Management and the Technology Professional – B302
Case study answer 3
In the case of the merger between Microsoft and Yahoo the reasons for my ratios are given below. Using the resources available it can be seen that there is a greater argument for the merger than against. Firstly it can be seen that Yahoo is at a 4 year low on its share prices as well as declaring its intentions to loose 7% of its workforce, the fact that they dismissed Microsoft's first effort to purchase the company this could be attributed to its “potential upside due to new operating strategies and an organizational restructuring”. As these new strategies were unsuccessful it could be viewed as a sign for Yahoo to be taken in a new direction and Microsoft could be the company to do this.
As Google has been described as close to becoming a monopoly and it being number 1 in the internet advertising the act of combining number 2 and number 3, i.e. Yahoo and Microsoft could contribute for the merger as although they still could not immediately compete with Google's 66% hold on internet searches in America they would be in good stead to 'close the gap'.
It could also be seen in the resources that Yahoo and Microsoft had a large amount of 'server farms' and with the merger they could consolidate these farms as well as being in a better position for “new areas such as online video, social networking and online commerce”, all factors which argue for the merger. My only reasoning against the merger in the end came down to the actions taken by Google to block the merger, coupled with the fact that the merger has failed before gave me some grounds to dismiss giving the merge a full 100% chance of success.
Reviewing the decision tree making the decision to go ahead with the project can be seen as the correct course of action. Calculating the present value for each point as well as the Net present value demonstrates that there is a high return by following the more highly probable outcomes. Should the merge not go ahead and the project itself fails then a high loss would occur however by consulting the decision tree these factors are not probable and again even if the first state occurred there is still a greater chance of the project being successful. Taking all the factors into consideration from my position as a software engineer within Yahoo I would most definitely start the client project.
