978-1259278211 Case 21 Solution Manual Part 2

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Referencing Chapter 4: Intellectual Assets

See the concepts of intellectual capital, human capital, and social capital, all of which are

intangible assets that a company such as Yahoo needs to have in order to compete successfully.

Intellectual capital is a measure of the value of a firm’s intangible assets, its reputation,

Human capital involves the individual capabilities, knowledge, skills, and experience of the

company’s employees and managers. This knowledge is relevant to the task at hand, as well as

Success in retaining human capital could also be attributed to the nurturing of the “social ties” or

social capital. Social capital is a function of the network of relationships that individuals have

throughout the organization and beyond. Relationships are critical in sharing and leveraging

Intellectual assets or intangible resources are critical to organizational success. The growing

importance of knowledge, coupled with the move by labor markets to reward knowledge work,

Human capital: does the organization effectively attract, develop, and retain talent? Does the

organization value diversity?

Social capital: does the organization have positive personal and professional relationships

among employees and alliance partners?

Technology: does the organization effectively use technology to transfer best practices across the

organization, codify knowledge, and develop dynamic capabilities for competitive advantage?

As a company competing in a knowledge-intensive industry, Yahoo has to make sure it can

attract and retain its human capital. In addition, it has to configure that talent to capture best

practices and share that knowledge across the organization and beyond so it can take advantage

of new ideas and other key resources. Working more closely together as the company embarks on

strategy changes should help those strategies create value for the firm. Perhaps having all

employees actually present in close physical proximity to each other, working “side-by-side,”

will increase the firm’s human and social capital. Is that what CEO Mayer had in mind when she

cancelled telecommuting?

Here’s an article referencing Mayer’s edict and commenting on what this precedent might mean

for the future of telecommuting at tech companies worldwide. See the embedded video:

http://www.cnn.com/2013/02/26/tech/remote-working-yahoo-mobile/index.html

Regarding the management of its intellectual assets, under CEO Semel, in 2001, Yahoo took the

information from the external environment – the dot-com bust – and realized it might not be

doing the right thing by focusing solely on ad revenue. The firm tried to push for other sources of

For advanced students, assigned reading of Michael Porter’s 1996 HBR article “What is

strategy?” and his 2007 interview in Fast Company provides more clarity regarding the issue of

trade-offs, especially in retail. In the Fast Company interview, Porter says:

The essence of strategy is that you must set limits on what you’re trying to accomplish.

The company without a strategy is willing to try anything. If all you’re trying to do is

It’s possible both Semel and Yang were unwilling to set limits. CEO Bartz appeared to be willing

to make trade-offs and hand over search engine and related advertising responsibilities to

CEO Mayer’s instinct to do what she was used to doing at Google, and innovate around products

AND engineering, might be what Yahoo needed, but she needed human resources in place as

well as controls to monitor her progress. Mayer had tried to boost employee morale and let

ADDITIONAL READING: An article in New York Magazine written shortly after Mayer took

the top job at Yahoo was titled “Can Marissa Mayer Really Have It All?,” referring to her

elevated status as a woman CEO AND a new mother. In 2012, Mayer was one of only “twenty

female CEOs of Fortune 500 companies and the only one to take the job while pregnant.” At

Referencing Chapter 8: Entrepreneurial Strategy and Competitive Dynamics

Entrepreneurship involves the creation of new value by an existing organization or new venture

For an entrepreneurial venture to create new value, three factors must be present – an

entrepreneurial opportunity, the resources to pursue the opportunity, and an entrepreneur or

entrepreneurial team willing and able to undertake the opportunity. Entrepreneurs must go

Entrepreneurs need to understand the concept of opportunity recognition: the process of

discovering and evaluating changes in the business environment, such as a new technology,

sociocultural trends, or shifts in consumer demand, that can be exploited. Changes in the external

Resources are an essential component of a successful entrepreneurial launch. The most Important

resource is usually money, but human resources, strong and skilled management, is also an

Launching a competitive venture requires a special kind of leadership involving courage, belief

in one’s convictions, and having the energy to work hard. Three characteristics of entrepreneurial

leaders are:

●Vision

●Dedication and drive

To achieve excellence, venture founders must understand the customer, provide quality products

Firms can grow via acquisition or via internal development, or entrepreneurial ventures. At

Yahoo, the opportunities for entrepreneurial ventures are there, worldwide, but so far the firm has

been primarily imitative, rather than exploiting changes in the business environment that could

1. What has Marissa Mayer done to reconfigure Yahoo, and what challenges remain? Do

you think Mayer will be successful in reinvigorating the firm?

Referencing Chapter 11: Strategic Leadership

See the concept of leadership, the process of transforming organizations from what they are to

what the leader would have them become. This involves:

●Setting a direction

Leadership is proactive, goal oriented, and focused on the creation and implementation of the

creative vision. This definition implies dissatisfaction with the status quo, a vision of what

The interdependent nature of these three activities is self-evident. Consider an organization with

a great mission and a superb organizational structure, but a culture that implicitly encourages

Leaders need to set the direction for the organization by continually scanning the environment to

develop knowledge of all stakeholders, and knowledge of salient environmental trends and

Leaders are also responsible for designing the organization: a strategic leadership activity of

building structures, teams, systems, and organizational processes that facilitate the

Difficulties in implementing the leader’s vision and strategies include a lack of understanding of

responsibility and accountability among managers, reward systems that do not motivate

Regarding organizational structure, originally Yahoo! had let managers develop their own pet

projects, without regard for how these Web offerings would connect with each other. Managers

However Semel believed that Yahoo should establish strong links between its various sites that

would allow its consumers to move effortlessly from one of them to another. He established the

Semel reduced the original 44 business units down to only 5, and made it clear each unit was

responsible for making money AND for feeding Yahoo’s other businesses. However, Semel’s

Although CEO Bartz had had to deal with management turnover at the top of the firm, she did

consolidate several positions, and created others in an attempt to make the company more

CEO Mayer had made no structural changes at the time of the case, but it was assumed she

would begin to hire more depth in mobile technology, which might require more divisional

restructuring in the future. In addition, there was the question of how to integrate the resources

The previous discussion of organizational structure highlighted Yahoo’s problems with lack of

accountability among managers, and possibly inappropriate control systems. In the past, there

In view of these multiple problems, at the time there was speculation: there might have been

some private equity firms interested in a buy-out, and Yahoo could also have considered

Even with Marissa Mayer’s hire, perhaps Yahoo, and CEO Mayer needs to spend some time

identifying Yahoo’s core competencies, clarifying its vision, and making some trade-offs.

Sometimes it’s necessary to set limits on what you’re trying to accomplish, and focus instead on

what you can truly deliver. As the case ends, it appears Mayer is interested rather in expanding

into new areas. Currently, she’s still in the fairly early stages of her tenure. Will she be able to

deliver in the long-term?

NOTE – WEB LINKS TO ADDITIONAL READING:

To provide historical context, in a story from August 2011, at least one analyst believed Yahoo

might soon cease to exist. Noting that Yahoo still made roughly 95 percent of its revenues from

display and search advertising, with the remaining revenues from subscriptions, and that Google

remained in a dominant position in online search, with over 70 percent market share, was this the

time for Yahoo to sell off more pieces or break up the company entirely? As this analyst pointed

out, many of the resources on Yahoo’s homepage were auxiliary services. In particular, the

something?source=yahoo

In a related story, from August 2011, AOL had posted net losses of almost $800 million in its less

than two years as a standalone company (spun off from Time Warner in 2009). The once

profitable dial-up Internet business had become obsolete and online advertising sales had failed

to make money. Analysts saw the company as a takeover candidate. AOL’s dial-up access

business had 3.4 million subscribers in 2011, down 23 percent from a year earlier, according to

regulatory filings. The thought was the business might wind down by 2015. AOL’s share of U.S.

And here’s a link to the widely discussed article and photo shoot of Marissa Mayer in Vogue, in

August 2013: http://www.vogue.com/magazine/article/hail-to-the-chief-yahoos-marissa-

mayer/#1 What other CEO would pose for a fashion spread in this iconic magazine? What

message did this send about her decision-making capabilities?

What are the big decisions that CEO Mayer MUST make, versus those she should delegate?

Mayer notes that she is still struggling with this. In this September 2013 video she discusses

strategy, plus how the new Yahoo logo was redesigned. http://video.cnbc.com/gallery/?

video=3000198746&__source=yahoo|headline|quote|video|&par=yahoo

Referencing Chapter 12: Managing Innovation and Fostering Corporate Entrepreneurship

Innovation involves using new knowledge to transform organizational processes or create

commercially viable products and services using the latest technology, experimentation, creative

Some of the challenges of innovation involve choosing when and how to continue to innovate,

the scope of future innovation and the pace, as well as whether or not to collaborate with

A strategic envelope defines the range of acceptable projects. Strategic envelope means a firm-

specific view of innovation that defines how a firm can create new knowledge and learn from an

innovation initiative even if the project fails. The strategic envelope also gives direction to a

firm’s innovation efforts, which helps separate seeds from weeds and builds internal capabilities.

In defining the innovation scope, a firm should answer several questions:

●How much will the innovation cost?

●How likely is it to actually become commercially viable?

●How much value will it add; that is, what will it be worth if it works?

●What will be learned if it does not pan out?

Innovation issues under Semel included the dismantling of the former brainstorming and free-

wheeling culture. He demanded formal presentations instead of initiatives driven by hunches.

CEO Mayer was trying to hire the needed engineering professionals for her mobile push, but she

Of primary concern was whether any innovation efforts in mobile would truly be in the firm’s

domain of interest. Given Yahoo’s legacy in search, services, and advertising, could it

appropriately integrate mobile into that mix, especially since it didn’t currently have the needed

financial, human, and social capital?

As explained above, it’s important to consider all the factors that go into strategic management,

and decide the sequence of strategic actions in order to conserve resources and gain focus. In

Yahoo’s industry, innovation was critical. Could Mayer deliver on her promise?

NOTE – WEB LINKS TO STORIES, VIDEO:

In September 2013 Yahoo stock made news when it passed a symbolically important milestone

and topped $30 a share for the first time since February 2008. 2008 was when “Yahoo co-

founder and then-CEO Jerry Yang was drawing up ways to fend off an unsolicited takeover bid

from Microsoft Corp. Yang insisted that Yahoo Inc. would be worth more than the $31 per share

Mayer reported that in 2013 Yahoo’s online services had seen a 20 percent growth since her

arrival, and were now attracting about 800 million monthly users. However, even with this

Teaching Note References (and possible additional assigned readings)

Porter, M.E. 1996. “What is strategy?,” Harvard Business Review, 74(6): 61-78.

Porter, M.E. 2007. “Michael Porter’s Big Ideas,” Fast Company, 44, (December 19), available at

http://www.fastcompany.com/magazine/44/porter.html