Corporate Strategy Case Study

AOL: The Strategic Shift, Will it Payoff

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Abstract:
US based online service provider, AOL, had been the biggest service provider of the world.

Traditionally, providing internet access to the paid subscribers had been the core business of AOL. However, over the time, due to drastic shift towards broadband from dial-up system and competition from free service providers AOL had been invariably losing its paying subscribers.

To arrest its declining core business, on 2nd August, 2006, AOL, announced to reorganize its subscription-based business model and change it to one supported by advertisements. AOL repackaged itself, apart from the core business, as a free, advertising supported web destination. Nevertheless, to execute this strategic shift, AOL had to take restructuring route and lay-off around quarter of its employees around the world. But then AOL chief Jonathan Miller who brought the strategic shift was replaced by NBC veteran Randy Falco just three months after the introduction of new strategy. The case discusses the strategic shift and challenges ahead for AOL.

Pedagogical Objectives:

• To understand the concept and challenges of strategic shift
• To analyse corporate restructuring at AOL
• To understand the rule of leadership in strategic shift and corporate restructuring.

Keywords : AOL; Internet Service Provider (ISP); Business Model; Strategic Shift; Restructuring; Lay-offs; Restructuring / Turnaround Strategies Case Study; Leadership Change; Jonathan Miller; Randy Falco; Quantum Computer Services (QCS); Time Warner; Repositioning; Change in Business Model; Challenges of Strategic Shift; CompetitionInternet and e-commerce