A Case Study About Zynga

Zynga Creating the Next Big Hit -- Or Cashing Out ASAP Describe the business situation, including the macro-environmental and micro-environmental conditions facing the organization. Zynga has had a tremendous rate of growth that has been as marked by a considerable amount of instability in regards to its perceptions among its current and potential investors.

For example, as soon as the company went public, Zynga's stock fell 5% below its $10 initial public offering price to close on the same day; despite the fact that many predicted that it was going to be the hottest IPO in the market (Baker & Barr, 2011).

The stock further went through a near catastrophe when the stock fell nearly forty percent after posting the financial statements about its losses in 2012, many also pointing to its reliance on Facebook for its performance which had announced that it was beginning to distance itself from the online games platform (Gustin, 2012). On the micro level, the company has struggled to innovate and create new sources of revenue streams. Games like Farmville, and other similar Facebook hits, have largely lost their appeal after their initial debut.

In the macro environment, many tech companies have also had problems which has put the whole industry at risk in the eyes of investors. There is a lot of turbulence in the tech industry since so much of it is built on constant innovations. This is especially applicable to companies in the software industry in general, but the gaming industry more specifically. There are many sources of competition that can spring out of nowhere, including startups that can possibly compete with larger companies such as Zynga. 2.

Develop the problem statement: the opportunity or threat facing the organization. The main problem that the case outlines is how Zynga can best position itself for future growth. The company would have more privacy and more flexibility if it went private, which many have stated that the company should do (or have done already). However, if the company could create an innovative new game that could drive revenues like Farmville did for them before, then it would make sense for them to remain a public company. 3.

What alternative strategies and programs would you consider to deal with the opportunity or threat to the organization? Present each alternative in sufficient detail to give the reader an idea of why it may be beneficial.

Strengths Strong Brand Recognition Leadership Real Estate Holdings Weaknesses Industry Volatility Weakened Partnerships (Facebook) Lack of Innovation Opportunities Pursue New Channels (Mobile, PC) Create a New Hit Game Reinvent Social Platforms Threats Shrinking Consumer Base Competition Based on the SWOT analysis, Zynga has to use the resources that it still controls to find sources of innovation that can be translated into real streams of revenue. If the company remains public, it needs to expedite an aggressive approach towards innovation. This would represent the high risk-high reward strategy.

If the company sells out to a private investor, the need to perform in the short-term would be significantly reduced and the company could have more time to focus on its strategy (to some extent). Many analysts have called the social gaming trend something of a fad that will likely fade away over time. This may be true with the first generation of social gaming that became popularized by the simultaneous growth of Facebook, however there are also opportunities to reinvent the social game and revitalize this trend.

There are also opportunities to continue to exploit other gaming platforms such as the mobile sphere which shows a lot of promise for future growth, as well as the pc or tablet platform which also could be significant future opportunities. There are also opportunities to begin to carve out paths in up and coming niches such as the 3D and virtual reality gaming industries that seem to be just burgeoning. 4. Recommend one or more of the alternatives you have identified. Inform the reader of your reasons for these recommendations.

If I were the CEO of Zynga, I think it would make the most sense to continue to explore the mobile platform for future growth. Although platforms such as the virtual reality developments might represent potentially big payoffs, the mobile sphere is a segment that is already developed and represents a prime target for growing market share. Furthermore, this platform is sure to continue growing as people become more and more reliant on their devices and the technology continues to develop quickly and becomes more widespread in the U.S.

market, as well as international markets as well. 5. Describe tracking metrics to determine whether your recommended strategies and programs are effective. Be sure to include both intermediate metrics and conclusive metrics to guide management's redirection of ineffective strategies. Developing metrics for games can be a difficult proposition since there is so much uncertainty and much of the success or failure is primarily dependent upon the consumer reception in the market and if games can go viral, such as the case of Farmville.

However, I think the most appropriate metrics would be based on the competitive position Zynga is able to achieve. For example, if the competition is creating better games.