeds
the cost of constructing customer value in other ways. Establishes a favorable position relative to
competitors. ( based on thePowerPoint) this cooperative alliance also give Yahoo a boost since it
was on the downward curve ever since its earlier buy-out deal with Microsoft fell through.
In the most recent quarter, Microsoft had online revenue of $863 million, compared with $4.8
billion at Google. Yahoo and Microsoft together had more than $2.6 billion in revenue, still trailing
well behind Google but in a far stronger competitive position. But the trends in online advertising
are working to Google’s advantage as it continues to gain share.
For instance, Yahoo use Microsoft’s search engine technology and search advertising on the Yahoo
site. In turn on Yahoo, it would handle the banner advertising of both companies while Microsoft
would provide algorithms for search results, Yahoo would control how these results were
personalized and presented on its pages. This gave Microsoft a competitive since it could now go
head-on with the largest search engine Google with two of the next largest, Yahoo under its control.
2.
What kind of strategic alliance has occurred with Microsoft and Yahoo? Explain your
answer. For what reasons do you think they developed such an alliance?
I think, Microsoft and Yahoo’ s strategic alliance should be Non-equity Strategic Alliance, based on
the definition from book, “Non-equity Strategic Alliance is Two or more firms develop a contractual
relationship to share some of their unique resources and capabilities.” The idea behind this alliance
was to consolidate the two companies and present online advertisers a large base
for online advertising. These corporate level cooperative business alliances are usually successful
when there is a vertical alignment rather than a horizontal alignment. Now, after this strategic
alliance, Microsoft and Yahoo provides a viable alternative to this service, and they earn more
competitive in the market, this give them more opportunity to gain access to a restricted market
and maintain market stability.
While Microsoft will power the search capabilities of both companies, Yahoo will handle the
worldwide presence for the premium advertiser. This will benefit advertisers, marketers and search
users since it will eliminate the redundancies between the two companies. It will present a single
sleek interface for these users and will enhance the pay-per-click experience in direct competition
of the most successful platform for advertisers of Google. Also, it will combine the innovation and
complementary strengths of both companies to present to the web users and advertisers a
platform having the power for continued development in the search area. It will enable the users
to find things of personal relevance faster and help advertisers to reach more targeted customers.
3.
Now that Microsoft and Yahoo have partnered, what business-level cooperative strategies
do you think we can expect from them? Why? Explain.
I think, Microsoft and Yahoo is in Horizontal Complementary strategic alliances business-level
cooperative strategies. Based on the meaning of Complementary Strategic Alliances, Horizontal
Complementary Strategic Alliance formed when partners who agree to combine their resources
and skills to create value in the same stage of the value chain. (Based on PowerPoint) now,
Microsoft prove technology infrastructure and engineering things for Yahoo, Yahoo, also prove
some of benefit for Microsoft. Include supplier or outsourcing that build two company competitive
advantage.
4. What corporate-level cooperative strategies do you think we can expect? Why? Explain.
We can expect Microsoft can get synergistic strategic alliance to created joint economies of scope
between two firms, and creates synergy across multiple functions or multiple businesses between
partner firms. (Based on book page 278 in chapter 9) since there has lots of sharing on the search
platforms and the online advertising, there was also the fact that this two company continue to
maintain their individual identities. It was estimated that as a result of this alliance, Yahoo would
generate an additional $500 million in operating income and would save $200 million in capital
expenditure. It was estimate that Yahoo would generate an additional annual cash flow of $275
million.
For expect of synergistic strategic alliance. Because the ultimate aim would be to use the
technological strengths of both companies to present to the world of online advertising a better
experience. This would be true for both advertisers as well as the targeted users.
References
Answer for “What corporate-level cooperative strategies do you think we can expect? Why?
Explain.”
http://finance.yahoo.com/news/edited-transcript-subc-ol-earnings-171505284.html
Answer for “What kind of competitive advantage is created through the Microsoft/Yahoo
cooperative strategy? Explain.”
http://www.nytimes.com/2008/02/02/technology/02soft.html
1/ What kind of competitive advantage is created through the Microsoft/Yahoo cooperative
strategy? Explain.
According to the definition in the text book, cooperative strategy is “a strategy in which firms work
together to achieve a shared objective”. Microsoft/ Yahoo use this strategy to defeat the biggest
competitor in the internet search market, Google. The passage says that Google is dominating the
market with 65%, while Yahoo takes the second place with 20 % and Microsoft at the third place
with less than 10%. So, cooperative between Microsoft and Yahoo is needed. And Bing is the result
for their cooperative. Bing becomes the #2 search tool in the internet search market. It can be a
threat for Google because of the competitive advantage is created through the cooperative
strategy. First, Microsoft’s capacity in create the special ability about technology in searching
information. Next, one advantage is the experience of Yahoo in advertising and the ability to
control the look and feel for the result. Besides that, they can combine the resource as well as the
human ability to make their owned core competitiveness. This is the strategic alliance which also
is the main cornerstone for their power until now. Microsoft and Yahoo again make a new deal
showing the successful of their cooperativeness.
2/ What kind of strategic alliance has occurred with Microsoft and Yahoo? Explain your answer.
For what reasons you think they developed such an alliance?
Strategic alliance is “a primary type of cooperative strategy in which firms combine some of their
resources and capabilities to create a mutual competitive advantage”. The text book also classifies
strategic alliance in three kinds. The cooperative strategy Microsoft and Yahoo does not require
them to create a legally independent company as the first kind of strategic alliance, joint venture.
Microsoft and Yahoo also do not own any percentage of equity in form of any new separate
company. So their strategic alliance is not the second form also, equity strategic alliance. It means
there is only one kind of strategic alliance they can fit in. It is the non-equity strategic alliance.
Besides that, their strategic alliance also adapts the requirement of this form as firms will develop
a contractual relationship to share some of their unique resources and capabilities. The reason why
they developed such an alliance because both of them already have their independent position
with their unique advantages which needs to consolidate by which is missing. Microsoft has
technology power while Yahoo has an excellent control in advertising and the look of the website.
With these resources, they need to share and combine their power to take more market share as
well as develop their position while try to defeat their competitor.
3/ Now that Microsoft and Yahoo have partnered, what business-level cooperative strategies do
you think we can expect from them? Why? Explain.
In the text book, business-level cooperative strategy classifies in four main types such as
complementary strategic alliance, competition response strategy, uncertainty-reducing strategy,
competition-reducing strategy. In these four types, complementary strategic alliance fit their
characteristic the most. First, Microsoft and Yahoo decide to combine their resources in
complementary way to create the new value. In here, Bing is definitely the evidence for this
combination. Next, their combination includes the technology to create the search tool as their
product, the data about customer to analyze the market as well as the reputation to build up the
reliability and the competitive advantages. It means that they not only share the supplier but also
share other resources or the distribution. Depends on these two factors, their strategic alliance is
match with the definition of complementary strategic alliance. Moreover, this is a horizontal
complementary strategic alliance. The reason is the creation of the value in the same stage of the
value chain. The passage also mentions that the strategy focuses on long-term profit. However, in
some news, there was a break before between Microsoft and Yahoo because they can become
competitor. This is also a minus point for the horizontal complementary strategic alliance.
4/ What corporate-level cooperative strategies do you think we can expect? Why? Explain.
The function corporate-level cooperative strategies is to help the firm diversify the product offers
to the market or the market it serves, require less source commitment, and create greater flexibility.
Text book also classifies this level in three kinds. For Microsoft and Yahoo cooperative strategic, the
corporate-level cooperative strategy will be the synergistic strategic alliance. There are some
reasons to explain why. The first reason is Microsoft and Yahoo share their economic scope. Both
of them joint in the internet search market. So, when they use the cooperative strategy, they will
joint their economies scope. They share the date about customer in the same angle. The
information, technology, any analysis will be for the same market. The other reason is they
combine their capabilities and their resources to make a synergy. “Bing” is the result for their
power. There are some news also mentions that at the beginning for the cooperative strategy,
Yahoo is helping Microsoft shift its strategy which is a good thing for both companies to expand
their unique power and renew their power.
Reference
Hitt, M., Ireland, R., & Hoskisson, R. (2015). Strategic Management: Concepts & Cases:
Competitiveness & Globalization (11th ed.) Stamford, CT: Cengage Learning.
http://www.nytimes.com/2008/02/02/technology/02soft.html?_r=0
http://money.cnn.com/2013/05/10/technology/yahoo-microsoft/index.html
http://www.businessinsider.com/yahoos-strategic-search-partnership-with-microsoft-is-totallyunraveling-2013-10
http://www.wsj.com/articles/yahoo-microsoft-add-new-termination-clause-in-search-deal1429572939
…
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