INTERNAL ASSESSMENT OF YELP INC. 14
Internalassessment of Yelp Inc.
Internalassessment of an organization is the identification and theevaluation of the capabilities, the core competencies, and theresources at its disposal. To successfully undertake theidentification and evaluations, there is a scrutiny at the missions,visions, strategies, and objectives of the organization. Through theinternal assessment, there is the incorporation of measures fromwhich an organization is able to obtain information crucial in theprovision of the information about the strengths, weaknesses,opportunities, and threats of the organization. Ideally, the internalanalysis unravels how an organization got to the current position,where it is as well as the development strategies for growth andsustenance of the business. By focusing on the above details, thispaper presents an internal assessment of the Yelp Inc.
Table of Contents
Internal analysis 5
Resource- based view analysis of Yelp Inc. 5
Financial resources 6
Physical resources 7
Human resources 8
Technological resources 9
Intangible resources 10
Value chain analysis 10
Primary activities 10
Secondary activities 11
Core competency analysis 12
VRIO analysis 13
Internalassessment of Yelp Inc.
Tobe able to assess the Yelp Inc. internally, it is important to havean overview of the organization. Yelp Inc. is a multinationalcorporation in America with its main office in San Francisco inCalifornia. The company began its operations in 2004 under theleadership of Russel Simmons and Jeremy Stoppelman, who was initiallyworking with PayPal. The main goal of Yelp is to propose a programwhich permits people to associate with outstanding local commercialenterprises. Such businesses include hair stylists, mechanics,dentists, restaurants, and hospitals. Initially, the organizationstarted as an email circle. A capital of one million US Dollars wasinjected into the Company by the leaders to fund an email circleenabling their close associates to share matters concerning theirbusinesses. The launching of Yelp Inc. was as a result of theexperience of Jeremy during a time he fell sick and there was verylittle information on the internet to help him locate a doctor.
Theoperations of Yelp Inc. are the hosting, development, and marketingof yelp.com as well as the Yelp mobile application whose task ispublishing of feedback and reviews concerning local businesses(Kamerer, 2014). They also offer reservation of online services aswell as online services for the delivery of food. Yelp Inc. alsooffers training to small businesses to endow them with skills inresponding to reviews, provision of data concerning businesses, andhosting of social consequences. Since its inception in 2004, YelpInc. has been springing up quickly. In 2010, the company had reacheda revenue of thirty thousand United States Dollars. Accordingly,their website had publishes exceeding four million crowd-sourcedreviews (Kamerer, 2014).
Between2009 and 2012, Yelp Inc. invested in expansion across Asia andEurope. Similarly, Yelp Inc. made agreements with Google for apossible acquisition. In 2012, Yelp Inc. changed its operations tobecome a public establishment. The operations of the organizationbore fruit for the company to become a profitable entity two yearsafter making and actualizing the decision to become a publicorganization. Currently, Yelp Inc. boasts of more than one hundredand thirty million visitors in a given month and reviews exceedingninety million (Kamerer, 2014). The revenues of the company emanatefrom advertising businesses.
Presently,the yelp community has established roots across thirty states. As thefirst quarter of 2016 came to an end, Yelp Inc. had over one hundredmillion local but rich reviews written on their site. This has madeYelp Inc. a leader in offering guide basing on the real word of mouthon all sorts of businesses ranging from mechanics and beauty shops tohospitals and restaurants. There is an approximated figure of twentymillion unique devices found to have made an access to the Yelp Inc.website from the Yelp mobile application following the results of themonthly analysis. There is also an approximation of seventy-sevenmillion new visits observed to have visited the Yelp Inc. websitethrough the desktop platform from the same analysis. The creation ofthe Yelp Mobile application has also been a great milestone for YelpInc. in increasing their customer base and ease of accessibility ofthe website.
Theinternal analysis is the organization’s identification andevaluation of the critical internal factors in a systematic manner(Minkler, 1993). An effective internal assessment of an organizationrevolves around certain crucial elements. The elements include theresources and capabilities at the disposal of an organization and thecoordination of the organization’s crucial value-adding activities,the organization’s performance as a measure of the strength of theproducts and services and the organization’s structure and thecultural characteristics (Minkler, 1993).
Theresources of an organization are the inputs and assets that anorganization incorporates in its day to day activities and processes.By particular, it implies that the resources are only applicable forhighly specialized purposes and are very paramount to theorganization for value additions to products and services (Chisholmand Nielsen, 2009). The resources of an organization can becategorized as financial, human, technological, informational, andphysical resources. It is crucial to undertake an audit of theresources to establish any gaps and necessary measures to fill them.Moreover, the auditing evaluates the resources to establish theavailability of the resources, quality, and quantity, the extent ofuse, control systems, and performance (Minkler, 1993).
Thecompetencies and capabilities are the crucial asset skills specificto the industry and knowledge of the organization according to Chenand Wu (2007) and are crucial in internal assessment. Some corecompetencies result from the combination of capabilities andresources, which are unique to a particular organization. Thecapabilities are responsible for the generation of the competitiveadvantage of the organization.
Theavailability of the required resources and the right capabilitieswork hand in hand to produce superior and distinct core competenciesfor an organization investing in their availability (Chisholm andNielsen, 2009). The production of such core competencies results inthe development of the appropriate skills for employees, goodknowledge and reputation of the organization, and technologicaladvancements which are unique to the organization and hard forcompetitors to imitate. Such distinct and superior core competenciesresult in better perception among the clients.
Theprimary concern of this paper is to carry out the internal assessmentof the Yelp Inc. To undertake the assessment, the paper will beseeking to answer the questions how Yelp has incorporated resourcesappropriate for its operations to be successful.
Resource- based view analysis ofYelp Inc.
Resource-based view analysis is the procedure which identifies whether theresources in use by a particular organization are crucial in makingthe organization a leader in its operations (Chisholm and Nielsen,2009). The aim of the procedure is to promote a competitive advantagein the use of the resources of an organization. The analysis relieson both the tangible and intangible resources of an organizationwhich should be immobilized and diverse in content.
Tangibleresources of Yelp Inc.
Tobecome the large entity it is, the Yelp Inc. has invested widely inthe tangible assets in use by the organization. Such resourcesinclude financial, physical, and technological resources.
Thereare various sources of finances for an organization. Depending on thenature of operations and the returns of Yelp Inc. from itsoperations, the organization has broad financial resources. Yelp Inc.has financial resources in the form of existing finances andpotential finances. The explanation of the assessment of financialresources will be done through the use of the ratio table below.
(Thedata below has been obtained from Morningstar (2016)
A/R Turnover in Days
A/P Turnover in Days
Fixed Assets Turnover
Total Asset Turnover
Long-term Debt Paying Ability
LT Debt to Total Capitalization
Cash Flow Coverage Ratio
Operating Profit Margin
Net Profit Margin
Currentratio – this ratio presents the ability of an organization to clearthe liabilities of the organization with assets that are expected atthe end of a certain production period. From the data, the currentratio for the Yelp Inc. is 12.66 which is a ratio, high enough forthe organization to finance its liabilities. The operations of theorganization are thus profitable.
Quickratio – this ratio is a measure of the comparison between the cashat hand and liquid resources to the organization’s currentliabilities. The above data shows that after financing the currentliabilities of the organization, Yelp Inc. remains with liquid cash.This implies that the operations of the organization are profitable,hence its success.
Fixedasset turnover – this turnover shows how an organization isefficient in generating revenues from utilizing fixed assets.Averagely, for every one United States Dollar of investing assets,the Yelp Inc. is able to generate 8.67 United States Dollars inrevenues relying on the information from Morningstar (2016). This isan indicator that the operations of the Yelp Inc. are successful.
Totalasset turnover – The total asset turnover is a measure of theorganization to generate income through the sale of the assets ownedby the organization. The Yelp Inc. has an asset turnover of 0.70according to Morningstar (2016) implying that it has the capabilityof generating seventy cents United States Dollars. The amount is notprofitable enough and as a result, the organization needs toundertake measures to raise the total asset turnover for moreprofitable operations.
Grossmargin – Gross margin is a measure used to compare the gross marginto the net sales. The Yelp Inc. has a whopping high gross margin of90.17 according to Morningstar (2016) which shows the ability of theorganization in financing the operating expenses.
Operatingprofit margin – this presents the operating profits when comparedto the revenue earnings in percentage form in a certain period. Fromthe table, Yelp Inc. does not operate profitably, but the assessmenthelps identify the areas of improvement for the organization to makeprofits.
Thephysical resources of an organization are the machinery and theproduction equipment at its disposal, which are crucial for thesmooth running of its operations (Minkler, 1993). Yelp Inc. providesonline services through the Yelp.com site or the Yelp applicationavailable in both mobile and desktop versions. Due to this nature ofits operations, the physical resources at the disposal of Yelp Inc.include the production processes and infrastructure.
YelpInc. incorporates high-tech processes to come up with the platformwhich enables buyers to find sellers online. The platform also allowsbuyers to locate crucial services such as medical services. Theprocess lessens the hustle of locating the business which would havebeen otherwise tedious and time-consuming. The processes ofproduction also ensure that customers can post their reviews about acertain product or business which can provide useful insights toother clients. Through this process, the platform also enables theowners of the businesses to respond to the reviews by the clients,providing a fair playground for both the clients and the serviceproviders. The platform also ensures that various users can be loggedin at the same time. Such a production process is beneficial to boththe clients and the service providers making the platform one of themost sought services. The views and reviews, in turn, translate toreturn to the organization which could be applied for the improvementof the services for more clients (Hansel, 2008). The combination ofthese factors results in the success of Yelp Inc.
Theinfrastructural resources in use by an organization are crucial forthe success or failure of an organization. Such resources include thebasic organizational and physical facilities that ensure properrunning of the operation of the organization. Apart from SanFrancisco office, which is the headquarters of the company, Yelp Inc.has established other thirty-two offices (Saul, 2008). The officesare fitted with high-tech machines and constant power supply toensure the operations of the organization run smoothly. Theimplication of such strong infrastructural base is the smooth runningof the operations of Yelp Inc. In turn, the operations result inlarge customer base because they are in a position to get goodservices. This promotes the business, thus good returns.
Humanresources refer to the individuals who monitor the processes of anorganization or business (Minkler, 1993). Without this personnel, itis almost impossible for a business to achieve its missions andgoals. Human resources, therefore, play a crucial role and are ofgreat significance to an organization. Yelp Inc. understands andappreciates the significant role played by the human resources. YelpInc. has close to four thousand employees. This is a sufficientnumber of staff to ensure the services and operations run smoothly.The human resources include Information Technologists who ensure thesystems and websites in use are operational and up to date. They alsoensure any breakdown of their systems is attended on time. The humanresources also include Statisticians who simplify the information anddata on their websites, ensuring that clients understand it clearly.There are also the human resource persons who ensure that the YelpInc. taps in employees with the best experience and expertise to workwith the organization. The results of such an investment in humanresources are an overwhelming success in the operations of thebusiness. Having incorporated the measures, Yelp Inc. has been in aposition to gain the success it boasts of today.
YelpInc. also brings in experienced and qualified staff on boarddepending on the roles and responsibilities. These staffs ensure thatthey bring in the best skills for the organization, ensuring that theoperations of the organization are run in an efficient manner. Thisis turn boosts client satisfaction of the services and products, thusattracting more business for the organization. The finances of thebusiness become a crucial means of expansion of the services theyoffer thus the unending success.
Thereis a low employee turnover rate at Yelp Inc. in that, the staffrarely leaves the organization. Such a scenario promotes theexpertise of the staff due to continuous development and training oflong-serving employees. This low turnover rate is promoted by thefavorable working environment and a competitive salary packageoffered by Yelp Inc. Such a turnover rate ensures that there are nochallenges and gaps in the running of the operations of theorganization. This is the end translates to high returns for theorganization hence its success.
Trainingand education are very crucial for an organization desiring successin its operations. In as much as the personnel is engaged into YelpInc. with the relevant qualifications and expertise, training andeducation have ensured that the personnel acquires more skills tomanage the business better. The training and education familiarizethem with the systems and the way of doing things in the organizationwhich could differ from the previous experiences. The training andeducation as well ensure that the staffs gain knowledge crucial forcoming up with better ways of undertaking tasks. The combination ofthese factors has enabled Yelp Inc. to remain efficient in theiroperations, hence, profitable and successful in the market.
Thetechnological resources are crucial in the business environmentbecause they facilitate the production of the products and servicesthe company offers (Chen and Wu, 2007). Yelp Inc. has invested widelyin the acquisition of the necessary Information Technology systems,proprietary system, software, hardware, and technologicalmanufacturing. Yelp Inc. makes use of technological systems combinedwith the appropriate hardware and software to manage their website.Besides, technological manufacturing has enabled Yelp Inc. to come upwith the Yelp app which is available in mobile and desktop versions.This has increased the number of new visits to their website, thuspromoting their services. Yelp Inc. makes use of proprietary systemsto protect the rights of their website. This implies that, forinstance, a business entity with the negative review does not havethe right nor ability to change it to suit their desires. This hasincreased customer reliance on the information from the site, henceencouraging more views which translate to more business. Thesefactors have enabled Yelp Inc. garner more revenues for it to remainsuccessful.
Intangibleresources form another crucial input for the success of anorganization. Human resources fall in this category from the humanresource intangibles which include motivation, morale, and culture ofthe organization. Yelp Inc. offers constant motivation and morale ofits personnel. The culture of the organization as well ensures a goodwork environment for the staff. This boosts the performance of thestaff, resulting in more efficiency in the services they offer. Thistranslates to great business for the company and thus the generationof more revenues.
Thereis another category of intangible resources in use by an organizationreferred to as intangibles. These intangibles include innovativeproducts, reputation in the market, and the intellectual propertiesof the organization. Yelp Inc. has been constantly coming up withinnovative measures for their operations. For instance, theintroduction of the Yelp app and the Yelp mobile app. These featuresare the latest innovative measures in the market and havetremendously improved the access of Yelp Inc. services thus improvingon its revenues. Although there have been issues with the reputationof Yelp Inc. especially among the small business owners, Yelp has putefforts in maintaining a good reputation in the market about thecompany. This to a great extent has as well promoted the services ofthe organization resulting in more returns hence the success of thebusiness.
YelpInc. has an attractive web page, from the mix of colors and uniquelogo, where people view and post their reviews about theirexperiences on different products and services. This feature isitself an attractive feature, apart from the information, promotingcustomer visits. The Yelp site also allows clients to postinformation accompanied by photos making it more attractive andinteresting. These features help in increasing the number of customervisits and reviews which are the core of the business thus making itprofitable in its operations.
Value chain analysis
Theoperations of a company incorporate the activities and processesinvolved in the production, designing, and the marketing of theproducts and services it offers (Fearne, Et al., 2012). Thecombination of these factors which an organization performsinternally forms the value chain. The name value chain emanates fromthe underlying intention of the company in undertaking theactivities, which is the creation of value for the buyers. The mainactivities in the value chain are the primary and secondaryactivities. The primary activities involve those which ensure thecreation of the maximum value for clients while the secondaryactivities help in the facilitation of the performance of the primaryactivities.
Theprimary activities are usually employed by an organization to createvalue for the customers so that they keep on purchasing the productsand services for the firm to remain profitable. The activitiesinclude inbound and outbound logistics, marketing and sales,operations and services. The inbound logistics deal with thereceiving, storage, and inputs’ distribution. The operations ofYelp Inc. are purely online. Yelp Inc. undertakes a constant upgradeof their website page, mobile app, and the desktop app to ensure fastspeeds in the loading of their information. This promotes customers’trust in their system, thus promoting sales. In other instances,inbound logistics work jointly with operations for the transformationof inputs into the final product. Yelp Inc. profitably employed theseactivities through the provision of an efficient platform for clientsto post and review information about certain services which is thecore of the business.
Inboundlogistics, outbound logistics, and operations work hand in hand toensure proper collection, distribution, and storage of the servicesto the clients. Yelp Inc. has the platform which allows the storageof data about a product despite the number of reviews concerning theproduct or service. Equally, the inbound logistics, outboundlogistics, operations, and marketing and sales work jointly topromote the purchase of products and services and how to induceclients to purchase the products. Currently, the social media hasbecome a crucial means of promoting and inducing buyers to makepurchases. Yelp Inc. being a social platform ensures the promotion ofsales through the click of a button. From the necessary and crucialinformation available on yelp.com, Yelp comes into the mind as themost appropriate means of finding the products and services theyseek, promoting the operations of the company hence its success.
Lastly,the inbound and outbound logistics, operations, services, andmarketing and sales work together in the provision of servicescrucial in the maintenance of the value of the product. The core ofYelp Inc. is the provision of a platform where clients can post thefeedback on certain services and products of different businesses.This provides Yelp Inc. with a competitive advantage thus itssuccess.
Thesecondary activities of an organization offer support to the primaryactivities by facilitating their operations. The secondary activitiesinclude the general administration, procurement, technologicaldevelopment, and human resource management. The generaladministration is key in the value chain. Yelp Inc. has incorporatedthese activities through offering an effective platform where clientscan post all the information they desire about a particular product.Besides that, the general administration ensures a good relationshipbetween the organization and the stakeholders and the promotion oforganizational culture. Yelp Inc. has profitably made use of generaladministration in the maintenance of a good relationship withstakeholders evident from the number of shares owned by thestakeholders. Yelp Inc. also promotes a good organizational culture,offering a good work environment for its personnel. These factorsresult into the success of Yelp Inc.
Generaladministration and human resource management work jointly to offersupport in the recruitment process, offering training and education,and compensation for the organization’s personnel. Yelp Inc. has astrong human resource department which oversees the recruitment ofnew staff hence ensuring they get the best in the market. Theorganization also offers a good working environment and incentives toits personnel. Such activities result in a good performance from theinput of the personnel hence profitability.
Generaladministration and human resource management incorporate thetechnological developments to support various activities, especiallythose involved in the production process. Yelp has been able to tapthis activity through the use of the most recent technologicaladvancements in the online media such as the use of the mobile appand desktop apps.
Again,general administration, human resource management, technologicaldevelopment, and procurement work together to assist in the purchaseof the inputs for use by the organization. Yelp Inc. involves the useof a high-tech network of interconnected computers, software, andhardware to manage and ensure proper functioning of yelp.com. Thequalified personnel in the different fields offer advice on the mostappropriate and cost-efficient equipment to use thus ensuring theorganization operates profitably.
Core competency analysis
Thecore competency analysis looks at the competitive advantage of anorganization which is ideally drawn from the capabilities of theorganization (Chu and Wu, 2007). The organizational capabilitiesresulting in the competitive advantage for the organization includespecific skills and competencies, and abilities.
YelpInc. employs unique skills and expertise to come up with such aplatform which allows clients to share their experiences through theuse of a phone or computer. Yelp has also made advancement in theplatform to incorporate the responses of the owners of the businessesfollowing a review of their services and products. The platform alsoallows for advertisements by diverse businesses. The combination ofthese services in one platform presents a competitive advantage forthe organization and thus its success.
TheYelp Inc. employs the services of bloggers in explaining andanalyzing reviews of the products and businesses on their website.The bloggers have the abilities to present the information in acatchy manner, hence prompting business owners to make use of thesite to advertise their products in an attractive manner. Thistranslates into the competitive advantage for the organization sinceit is in a position to generate more sales from the advertisements.
Yelp.comprovides information about the availability and reviews on thediverse products and services. This information is available in thesocial media and is accessible at any time of the day. It is,therefore, convenient for clients since they can get crucialinformation without much time and energy. This presents Yelp Inc.with a competitive advantage due to the effectiveness and efficiencyof its services and subsequently, its success.
VRIOanalysis is an analytical tool which helps in identifying thepotentiality of the resources in use by an organization to result incompetitive advantage. VRIO helps in the assessment of the situationof a firm by looking into the resources to identify the competitiveadvantage and the potentiality of improvement.
Theresources in use by Yelp Inc. are valuable, ranging from the humanresources to the technological resources. The resources, forinstance, human resources are rare, bearing in mind it is not easy tofind personnel with the exact expertise as those in Yelp Inc. Thispresents the crucial success factor of employee skills and expertise.Although other resources such are the technological resources are notrare, the fact that they are valuable presents a competitiveconformity with the competing firms. The resources in use by YelpInc. are difficult to imitate. Considering the number of years theorganization has been in operation and the transformations they keepundertaking, it is not easy for competing firms to imitate them. YelpInc. also uses an integrated system and software which is a crucialsuccess factor in competing successfully. Yelp Inc. is as wellorganized to capture value. The use of the social media such as themobile app is a crucial success factor for Yelp Inc. This is evidentfrom the wide range and interconnected services and products theorganization offers. These factors enable Yelp Inc. to remaincompetitive in the industry hence its success.
Internalassessment of an organization is very critical in ensuring that abusiness entity remains competitive and successful in its operations.Various inputs and strategies should be employed in the operations ofan organization for it to be successful. For instance, basing on theassessment of Yelp Inc., it is evident that the organizationincorporates various resources to become what it is today. Theefficient use of tangible and intangible resources has enabled YelpInc. to gain its success. These resources have worked hand in handwith core competencies to offer Yelp Inc. competitive advantage inthe market. Although there are shortcomings, performing an internalassessment is certain to identify the gaps in production andinstigate for corrective measures for the Yelp Inc. to remaincompetitive and successful.
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