Strategy formulation & Implementation (MBA907)

BY IMRAN KHAN MNS 07MBI037

Batch-D
Pick a firm of interest to you. Identify potential acquisition candidates. Explain why these companies would make sense as an acquisition target. Evaluate and describe possible implementation barriers to this acquisition.

Abstract
Based on the Yahoos Mission statement the most essential global Internet service for consumers and businesses. Yahoo has to focus on improving social networking service, potential acquisition candidates are listed out and compared on the basis of traffic, service offering.

Keywords Social networking site traffics- Number of user using social networking sites. Market Capitalization- total worth of the company. Acquisitions- Aspect of corporate strategy, corporate finance and management dealing
with the buying, selling, dividing and combining of different companies

Introduction
Yahoo is a computer software and web search engine company founded on March 1, 1995. The company is a public corporation and its headquarters is located in Sunnyvale, California. It was founded by Stanford University graduate students Jerry Yang and David Filoin 1994. According to web traffic analysis companies, Yahoo! has been one of the most visited websites on the Internet, with more than 130 million unique users per month in the United States alone. Yahoo!'s first acquisition was the purchase of Net Controls, a web search engine company, in September 1997 for US$1.4 million. As of April 2008, the company's largest acquisition is the purchase of Broadcast.com, an Internet radio company, for $5.7 billion, making Broadcast.com co-founder Mark Cuban a billionaire. Most of the companies acquired by

Yahoo! are based in the United States; 47 of the companies are from the United States, and 8 are based in a foreign country. As of April 2010, Yahoo! has acquired 64 companies.

Yahoo in Social Networking Service

Yahoo360 was a social networking and personal communication portal operated

by Yahoo! made available in 2005. It enabled users to create personal web sites, share photos from Yahoo! Photos, maintain blogs and lists, create and share a public profile and see which friends are currently online. 360 also featured a 'friends updates' section, under which each friend's latest update was summarized (e.g. blog posts, updated lists or newly shared photos). This service was never officially launched; Yahoo! prematurely stopped developing this service in 2008. Yahoo360 plus Vietnam is a similar service that is available in Vietnam. This service was launched in 2008 and is still active.

Methodology
Social networking sites whose traffic exceeds 7000000 unique user per month and the market capitalization less than $1billion are considered for the acquisition.

Discussion
Yahoo inc has to focus on social networking service to provide essential service to consumer as well as to business. Yahoo already failed in social networking service Yahoo360 which shut down in 2008. So the best way to improve social networking service is to acquire the social networking sites which has high market share. This strategy help yahoo to increase the traffic for their service as well as to improve the customer satisfaction. The reason for trying to acquire social networking site is basically to compete on par with its biggest rivals Google who have already made considerable investments in that field. So i considerd 4 potential candidates such as tagged, hi5, myyearbook, bebo.

List of Potential Acquisition Candidates 1) Tagged.com

Tagged is a social networking site based in San Francisco, California, United States, founded in 2004. By 2011 ebizMBA reported that tagged had become the 7 most popular social networking
site in terms of monthly unique visitors.

The website suggests new people for members to meet based on shared interests. It also allows members to browse people, play games, and share tags and virtual gifts. Tagged says it has 100 million members As of 10 April 2011, Quantcast reports Tagged monthly unique users at 6.2 million U.S., and 20.4 million globally. Tagged's first acquisition was the popular social and instant messaging client Digsby, which has 3 million registered users. Michael Arrington wrote in April 2011 that Tagged is most notable for the ability to grow profitably during the era of Facebook.

2) Hi5.com
hi5 is a social networking website based in San Francisco, California. The company was founded in 2003 by Ramu Yalamanchi. By 2011 ebizMBA reported that hi5 had become the 9 most popular social networking site in terms of monthly unique visitors. Bill Gossman was appointed CEO in April 2009 and since that time, hi5 has refocused itself as a social gaming platform and opened itself to new game developers.Gaming industry veteran Alex St. John joined the company as President and CTO in November 2009 and in early 2010, hi5 acquired social gaming company Big Six The company raised $20 million in series A venture capital from Mohr Davidow Ventures, as well as $15 million in venture debt, in 2007, and announced it had raised $3 million convertible note from existing investor Mohr Davidow, bringing the funding up to $38 million.[ Quantcast reports hi5 has 2.7 million monthly US visitors and 46.1 million global visitors. Software-industry veteran Karen Richardson has served as chairwoman of the company's board since 2008. In early 2010, hi5 began to evolve from a social network into a site focused on social gaming and opened to new game developers.

3) Myyearbook.com
myYearbook is microblogging and a teenage focused social networking website,

headquartered in New Hope, PA, United States owned by Latino social network Quepasa. By 2011 ebizMBA reported that myyearbook had become the 10 most popular social networking site in terms of monthly unique visitors.It is the 5th largest social network in the U.S. with

over 15 million weekly visits. Members can make new friends by creating profiles, interacting through chatter, a real-time stream, sending virtual gifts, and playing games. Since its launch myYearbook has grown to be one of the top teen sites and one of the 25 most trafficked sites in the US. Quantcast reports MyYearbook has 4.7 million monthly unique US Visitors and 5.4 million globally It is estimated by Alexa that 77% of the website's visitors are from the US, where it has a traffic rank of 390.

4) Bebo.com
Bebo (pronounced bee-boh) is a social networking website launched in July 2005. It is currently owned and operated by Criterion Capital Partners after taking over from AOL in June 2010.By 2011 ebizMBA reported that Bebo had become the 10 most popular social networking site in terms of monthly unique visitors. Bebo was founded by Michael Birch and his wife Xochi Birch in January 2005 at their home in San Francisco. It was acquired by AOL on March 13, 2008 for $850 million, with the Birch's combined 70% stake yielding a profit of $595 million from the deal. However the founders and executives of Bebo had stated that their end goal had been to sell out to a larger company, as they were well aware of the site's platform instabilities. Many suggested that AOL overpaid for Bebo, especially as advertising suffered a downturn due to the financial crisis. Furthermore AOL was unwilling to invest and continue developing Bebo so that it could remain competitive with Facebook. In April 2010, AOL announced it was planning to sell or shut down Bebo, with the sale being completed on June 17, 2010 to Criterion Capital Partners for an undisclosed sum which was reportedly under $10 million.

Result
Its better choice to acquire hi5.com because that has high market share in both social network and social network gaming service. Yahoo already acquired other company which support social networking activities. It also help yahoo to compete with other big rivals such as google, facebook, twitter who already in that field as well as to increase the profit of the firm. References http://drdianehamilton.wordpress.com/2011/01/13/top-10-company-missionstatements-in-2011/ http://www.ebizmba.com/articles/social-networking-websites

 http://techcrunch.com/2008/06/23/modeling-the-real-market-value-of-socialnetworks/