JAC Final Business Proposal

StrategicBusinessProposal 1of38

Strategic Business Proposal

for

JAC Business Development Group

For:Zyngawww.zynga.com

PreparedOn:June13,2015

PreparedBy:AnthonyMolandesCarmenMartinez

JustinFord

InstructorName:MarianthyTroupos

StrategicBusinessProposal Page2of38

ContentsIntroduction............................................................................................................................................................3

ExecutiveSummary............................................................................................................................................3

1.OrganizationalChallenges&ProposedSolution................................................................................................4

OrganizationalChallenges..................................................................................................................................4

ProposedSolution...............................................................................................................................................5

2.EnvironmentalScanning......................................................................................................................................7

InternalAnalysis..................................................................................................................................................7

ExternalAnalysis...............................................................................................................................................10

3.StrategyFormulation........................................................................................................................................13

Operations........................................................................................................................................................13

Sales,Marketing,&Distribution.......................................................................................................................15

Legal&Ethical...................................................................................................................................................16

4.ProposalBudget&Projections.........................................................................................................................17

SalesProjections...............................................................................................................................................17

CostAnalysis.....................................................................................................................................................18

ProjectBudget..................................................................................................................................................21

5.StrategyImplementation.................................................................................................................................22

TimelineandProposedMilestones..................................................................................................................22

6.StrategyEvaluation..........................................................................................................................................23

EvaluationStrategy&Benchmarks...................................................................................................................23

7.AppendicesandReferences.............................................................................................................................24

References........................................................................................................................................................24

Appendices.......................................................................................................................................................34

Appendix1:CompetitiveAnalysis................................................................................................................34

Appendix2:SampleMarketingMaterial....................................................................................................35

Appendix3:ProposedSolutionCostBreakdown…………………………………………………………………………………..…36

Appendix4:FinancialChartsandGraphs…………………………………………………………………………………………….……37


Appendix5:DayCareFloorPlan……………………………………………………………………………………………..…..…………..38

IntroductionExecutiveSummary

June14,2015

DearSirs,

JACBusinessDevelopmentGrouphascreatedaproposalthatwefeelconfidentwillleadtoanincrease

in success for Zynga.With thorough research, we have completed a plan inwhich the current low

moraleofthecompany’semployeeswillbeaddressedaswellaswaystogoaboutimplementingnew

strategiestodrivethecompanytowardsuccess.

Withminimumfinancialcontribution,ourplanoutlineshowafewkeyemployeeperkssuchasflexible

time,allowingforcreativefreedomandinputfromtheemployeesasencouragedbythecompanycore

values,andbuildingofachildcare facilitycanbenefit theemployees,andultimately thecompany’s

success.

We hope you will consider our proposal as it would be lucrative to the employees, board, and

shareholdersofZyngaalike.

Sincerely,

AnthonyMolandes,CarmenMartinez,andJustinFord

JACBusinessDevelopmentGroup


1:Challenges&SolutionsOrganizationalChallenges

In2007,ZyngastartedoffstrongwiththeirreleaseofTexasHoldEm'totheFacebookplatform

(Buckman,2009)andhadcontinuedsuccesswithFarmVille,CityVille,andMafiaWarsthrough2010.

(Farivar,2013)Thoughhehadearly success,MarkPincuswantedmore,and toget theredid“every

horriblethinginthebook”(Farivar,2013)toensuremoneykeptcomingin–andquickly.Amongthe

tactics used by Pincuswas to take games that had shown success in other companies and create a

gamealmostidenticaltopiggybackonthatsuccess.(Saint,2010)

Zynga has struggled to move from its Facebook platform model into the mobile gaming

industry.(Evangelista,2014)PriortoarecentreleaseofEmpiresandAlliesinMayof2015,Zyngahas

notreleasedagamesince2013.(ZyngaGames-IGN,n.d.)WithPincusscrappingmanyofthegameshis

createdanddeveloped,hisemployeeswereangered.(Buckman,2009)

In an attempt to raisemorale and lighten the office atmosphere Zynga hired a half a dozen

clownsasafunprank,howevertheclownshadtheoppositeeffect.(Carr,2013)Atopmanagerofthe

company stated that the clowns were making noises, getting into everyone’s faces, disrupting

meetings,andgenerallyjustmakingeveryoneangry.(Carr,2013)

AnotherfailedattemptbyPincustomakepeoplehappier,wassimilartotheclowncatastrophe.

Pincushiredmariachis. (Carr, 2013)A former Zyngadeveloper furtherpointsout that themariachis

weredistracting,andtheydidnothelptomakethemoodlighterashoped.(Carr,2013)

With low employeemorale and no fresh ideas to produce new games, Zyngawas forced to

beginclosingdownoffices. In2012,cutsbeganwitha5%reductiontoemployees,closingdownthe

offices inAustinandBostonaswellasshuttingdownanumberofgames. (MacMillan,2013)Byhalf

waythrough2013,morereductionsweremadeandofficesinDallas,NewYork,andLosAngelesshut


theirdoors.(MacMillan,2013)Bejing,Chinaofficewassoontofollowinearly2015(Derrick,2015).

MorerecentreportsshowthatZyngaisagainplanningareductionbyaround20%,closingthe

Orlandoofficeand further reducing theworkforceatother locations. (Kain,2015)EvenMarkPincus

statestheyhave“overburdenedourgameteams.”(Kain,2015)

ProposedSolutionDue to the low morale from overburdened game teams (Kain, 2015), and generally angry

employees(Buckman,2009),weproposecreatingstrategiesandperksforemployeestohelpincrease

themoraleamongsttheemployeeswho,amidstreductionafterreduction,(MacMillan,2013)needto

begivenconfidenceintheircompany.

Manyitemstoboostmoraleandlowerstresslevelsatthejobcanbeimplementedwithlittleor

nocost.Oneofthemajorcausesofstresstowomen(andmanymenwithfamilies)isanoverlystrict

schedule. (“7 Ways Employers...” 2014) Allowing employees to work remotely with carefully set

guidelinesandcommunicationwiththeemployer,canallowsomeflexiblefreedomtocompletework

taskswhilebeingabletocareforasickchild,havehomerepaircompleted,etc.Givinganemployeea

chancetogetworkdoneinamorerelaxedenvironmentwillshowthemyoucareforthemaswellas

providinganoptioninsteadoftakingtimeoff.

Since one of Zynga's larger issues is the lack of new games, implementation of an 80/20

creativitysplitcanbothmaketheemployeehappyaswellashavingthepotentialforevenmoregame

output.Thebasicpremiseforthisprogramistohavetheemployeeworkontheirassignedtasksfor

80% of the time, andwork on something that excites them but is still in someway related to the

company theother20%. (Mediratta, 2007) If yourmainproject isnot something that isparticularly

excitingtoyou,butyouhavean ideaforanothergamethatstimulatesyourcreativeside,yougeta

chancetoexplorethatidea.Thiscouldmeanagreatprojectcouldbeproducedthatwouldbenefitthe

company,allbecausetheyweregiventhefreedomtoexploretheircreativeside!


AnotherperkZyngacouldofferwouldbeanon-sitedaycare facility.Byofferingemployeesa

reducedcostforchildcareattheirfacility,thiswouldbenefitbothemployerandemployee. Studies

have shown that when day care is offered at the workplace, time taken off, missing work are

decreased,andemployeehappinessisincreased.(Hahn,2007)Instartinganon-sitedaycarefacilityin

theSanFranciscoheadquarters (wheremostofZynga'sworkforce isstationed)employeescanfocus

onputtingputagoodproductfortheircompanywithoutworryabouttheirchildren.Withanaverage

upstartcostofaround$83,000(Huntington,n.d.),andtheaveragechildcareworkermaking$9.03per

hour,(“ChildCare...”,n.d.),thisventurewouldcostanestimated$751,296peryear(assuming15%of

employeeshavechildrenbasedonCensusdataandallowingforcommuters).(USCensusBureau,n.d.)

Sincethisissuchalargenumber,wewouldproposetheemployeecoverhalfofthecost.Thiswould

costZyngaabout$376,000peryear,andcomestoabout$2,025peryeartotheemployee,perchild

whichwillcoverchildcareworkerswatchingthechildaswellascontributingtowardfutureequipment

purchasesandanyotherassociated fees. In SanFrancisco, theaverageyearly costof full timechild

careisaround$18,000foreachchild.(Children'sCouncil,2015)Theinvestmentwouldbesignificant,

butthereturnontheinvestmentwouldbemoreproductiveemployees,lessmissedworktime,anda

perkthatwouldbeverymuchappreciated.Inaddition,researchshowsanon-sitedaycarefacilitycan

saveabout$200,000.(“DayCare...”,2014)

With employees expressing they feel like the environment they work in is lacking (“Zynga's

Flaws...”, 2013), building solid working relationships is important. Through introducing quarterly

bonding and team building activities, employees can get a chance to connect on a deeper level.

Activities that we propose could include an outing for employees and their families to Six Flags

DiscoveryKingdom,acateredcompanypicnic,andanopportunityforcommunityservice.Twoofthe

bondingdays(SixFlagsandPicnic)canbeafterworkoraweekendactivity.Thecommunityserviceday

couldbestructuredtoeitherbeduringworkinghoursdoneduringaweekend,dependingoncurrent

companydemand.(seeAppendix4forproposedcostbreakdown)

Someoftheintangiblebenefitsofourimplementationswillbeincommunityinvolvementand

companyexposure.Throughcompanywidecommunityserviceactivitiesheldonceayear,Zyngawillbe


able to add their charitable contributions to their resume as well as gaining exposure in their

community,andlikelyinthepress.

2:EnvironmentalScanningInternalAnalysis

CompanyOverview MarkPincusfoundedPresidioInc,whichwaslaterchangedtoZynga,in2007.Pincus,aHarvard

Business School graduate, began with 27 employees and venture capital funding of $5 million.

(Takahashi,2011)Beforelong,peoplecouldseethathewasheadinginapowerfuldirection,andmore

money started pouring in. By 2008, he had received more than $200 million dollars from venture

capitalists, giving him and the company a lot ofmoney to produce games that had people talking.

(Takahashi,2011)

The games that gained huge success were created for use through the Facebook platform,

whichbenefitedbothZyngaandFacebook.(Shields,2011)GamessuchasFarmVille,MafiaWars,and

CitiVillewereamongthegreatestsuccessesoftheearlycompany.(Buckman,2009)Infact,FarmVille

wassopopular,withinjusttwomonthsofitsrelease,ithadover11milliondailyusers!(Dybwad,2009)

With the in-app purchases that were available, allowing people to grow their virtual farms more

quickly and decorate them more elaborately, the game showed success in popularity as well as

monetarily.

CoreValues(Rosoff,2011)

• Build games you and your friends love

toplay

• Surpriseanddelightourplayers

• Zyngaisameritocracy

• BeaCEOandownoutcomes

• MoveatZyngaspeed

• PutZyngafirst,decisionsforthegreater

good


• Alwaysinnovate

MissionStatement:(“AboutZynga”,n.d.)

Connecttheworldthroughgames

Our proposed solution to boost companymorale in order to provide the companywith the

strengthandfoundationitneedsamongitsemployeestocreateanenvironmentwherecreativitycan

onceagaintakecenterstage.Thisincreaseinmoraleandcreativitywillinturn,boosttheplummeting

stockofthecompanyandbringitbacktothesuccessfulstatethatithaduponitsinception.Positive

moraleamongstemployeescanmeananincreaseinwork,production,andprofitabilityforacompany.

Organizationscan'tsucceedwithouttheiremployees.(Conner,2014)

FinancialStandingsZynga’s financial statement is a depressing one. The graph above shows the gradual fall of

Zynga'sprofits.Their total revenue-endingyear2012was$1.28billion, for2013 itwas$873million,

andfor2014itwas$690million(GoogleFinance,2015).ThegraphabovealsoshowsNetincome.2012

endedayearwith -$209million,2013endedwithabetterbutstill far fromimpressive-$37million,

and2014skyrocketedtoarecordlowof-$245million(GoogleFinance,2015).

The above graph represents Zynga’s total assets and debt for the past several years. Total

assetsendingyear2012wereatotalof$2.58billion.2013totalassetswere$2.3billion,and2014’s

totalassetswere$2.4billion(GoogleFinance,2015).Thoughthechartabovedoesn'tvisiblyreflecta

lot of debt Zynga’s numbers are still far from where they should be. Zynga's deferred income tax

numbersreflect$25millionfor2012,$0for2013,and$5.3millionfor2014(GoogleFinance,2015).


OrganizationalStrengths

Zynga, no doubt has its share of troubles, but there are also still some points that show

promise. Throughout all of their troubles, Zynga still records about 25milliondaily users. (“Zynga –

DailyActiveUsers2015”,n.d.)Inaddition,Zyngaiscontinuingitstransitionintothemobilemarketand

away from just using the Facebook platform. (“Zynga Announces First…”, 2015) Zynga is keeping a

focusonthemoneymakersofthecompany:FarmVille,ZyngaCasinoandWordswithFriendsgrowing

andthrivingtoinsureconsistentrevenuestreams,anddespiteallrecentproblemsarelookingatnew

gamesthroughtheirEuropeanofficetolaunchin2016.(“ZyngaAnnouncesFirst…”,2015)

OrganizationalWeaknesses

Problemswithinacompanycanoftenbetracedbacktotheleaders.Withstatementsmadeby

founderMarkPincusthathe is“boredwithallgames”(Fahey,2013), thiscannotresonatewellwith

employees or investors. Showing steady loss in revenue since 2010 and daily users falling from 72

millionto39millionbetweenJune2012andJune2013,(Quigley,2013)Zyngaisdefinitelysuffering.

With employees angry and feeling like their work environment is not healthy (“Zynga's

Flaws...”,2013)thisonlymakestheproblemsworse.Pincusridingthecoattailsofthesuccessofother

populargames(Saint,2010)andtakingawaythecreativefreedomofthedesignershaskeptawedge

betweentheleadersandemployees.

Pincusseemstofeelthatacquisitionofothergamingcompaniesisthewaytostrengthenthe

Zyngabrand,butso far,acquisitionssuchasOMGPOP,andmorerecentlyNaturalMotionhavedone

little more than drive the company further into debt. (Tiku, 2014) The latest $527 million dollar

acquisition of NaturalMotion was met with the announcement of layoffs on the horizon, further

increasingtheangeroftheemployeesthatarealreadyfeelingthestress.(Tiku,2014)

CustomersOurcustomerbaseisuniquebecausethecustomersthatwearetryingtobenefitisactuallythe

employeesofZynga.Withthelowmoraleofthecompanyatpresent,programsandincentivesneedto


beputintoplacesoourcustomer(theemployee),onceagainfeelsvalued.Thisvaluewillincreasethe

overallperformanceofandproductiveness.Thegreatestcompanyassetistheemployeesthatworkfor

them.(Ali,2010)“Theyaretheenginethatdrivesproductivityandresultsandthereforetheirsenseof

moraleandmotivationwillimpactthecompany’ssuccess.”(Ali,2010)

Currently, the customer (employee)morale is so low and theworkers are so stressed (Kain,

2015) it is showing in theirperformanceand lackof gameproduction. (ZyngaGames-IGN,n.d.) This

lack of new games is affecting the other customer set, the actual game players. The decrease in

number of daily game users from 72 to 39million aswell as their lack of profit since 2010 clearly

demonstratesthatthecompanystructureandlackofcompanymoralehascausedfinancialsuffering.

(Quigley,2013)

ExternalAnalysis

CompetitorsThe first direct competitor is EA, Electronic Arts. In recent years, EA, partly due to the

acquisitionofDICEin2006,(“EAAcquires…”,2006),hasbrokenfurtherintothemobilegamingworld.

Theydevelop,market,publish,anddistributegames.Theirtopmobilegamestheyarebestknownfor

areBattlefield,MassEffect,NeedforSpeed,DragonAge,Sims,Bejeweled,andPlantsv.Zombies.They

alsoareknownforFIFA,MaddenNFL,andStarWarsgames.Thefocuson“developingandpublishing

interactivegamesformobilephonesandtablets”(GoogleFinance,2015)Withallofthesehardhitting

gamescoupledwiththeshutdownofZynga’sOrlandooffice(Kain,2015),EAhasprimeopportunityto

recruit the recently discarded employees of Zynga to help them in furthering their mobile gaming

department. This is not only an opportunity to pick up some talented game designers, but has the

potentialthroughword-of-mouthtohaveanevenmoreZyngaemployeesapplytoworkforacompany

withasolidplantoexpandandgrowwithoutallofthestressthatZyngacurrentlyoffers.(Kain,2015)

Another strong competitor isDeNACo. LTD.DeNAdevelopsandoperatesmobileandonline

services worldwide. They operate using “Mobage” which is a social game platform that hosts over


1,000freetoplaygames.SomeofthesefreegamesincludeStarWarsGalacticDefense,Transformers

AgeofExtinction,andCupcakeCarnival(Mobage,2015).

MobilegamegiantKing Inc.,creatorofCandyCrush,BubbleWitchSagaandFarmHeroSaga

(King.com, n.d.), is definitely a company that Zynga needs to have in their sites. In their recently

releasedfirstquarterfinancialreport,theyhaveincreasedindailyactiveusers,monthlyactiveusers,

and unique active users by a significant margin since the 2014 first quarter. (“King Q1…”, 2015)

Additionally, King has plans to launch new midcore games and expand their reach to new

demographics in 2015 (Takahashi, 2015), making their ever diversifying profile a concern to the

currently stale Zynga climate thathasnotproducedanewhit game since2010. (ZyngaGames-IGN,

n.d.)

Allofthesecompetitorshavehighqualitygamescurrentlyonthemarkerthatarelovedbytheir

users,butdon'tstopthere.Thesecompaniescontinuetonotonlyimprovethegamestheyhave,but

alsocomeoutwithmanynewgamestokeeptheusershappyandfindingnewwaystofurthertheir

marketingreach.

BusinessClimateAccordingtoeMarketer,themobilegamingmarketislookingtoincreaseinthefutureandwill

exceed console gaming in revenue. (“Mobile Gaming Revenues…”, 2014) It is estimated that the

growthamongthemobilegamingindustrywillgrowaround$5billiondollarsbetween2014and2015,

andjumpanother$10billionby2017.(“MobileGamingRevenues…”,2014)KingInc.,amobilegaming

powerhousewithhitssuchasCandyCrushSagaandCandyCrushSodaSaga(Rossignol,2015),shows

growththefirstquarterof2015aswellasshowingtheirabilitytobringmorehitgamestothemobile

gamingmarket. (Price, 2015)With this growing trend towardmobile games in the next few years,

thereisperfectopportunitytotighteninternalcompanystructuretocapitalizeonthismarket.

With trends showing that disposable income is growing, and is projected to continue this

upwardclimbthrough2025,(“UnitedStatesDisposable…”,n.d.),theamountofin-apppurchasesthat

mobilegamingcompaniesseeshouldfollowthistrendaswell.


According to recent studies,womenover theageof 18 comprise36%of gamers.Adultmen

(over 18) comprise another 35% of gamers, for a combined total of 71%! (Romano, 2014) These

statistics indicate thatwhatwas once thought about young, teen-aged boys comprising the largest

groupofgamersisnolonger(ifever)true,andthemarketmustadjusttomeetthesedemographics.

(Romano,2014)

Ofallgamers,theaverageageis31yearsold,and52%maleand48%female.Inrecentyears,

therehasbeenaspikeamongwomengamersthatareovertheageof50(Romano,2014),makingthis

demographiconethatneedstobeconsideredwhencreatingnewgames,ormarketingpresentgames.

WiththenewHTML5enteringthemarket,itwillproveeasierformobilegamingcompaniesto

make their games available on a number of platformswithout thework. This technologywill allow

appstobecompatibletoiOS,Android,BlackberryandWindowsphoneplatforms.(SenchaTouch,n.d.)

Mobilegamingcompaniesneedtostartbudgetingforthisnewtechnologythatcouldsavethemtime

andenergytogettheirgamesonmultipleplatforms.(SenchaTouch,n.d.)

BusinessOpportunitiesWithamobilemarketthatissettoincreaseinthecomingyears,overshadowingthetraditional

console gaming devices (“Mobile Gaming Revenues…”, 2014), there is great opportunity for

companies,especiallythosesuchasZyngawithanestablishednameandfanbase,tolaunchnewand

excitinggameswithsuccess.

MovingawayfromtheFacebookcenteredmodelandintothemobilegamingplatformcanbea

great avenue of success for a now struggling Zynga. (Thomas, 2013)With HTML 5 allowing gaming

companies tocreategamesthatwillworkwithvirtuallyanymobilegamingplatform(SenchaTouch,

n.d.),Zynganowneeds thecreativeminds itemployees thathavecreatedsuccessfulgamessuchas

FarmVille to come out with new games that their users can begin enjoying apart from Facebook.

(Farivar,2013)

BusinessThreatsWithnorealexperienceinthegrowingmobilemarket(SenchaTouch,n.d)Zyngawillhaveto


regroupand creategames that are interesting to the consumer, yetdonot require largeperiodsof

time to play. (Webster, 2015) Mobile game users need exciting and engaging games that do not

require that they have to look at the screen for long periods of time – that is just not howmobile

playersoperate.(Webster,2015)

LargecompetitorssuchasKingInc.,creatorsofCandyCrushSagaandCandyCrushSodaSaga

(King.com,n.d.)andDeNA,creatorsofAgeofExtinction(Mobage,2015),ElectronicArtsandtheirvast

array of mobile sports games (Mobile Games, n.d.), Zynga has its work cut out to catch up in the

mobilegamingindustry.(Webster,2015)

Theabilitytokeepkeyemployeesaswellasattractnewemployeestohelpwithnewexpansion

into the mobile market will be key in Zynga’s success. (“Zynga Inc…”, 2015) The employees are

necessaryindevelopinggamesthatwillmakeZyngamoneyincurrentandmobilemarkets.

3:StrategyFormulationOperations Wehave proposed a transformation of the benefits that are offered to Zynga’s employees by

settingupathreeyearimplementationprogram.Wefeelthatinmakingtheemployeefeelvaluable,

thecompanywillseethebenefits(Cooper,2012)oftheseeasyandcosteffectivetools.Thebenefits

extendthroughoutthecompany,soeveryonefromthetoptobottomwillseetherewards.

The80/20creative split, allowing theemployee to spend20%of their timeonanactivity that

pertainstomobilegaming,butisnotintheirtypicalduties,willneedtobemonitoredbymanagement

andrecordedbyhumanresourcessothattheseprojectsandthebenefitstheybringthecompanycan

bemeasured.Thismayinvolvegivingeachemployeeanassignedtimeforthiscreativedevelopment,

orcodingtheir timeworkedontheseprojectsdifferentlyontheir timesheetor thecompany’s time

trackingcomputerprogram.

Alsobeginninginyearonewewillimplementtheflexiblescheduleprogram.Thisprogramcanbe


anallotmentofdayswithintheyear,allowingtheemployeetoworkfromhomewhentheyhaveasick

child,householdissue,etc.,wheretheywouldotherwisehavetotakeasickorpersonalday.Research

showsthatupto78%ofpeoplewhocallinsickarereallydealingwithhouseholdissuesorstressand

aren’tactuallyill.(“CostsandBenefits”,n.d.)Thisflexibleschedulewouldbemonitoredthroughtheir

computeractivitythroughtheirdirectsupervisorandreportedtothehumanresourcedepartmentto

bedeductedfromtheirallotteddays.Thiswouldinsurethattheseflexdayswerenotbeingusedasa

dayoff,butrathertheflexibilitytoworkfromaremotelocation.

Wewillbeaddingafewteambuildingandsocialactivitiestobuildbondsforastrongerteamat

work.(Harper,2012)Oneoftheseactivitieswillbeacommunityserviceproject.Thisnotonlygetsthe

employeestoworktogetherinanexternalenvironmentbutalsogivesbacktoyourcommunitywhile

givingthecompanypositiveexposure.(Harper,2012)Thedatesoftheseactivitieswillvarydepending

upon the specific need of the community at the time. Management will need to research the

communityneedandcoordinatethedatewitheachdepartmenthead.

Thetwocompanyfundayswillneedtohavesomeoneassignedtotakingcareoforganizingthe

day.Forthethemepark,theonlycoordinationwillbesomeonewhoisthecontactforthecompany

andmakestheticketpurchase.Ticketscanbehandedoutthrougheachdepartment’smanager,orata

designatedpickuplocation.Forthecompanypicnic,alocationandorderingofthefoodwillneedto

becoordinated.ThiscouldevenbeheldwithintheZyngafacilitysofamiliescanseewheretheirloved

onesareduring theday.Human resourceswillnotneed tobe involvedas thesedays caneitherbe

weekendsoradaythatthecompanysetsasidetopromoteafamilyday.

Thesecondyearwillbringneedtofindandhireacompanytocomeandsetupthedaycarearea.

(SeeAppendix5)Withrecentandupcomingstaffingreductions(Kain,2015)thereissuretoberoomin

the gigantic 556,000 square foot, 6 story building to house the child care center (“Inside Zynga’s

Gigantic…”,n.d.). Throughplanningofuppermanagement teams, theexact locationcanbedecided

upon,andtheselectedcompanycanbehiredtomake itcometo life.Somemarketingto invite the

employees to this new opportunity can be done through signage within the facility and


announcements via e-mail. Human resources will need to be prepared to have forms available for

thosesigninguptohavetheemployeeportionofthechildcarepayrolldeducted.

In monitoring through human resources, management and staff feedback, and productivity

numbers, Zynga should be able to see these implementations working through increase in game

development,employeesthat feelasenseofvalueandbelonging,and inturn investmoretimeand

energyintotheirwork,andincreasedprofits.

Sales,Marketing,&DistributionSincetheemployeesofZyngaareourcustomers,wedonothaveatypicalsalesmodel.Oneof

theonlyproductstotheemployeethatcanbeviewedasasellableitemistheemployee’sportionof

theproposeddaycaremodel.Eachchildthat isenrolled inthedaycareprogram,theemployeewill

haveamonthlypayrolldeduction(tobesplitevenlyamongtheirpayperiods)of$168.75totalingto

$2,025eachyear.Thiscostwillpayforthecaretheirchildreceivesaswellasprovidingthecompany

anadditionalincomeof$80,000peryeartocoveranyequipmentorlicensingfeesthatmayarise.

Thisnewperk to theemployeewillbepromoted through theZyngaheadquartercampusvia

informational flyers and posters placed at the entrance of each department (See Appendix 2).

Additionally, e-mails will be sent companywide to further promote and explain the procedure for

signingchildrenupfor theprogramandgettinghumanresourcestheproperpaperworktohavethe

servicepayrolldeductedeachcheck.

Studies have shown thatwhen day care is offered at theworkplace, time taken off,missing

workaredecreased,andemployeehappinessisincreased.(Hahn,2007)Instartinganon-sitedaycare

facility in theSanFranciscoheadquarters (wheremostofZynga'sworkforce is stationed)employees

can focusonputtingputagoodproduct for their companywithoutworryabout their children.The

investment would be significant, but the return on the investment would be more productive

employees, less missed work time, and a perk that would be very much appreciated. In addition,

researchshowsanon-sitedaycarefacilitycansaveabout$200,000eachyear.(“DayCare...”,2014)


Boththeflexibledaysand80/20splitmodelwillbemarketedthroughmeetingsandcompany

e-mails.Employeeswillbemadeawareattheirteammeetingsthattheseperkswillbeaddedasapart

of the company restructure and guidelines and rules outlining expectationswill be handed out and

explained.Human resourceswillneed tobe involved in this toensure thatproper tracking is taking

placesothatbenchmarksandgoalscanbeevaluated.

Legal&Ethical

LegalFactors GettinglicensedthroughtheCaliforniaChildCareLicensingDivisionissomethingthatneedsto

behandledbythecompanyandreviewedbya legalteam.(Steingold,n.d.)Additionally,youhaveto

take into consideration local zoning lawsandmake sure you fallwithin theseguidelines. (Steingold,

n.d.)

Daycareworkerswillneedtobescreenedtomakesuretheyareproperlytrainedandhaveno

criminal background. (Steingold, n.d.) The equipment that is put into the facility must meet safety

standardstocomplywithCalifornialawaswellashavingdisasterplansinplacetoensurethesafetyof

thechildrenandworkers.(Steingold,n.d.)

Thestatehastheauthorityforroutineinspectionstoensurealllawsandregulationsarebeing

met (Steingold, n.d.), so the company needs to have someone perform routine spot checks so that

there are no problems when these state inspections are performed and prevent any legal

repercussions.

Liabilityinsuranceneedstobesecuredthroughthecurrentinsurancepolicyholdertocoverthe

childrenandthedaycareworkerswhileonZynga’sproperty.Thispolicyshouldencompassissueslike

sexualabuse,childmolestation,andcorporalpunishment.(Steingold,n.d.)

EthicalConsiderations


Problemswithinacompanycanoftenbetracedbacktotheleaders.Withstatementsmadeby

founderMarkPincusthathe is“boredwithallgames”(Fahey,2013), thiscannotresonatewellwith

employeesorinvestors.

Pincusseemstofeelthatacquisitionofothergamingcompaniesisthewaytostrengthenthe

Zyngabrand,butso far,acquisitionssuchasOMGPOP,andmorerecentlyNaturalMotionhavedone

little more than drive the company further into debt. (Tiku, 2014) The latest $527 million dollar

acquisition of NaturalMotion was met with the announcement of layoffs on the horizon, further

increasingtheangeroftheemployeesthatarealreadyfeelingthestress.(Tiku,2014)Theproposalto

save$100millioneachyearasjustificationforlayoffs(Kain,2015)doesnotshowthatPincusandother

Zyngaexecutivesareplacinganyvaluetheemployees.

Zynga’scorevaluesstate,“BeaCEOandownoutcomes”and“PutZyngafirst forthegreater

good”(Rosoff,2011),butinscrappinggameideas(Buckman,2009)whenthecompanyhasnothada

newgamehitsince2013(ZyngaGames-IGN,n.d.)theemployeeshavenotbeengiventheopportunity

byPincustoliveoutthosevalues.

4:ProposalBudget&ProjectionsSalesProjections Through implementation of ourmorale boosting strategies, Zynga should be back on track to

produceexcitinggamesandonceagainbeabletogeneratehigherrevenue.In2011,FarmVilleearned

$11.8million in saleswithin the first threemonths. (Pepitone,2011)Withhighermorale andZynga

workingtowardfocusingmoreonmobilegamingstrategy(Evangelista,2014),Zyngawillonceagainbe

ontrackforproducingmoregaminghits.

Withanaverageupstartcostofaround$83,000(Huntington,n.d.),andtheaveragechildcare

workermaking$9.03perhour, (“ChildCare...”,n.d.), thisventurewouldcostanestimated$751,296


per year (assuming 15% of employees have children based on Census data and allowing for

commuters). (US Census Bureau, n.d.) Since this is such a large number, we would propose the

employeecoverhalfofthecost.ThiswouldcostZyngaabout$376,000peryear,andcomestoabout

$2,025peryear totheemployee,perchildwhichwillcoverchildcareworkerswatchingthechildas

well as contributing toward future equipment purchases and any other associated fees. The

investment would be significant, but the return on the investment would be more productive

employees, less missed work time, and a perk that would be very much appreciated. In addition,

researchshowsanon-sitedaycarefacilitycansaveabout$200,000.(“DayCare...”,2014)

Theother cost for teamboosting in theproposalwouldbemodest and implementedovera

threeyearperiod.

IfZyngaisabletocreateagamewiththeincreaseproductionfromtheirmoraleboostandcan

make 5% of the profits of FarmVille in 2011(Pepitone, 2011) the first two years and 10% of those

profitsinthethirdandongoingyears,therewouldbealotofmoneytobemadeoffoftheinvestment.

$0.00

$200,000.00

$400,000.00

$600,000.00

$800,000.00

$1,000,000.00

$1,200,000.00

$1,400,000.00

Year1 Year2 Year3 Ongoing

PotentialProLitvs.Cost

ProgramImplementationCost PotentialGrowth TotalProjectedProLit


CostAnalysisManyitemstoboostmoraleandlowerstresslevelsatthejobcanbeimplementedwithlittleor

nocost.Oneofthemajorcausesofstresstowomen(andmanymenwithfamilies)isanoverlystrict

schedule.(“7WaysEmployers...”2014)Allowingemployeestoworkremotelywithcarefullyset

guidelinesandcommunicationwiththeemployer,canallowsomeflexiblefreedomtocompletework

taskswhilebeingabletocareforasickchild,havehomerepaircompleted,etc.Givinganemployeea

chancetogetworkdoneinamorerelaxedenvironmentwillshowthemyoucareforthemaswellas

providinganoptioninsteadoftakingtimeoffwithouthavingtheestimated78%ofpeoplejusttakinga

sickday.(“CostsandBenefits”,n.d.)Takingtheaveragesalaryof$116,179.64amongallpositionsat

Zynga,coupledwiththe78%ofsickdayswhereemployeesarenotreallyill(“CostsandBenefits”,n.d.)

givesthecompanyapotentialsavingsof$90,620.12eachyear.

SinceoneofZynga'slargerissuesisthelackofnewgames,implementationofan80/20

creativitysplitcanbothmaketheemployeehappyaswellashavingthepotentialforevenmoregame

output.Thebasicpremiseforthisprogramistohavetheemployeeworkontheirassignedtasksfor

80%ofthetime,andworkonsomethingthatexcitesthembutisstillinsomewayrelatedtothe

companytheother20%.(Mediratta,2007)Thereisnocostfortheimplementationofthisprogram.

Anotherperkweproposewouldbeanon-sitedaycarefacility.Byofferingemployeesareduced

costforchildcareattheirfacility,thiswouldbenefitbothemployerandemployee.Studieshave

shownthatwhendaycareisofferedattheworkplace,timetakenoff,missingworkaredecreased,and

employeehappinessisincreased.(Hahn,2007)Instartinganon-sitedaycarefacilityintheSan

Franciscoheadquarters(wheremostofZynga'sworkforceisstationed)employeescanfocusonputting

putagoodproductfortheircompanywithoutworryabouttheirchildren.Withanaverageupstartcost

ofaround$83,000(Huntington,n.d.),andtheaveragechildcareworkermaking$9.03perhour,(“Child

Care...”,n.d.),thisventurewouldcostanestimated$751,296peryear(assuming15%ofemployees

havechildrenbasedonCensusdataandallowingforcommuters).(USCensusBureau,n.d.)Sincethis

issuchalargenumber,wewouldproposetheemployeecoverhalfofthecost.ThiswouldcostZynga


about$376,000peryear,andcomestoabout$1,670peryeartotheemployee,perchild.InSan

Francisco,theaverageyearlycostoffulltimechildcareisaround$18,000foreachchild.(Children's

Council,2015)Theinvestmentwouldbesignificant,butthereturnontheinvestmentwouldbemore

productiveemployees,lessmissedworktime,andaperkthatwouldbeverymuchappreciated.In

addition,researchshowsanon-sitedaycarefacilitycansaveabout$200,000.(“DayCare...”,2014)

Withemployeesexpressingtheyfeelliketheenvironmenttheyworkinislacking(“Zynga's

Flaws...”,2013),buildingsolidworkingrelationshipsisimportant.Throughintroducingquarterly

bondingandteambuildingactivities,employeescangetachancetoconnectonadeeperlevel.

ActivitiesthatweproposecouldincludeanoutingforemployeesandtheirfamiliestoSixFlags

DiscoveryKingdom,acateredcompanypicnic,andanopportunityforcommunityservice.

1stYearCost 2ndYearCost 3rdYearCost OngoingCost

ChildCareFacilityBuild$-

$83,000.00

$-

$-

ChildCareWorkers$-

$-

$751,296.00

$751,296.00

TeamBuilding-ThemePark$165,000.00

$-

$165,000.00

$165,000.00

TeamBuilding-Picnic$-

$72,000.00

$72,000.00

$72,000.00

TeamBuilding-CommunityService

$15,000.00

$-

$15,000.00

$15,000.00

TOTAL$180,000.00

$155,000.00

$1,003,296.00

$1,003,296.00

OffsetofCosts

EmployeeChildCareOffset$-

$-

$455,625.00

$455,625.00

SavingsforFlexTimeImplementation

$90,620.12

$90,620.12

$90,620.12

$90,620.12

SavingsforMissedTime-ChildCareFacility

$-

$-

$200,000.00

$200,000.00

GRANDTOTAL$89,379.88

$64,379.88

$257,050.88

$257,050.88


ProjectBudget

1stYearCost 2ndYearCost 3rdYearCost OngoingCost

ChildCareFacilityBuild -$ 83,000.00$ -$ -$

ChildCareWorkers -$ -$ 751,296.00$ 751,296.00$

TeamBuilding-ThemePark 165,000.00$ -$ 165,000.00$ 165,000.00$

TeamBuilding-Picnic -$ 72,000.00$ 72,000.00$ 72,000.00$TeamBuilding-CommunityService 15,000.00$ -$ 15,000.00$ 15,000.00$

TotalExpense 180,000.00$ 155,000.00$ 1,003,296.00$ 1,003,296.00$

EmployeeChildCareOffset -$ -$ 375,648.00$ 375,648.00$SavingsforFlexTimeImplementation 90,620.12$ 90,620.12$ 90,620.12$ 90,620.12$SavingsforMissedTime-ChildCareFacility -$ -$ 200,000.00$ 200,000.00$

TotalOffset 90,620.12$ 90,620.12$ 666,268.12$ 666,268.12$

5%ofProfits(BasedonFarmVille2011 590,000.00$ 590,000.00$10%ofprofits(basedonFarmVille2011) 1,180,000.00$ 1,180,000.00$

TotalProjectedReturn 590,000.00$ 590,000.00$ 1,180,000.00$ 1,180,000.00$

GRANDTOTALPROJECTEDPROFIT 679,379.88$ 654,379.88$ 1,517,027.88$ 1,517,027.88$

OffsetofCostsDirectfromEmployee

ProjectedCompanyReturn


5:StrategyImplementationTimeline&ProposedMilestones JAC Business Development Group proposes to increase employee morale and productivity

throughvarious teambuildingprogramsandextrabenefits. Thisplanwillbe implementedovera3

yeartimelineatminimalcostperfiscalyeartothecompany.Theseimplementationsseektoincrease

morale,inturn,increasingproductionandrevenuetothecompanyduetobetterandmoreinnovative

productsbeinglaunchedtotheconsumers.

Withinthenextthreeyearswewillimplementanemployeebenefitplanthatincludesflexible

schedule days, 80/20 creative split, onsite daycare, teambuilding activities and a freeze on all new

companyacquisitions.

YearOne

Date/Timeframe Event/Milestone Januaryyear1 ImplementFlexibleScheduleDays/Seeadecreasein“sick”days

within6monthsofimplementationJanuaryyear1 80/20CreativeSplit/Havenewgameideasbasedonpassionsof

employeeswithin6monthsMarchYear1 TeamBuildingCommunityServiceproject/Seeclimatechangeamong

teamswithinamonthofactivitySeptemberYear1 TeambuildingFundayThemeParkDay/Seeimprovementamong

strengthofteam,workethic,andproductionwithin3monthsJuneYear1 Organizingplansforonsitedaycare

YearTwo

Date/Timeframe Event/Milestone Januaryyear2 BreakgroundondaycarefacilityMarchYear2 TeamBuildingCommunityServiceproject/Gaingoodpublicityfor

companythroughcommunityvisibility,gainnewcustomersasaresult,furtherincreaseinemployeecomraderyandproduction

SeptemberYear2 CompanysocialPicnic/ContinuetoshowtheemployeetheirvalueOctoberyear2 Begindaycaresignup

Y Date/Timeframe Event/Milestone


earThree

Januaryyear3 Opendaycareforuse/Seeemployeehappinessincrease,stressdecrease,andseeadropinthenumberofmissedworkdaysrelatedtochildcareissues

Marchyear3 TeambuildingFundayThemeParkDay/Maintainstrongconnectionsamongthecompanyandemployees,continuedstrengthintheworkplace

JulyYear3 CompanysocialPicnic/Seecontinuedfinancialgrowthbecauseofemployeehappiness

NovemberYear3 TeamBuildingCommunityServiceproject/Withincreaseinproductionandvisibility,thisactivitywillgainmorecustomersandresultinanincreaseinrevenue

6:StrategyEvaluationEvaluationStrategy&Benchmarks

Toevaluatethestrategyofthesuggestedimplementation,wewillhavetocollectdatafrommanagersordepartmentheads,humanresources,andthroughemployeesurveys.Inadditionwecanlookattheoverallproductionrateoftheemployees.

FlexibleTime

Toevaluatetheefficiencyoftheflextimeimplementation,wewilllooktohumanresourcesfortheamountofsickdaysbeingtakenpriortotheprogramandafterthefirstyear.Datasuggeststhat78%ofemployeeswhocallinsickareactuallynotillandinsteadtakingcareofasickchild,homeissue,orbecausetheyareundertoomuchstress.(“CostsandBenefits”,n.d.)Thereshouldbeareductioninsickdaystaken,whichwillsavetheemployerapotential$90,620.00eachyearasSanFranciscorequiresemployerstopaysickleave.(“SanFranciscoPaid…”,n.d.)

80/20Split

Toevaluatetheeffectivenessofthe80/20splitimplementation,wewillhavetorelyondepartmentheadstodetermineifassignedprojectdeadlinesarebeingmetandtheadditionalcreativeprojectsbeingdoneinthe20%ofthetimeallowed.Ifdeadlinesarebeingmetontimeandadditionalworkisbeingbroughttothetablethatmayhavepotentialtobenefitthecompanyintermsofanewgametomarketornewideasforexistinggameprojects.

TeamBuilders


Teambuildingactivitiesaremoreofanintangiblebenefit.Employeesurveyscanbegiventoseeiftheyfeelalargerconnectiontothecompanyaswellastheirfellowemployees.Thiswilllikelyalsobemeasurableintheprojectsthatareabletobecompleted.

DayCareFacilities

Implementationofonsitedaycarefacilitieswillgivetheemployeesasenseofcareaswellasmakingthemfeelliketheyaregettingapayincreaseduetotheextremelyreducedcostof$2,025perchildperyearinsteadof$18,000(Children'sCouncil,2015)perchildperyearthatistypicalinSanFrancisco.Thisshouldalsoreducethenumberofmisseddaysbecausepeopleareworriedaboutchildcare.

7:AppendicesandReferences

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Appendices

Appendix1:CompetitiveAnalysis

ZNGA DNACF EA PVT1 Industry

Market Cap: 2.80B 2.59B 19.74B N/A 343.73M

Employees: 1,974 N/A 8,400 N/A 251.00

Qtrly Rev Growth (yoy):

0.09 -0.09 0.06 N/A 0.03

Revenue (ttm): 705.68M 1.15B 4.52B 321.20M1 184.34M

Gross Margin (ttm):

0.69 0.60 0.68 N/A 0.57

EBITDA (ttm): -83.42M 287.82M 1.14B N/A 2.59M

Operating Margin (ttm):

-0.22 0.17 0.21 N/A -0.13

Net Income (ttm): -211.21M 120.95M 875.00M 10.40M1 N/A

EPS (ttm): -0.24 0.94 2.69 N/A N/A

P/E (ttm): N/A 21.32 23.33 N/A 27.38

PEG (5 yr expected):

-4.98 N/A 1.68 N/A 0.51

P/S (ttm):

(ZNGACompetitors,n.d.)


Appendix2:SampleMarketingMaterial


Appendix3:ProposedSolutionCostBreakdown

Activity Cost NumberofPeople Total

SixFlagsDiscovery

Kingdom

$32.50/adult

$22.50/child

3000

3000

$97,500.00adults

$67,500.00kids

$165,000.00TOTAL

CateredCompany

Picnic

$12/personforfood 6000 $72,000.00

CommunityService $10/pershirt 1500 $15,000.00

GRANDTOTAL $252,000.00

Asadaptedfrom(“SixFlags…”,2015),(SanFranciscoBoxedLunches,2015)and(Zazzle,2015)

Appendix4:FinancialTablesandCharts


Asadaptedfrom(GoogleFinance:ZyngaInc.,2015)

Asadaptedfrom(GoogleFinance:ZyngaInc.,2015)


Appendix5:DayCareFloorPlan

(DesignbyJustinFord,2015)

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JAC Final Business Proposal

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