Facebook Inc (FB), Zynga Inc (ZNGA): Business Model Explained

Key Resources

The Key Resources Building Block describes the most important assets required to make a business model work. Every business model requires Key Resources. These resources allow a company to create an offer a Value Proposition, reach markets, maintain relationships with Customer Segments, and earn revenues.

–People

–Intellectual Property

–Software

–Brand

Key Activities

The Key Activities Buildings Block describes the most important things Zynga must do to make its business model work. Every business model calls for a number of Key Activities. These are the most actions a company must take to operate successfully. Like Key Resources, they are required to create and offer a Value Proposition, reach markets, maintain Customer Relationships, and earn revenues.

–Developing new games

–Improving already existing games

Key Partners

The Key Partners Building Block describes the network of suppliers and partners that make the business model work. Companies forge partnerships for many reasons, and partnerships are becoming a cornerstone of many business models. Companies create alliances to optimize their business models, reduce risk, or acquire resources.

–Facebook and other social networks

–Smart phone manufacturers

–Manufacturers of tablet computers and other mobile computing devices

–Advertisers

Cost Structure

The Cost Structure Building Block describes all costs incurred to operate a business model.

–Employees

–Technology

–Servers

Some additional thoughts

Possible suitors for Zynga could be large media companies, wanting to branch into social gaming, and traditional gambling companies that want to expand into online poker. At least one of the three big gambling names could be interested. MGM, Sands or Wynn will have to act to get a piece of the online action.

Some analysts think Yahoo! Inc. (NASDAQ:YHOO) could be interested in acquiring Zynga Inc (NASDAQ:ZNGA). I agree with those analysts because I think both companies would make a perfect fit. Yahoo! could become the number one “fun portal” of the world. For example On Yahoo! Finance Zynga could offer money games.

Even Facebook Inc (NASDAQ:FB) could still be interested in Zynga. Acquiring Zynga’s customer base could still be worthy before all players leave Facebook to play on zynga.com.

Time will tell what is going to happen with Zynga Inc (NASDAQ:ZNGA). The company has a strong balance sheet, with more than $1 billion in cash and no debt. At least I am positive and think the share price could run to $5 in the short term.

The article Zynga: Business Model Explained originally appeared on Fool.com and is written by Johan Seijkens.

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