Yahoo! was in the late nineties the most profitable and successful internet company on the web. However, after the burst of the dotcom bubble, its competitive position changed dramatically as the banner advertising format, the center of its advertising-based business model, entered in decline. This dissertation uses dynamic capabilities to explain the failure of Yahoo! to respond to that change in the environment. For that purpose, we develop and analyze in detail a teaching case covering Yahoo!’s history from 1994 to 2007. As we succeed to explain the failure of Yahoo! as caused by a low level of dynamic capabilities, we conclude that the company had a low propensity to sense opportunities and threats, to make timely decisions and to make market-oriented decisions. We further identify problems in Yahoo!’s propensity to change its resource base that we classify as medium-low. Its low level of dynamic capabilities led Yahoo! to ignore the potential of search as a business and the emergence of keywords advertising as the dominant format of online advertising. Yahoo! reacted late and failed to transform its resource base in an effective manner to respond to those changes. These events still impact Yahoo!’s performance today.
| Date of Award | 2012 |
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| Original language | English |
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| Awarding Institution | - Universidade Católica Portuguesa
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| Supervisor | Ilídio Barreto (Supervisor) |
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Yahoo!: the end of the banner years
Alves, B. P. (Student). 2012
Student thesis: Master's Thesis