Executive Summary
Zynga Inc. primarily started to offer its customers social games. Its founder, Mark Pincus, established it to provide a social gaming platform on Facebook (Runge, 2014). Facebook users are provided with free games, and the company generates revenue by selling virtual products or currency within the game. Advertising also earns revenue for Zynga Inc.
Synopsis of the Case
Zynga Inc. was started with the main purpose of offering social games to users on Facebook. As the use of smartphones during this digital age became more popular, the company realized that it needed to catch up in the development department (Burkhalter et al., 2011). In addition to their struggles to keep up with the evolving technology, Zynga Inc. got into a legal issue with their games. The company’s founder thought it was ideal to duplicate other games and create its version (Burkhalter et al., 2011). This move resulted in Zynga Inc. facing numerous lawsuits. Furthermore, employees expressed dissatisfaction with the company’s running, causing it to face legal implications with the top executives.
Relevant Factual Information about the Problem or Decision the Organization Faced
In the beginning, Zynga Inc. was a success, and its partnership with Facebook helped to improve its reputation, and in return, it helped Facebook to increase its users. With the continued growth of Zynga Inc. to develop more games for social networking platforms, the popularity of smartphones increased, leading to increased use of mobile gaming, and users preferred it to computers (Burkhalter et al., 2011). Thanks to this popularity, Mark Pincus and other top executives found themselves in a difficult situation and were forced to adapt to technological changes. Pincus encouraged his employees to duplicate other games, a common practice within the company, and it invited many lawsuits (Burkhalter et al., 2011). Insider trading was another lawsuit that Zynga Inc. faced. After its initial public offering, selling shares was only possible on a certain date, but a loophole was found, and individuals could sell their stock. Afterward, there was a decline in stock price, which was a concern to many.
Explanation of Relevant Concepts, Theories, and Applications Derived from Course Materials
As an organization seeks success in what they offer its customers, a vital aspect that it should research is the competition within the market presently and in the future. According to the class readings, competitive forces exist, which determine the industry’s profitability levels (Landoni et al., 2020). Profitability measurements are in terms of return on investment in the long run. The biggest concern of Zynga Inc. was the competition but in a real sense, they were not since they were duplicating games. Another concern is the entry of new companies into the industry, which were developing mobile-based games in which people could download gaming apps on their smartphones and did not need a PC to play (Landoni et al., 2020). Another important aspect is the board of directors’ responsibility to ensure that the company is running smoothly (Schaltegger, Hörisch, & Freeman, 2019). They should have focused on the company’s stock and ensured Zynga Inc. was free from insider trading. With Pincus as the founder and getting involved in insider trading, it was difficult for other board members to step in and confront Pincus’s actions. They were required to uphold their personal and company code of ethics nonetheless.
Recommendations
Its operations must change to achieve Zynga Inc.’s success, or other gaming companies will continue using them for product duplication. The company needs product innovation, hence, their reason for duplicating other gaming products. Firstly, Pincus should hire personnel with top-notch innovative and creative skills and with high originality levels (Christensen et al., 2018). With this, Zynga Inc. will develop unique gaming products that will attract users on PCs and mobile applications. Another option is to partner with another gaming company to help with game development and innovation. The partnering company can help to bring newer ideas that Zynga Inc. desperately needs. In addition to getting new partners, there is a need for increased capital for the creation of new games (Christensen et al., 2018). This need calls for potential investors in Zynga Inc. The issue with the board of directors needs to be addressed as well. The company’s code of ethics must be revised and highlighted and should apply to everyone in the company, including the founder himself. The insider trading issue should be addressed with seriousness, and all the guilty parties should be brought to book.
Alternative Recommendations
An alternative recommendation is for Zynga Inc. to adopt another platform to offer their gaming products besides Facebook. Some of the platforms can include TikTok, Instagram, and Snapchat (Christensen et al., 2018). This will enable it to gain access to the younger generation who utilize other social networking platforms. Secondly, the company should develop mobile game applications and not solely rely on social media users.
Conclusion
Despite its continued success, Zynga Inc. should realize that technological changes transform the dynamics of the gaming industry. As a company, adapting to new changes and technologies is important. It is clear that innovation plays an important role in the company’s success, and so is the management. The gaming industry flourishes on the creativity of gaming products. So apart from the risk of facing lawsuits due to infringement, Zynga Inc. would risk losing its customers to the new companies coming into the market and have embraced creativity and innovation. Finally, a policy should be adopted at Zynga Inc. to reward gaming product developers if they create a unique and innovative product.
References
Burkhalter, Z., Muller, D., Bagnato, C., Vincelette, J., & Fogarty, E. A. Zynga, Inc.(2011). Whose Turn Is It? Strategic Management and Business Policy.
Christensen, C. M., McDonald, R., Altman, E. J., & Palmer, J. E. (2018). Disruptive innovation: An intellectual history and directions for future research. Journal of management studies, 55(7), 1043-1078.
Landoni, P., Dell’era, C., Frattini, F., Petruzzelli, A. M., Verganti, R., & Manelli, L. (2020). Business model innovation in cultural and creative industries: Insights from three leading mobile gaming firms. Technovation, 92, 102084.
Runge, W. (2014). Zynga, Inc. https://etm.entechnon.kit.edu/downloads/Zynga_Inc.pdf
Schaltegger, S., Hörisch, J., & Freeman, R. E. (2019). Business cases for sustainability: A stakeholder theory perspective. Organization & Environment, 32(3), 191-212.
write