California Business Structure Change Challenges New CEO
On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Mergers & Acquisitions on Tuesday, July 16, 2013.
Social media has become a driving force in just about every aspect of society. However, a significant portion of the social media experience for many people is the online games, which were integrated into certain social media websites, such as Facebook. Zynga, which is a maker of popular social online games based in California, has recently been purchased by a former department head at Microsoft. However, the new CEO of Zynga will have several hurdles to overcome, including a challenging business structure change.
The new CEO who was once the head of the entertainment division at Microsoft Corp. is now facing two main challenges as head of Zynga. Firstly, although the business structure of the company puts the new CEO in charge, the former head of the company still has the final say on decisions in the company despite officially leaving the top position in Zynga. This means the new CEO will have to create and maintain a working relationship with the former head of the company in order to keep things moving forward.
Additionally, the new CEO also has to deal with a company which seems to have taken a downturn as of late. The company was once the top game maker for the Facebook network, but it has now lost its number one spot to a competitor game maker. Gamers are also switching to mobile app games which had dramatically changed the market landscape. Also, the company's stock has dropped approximately 66 percent since its initial public offering in December 2011.
With the challenges of the business structure change, financial problems and the company's loss of market control the new CEO has his work cut out for him. However, he can greatly increase his chances of success by formulating an effective business plan which addresses these particular issues. Also, the business plan should ensure that the company is in compliance with any rules and regulations specific to a change in business ownership structure or particular to the industry. This can help the California company avoid potential future legal problems.
Source: bloomberg.com, "Zynga’s Mattrick Looked to Buy Company While at Microsoft," Douglas MacMillan & Dina Bass, July 7, 2013