In 2009 Zynga Inc created the extremely popular online game “FarmVille” that is exclusively played through Facebook. It launched in about five week with only a 10-person team. At its peak “FarmVille” had roughly 32 million users per day but has dropped all the way to 2.8 million users per day. For the last two years Zynga has been pushing to reinvent themselves and regain the market of gamers they once had. In September 2012 they came out with “FarmVille 2.” To make sure that “FarmVille 2” was a complete success Zynga hired 50 works, including an executive from videogame maker Electronic Arts Inc, which help to create their new 3-D graphics.
Zynga has a lot riding on the success of “FarmVille 2” and has already warned investors that there will be losses next quarter’s financial outlook. Along with delays of production on upcoming game launches. They are trying hard to recapture their initial buzz by spending $171 million on researcher and development of their product. By investing more money, they hope that users will be more enticed to buy more virtual goods. Since their “FarmVille 2” launch in late September 2012 they only had 8.2 million users per days, which is far from what they had expected.
Zynga competes on a differentiation approach, by making their games free they have to make users want to play their game. For instance Zynga create a unique soundtrack to their game “CastleVille” and also revamping the image to “FarmVille” gave Zynga their competitive edge. Zynga also witnessed a quick product life cycle with “FarmVille”, which lasted about two years. When “FarmVille” reached it’s maturity in 2010 it had over 32 million users and had less focus on changes of the game. During its decline many other games distracted gamers with new ways to win prizes and to get ahead in the game. With the new “FarmVille 2” it is still in its introduction but Zynga had planned a forecast that showed more potential daily players than it currently has.
Zynga is fighting an uphill battle trying to regain is popularity. But it might take more than changing the image and making incentives for users to continue playing and to get old users back.
Italy’s largest manufacturing company Fiat is faced with growing problems after the economic downturn in 2009. After loosing hundreds of millions of dollars in the last year just in the European market alone, Fiat has been faced with moving its manufacturing to other more affordable parts of the world.
Fiat was originally founded in 1899 by Giovanni Agnelli and has always manufactured its cars in Italy. And even though the company is confronted with hard times, Fiat states, “that it won’t give up on its home market, even as sales drop and European losses are estimated at 700 million euros this year.” The company overall is trying to focus on efficiency and exporting solely in Italy. Fiat has also put a freeze on all future investments for the company, which is also causing controversy because this could lead to more and more job losses in Italy. Fiat’s CEO Marchionne also said that, “he did not see the Italian car market recovering until at least 2014.” This is causing Fiat to postpone the production of future new car models.
Brazilian government has offered the company an incentive package if Fiat were to consider moving some of its manufacturing plants there. The demand for Fiat is much higher in Brazil than in Europe for the moment and the Brazilian government sees several potential economic rewards. But managers at Fiat have several things to consider as well. For the company to stay afloat in the long term Fiat might have to consider moving its manufacturing to places like Brazil where labor is cheaper. Also moving manufacturing to South America it will allow exporting costs to decrease seeing as the automobiles will have to travel less distances. And if Fiat moves to countries that are more sustainable they will begin to focus on targeting a market that can increase the amount of cars produced.
Fiat has already not completed two future investments and has to consider how they will make up for their lost profits. Fiat needs to investing less into the Italian government and economy and focus on their production changes so that they can increase their own revenue. Layoffs are going to continue as long as the company continues to stay in Italy so they are better off sending operations to Brazil and they hopefully expanding the operations in Italy once again in the future when economic times are easier.