Yahoo! Japan: A Study in Strategic Diversification (Case #23, Notes) Overview Yahoo! Japan is the leading portal and Internet-related service provider in Japan. Managed and operated independently from Yahoo! Inc., the Company offers a variety of informational content on its web site and internet-related services. In financial year 2002, Yahoo! Japan recorded ¥59 billion in sales and ¥43 billion in gross profits. Strategic Diversification During the late 1990 s, Yahoo!, Japan experienced tremendous growth. The company controlled the leading internet advertising channel in Japan and benefited from the belief that advertising on the internet had immense profit potential. The “internet crash” of 2000, however, and a loss of faith in the sustainability of Yahoo! Japan s advertising revenue placed immense pressure on the company to maintain positive revenue growth. Management recognized the strategic need to diversify its business portfolio and made the strategic decision to enter into auctions and broadband services. Management also recognized the strategic importance of broadband as a future digital distribution channel for their fee-based services. Portal Services