Running head: NINTENDO
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Nintendo
Student’s Name
Institutional Affiliation
NINTENDO
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Nintendo
Introduction
Nintendo Company Limited has launched the Wii U as a marketing and competitive
strategy in the gaming industry. The company aims to sustain the exceptional success it has been
enjoying in the gaming technology with the regular Wii. It has been able to increase their revenue
in the video game segment. The company innovativeness has enabled them to launch products
that have received accolades from customers and colleagues. The current paper explores the best
strategies that the company needs to employ in order to increase their competitiveness in the
crowded industry. It also evaluates the process of ensuring growth in the organization. The
company had introduced new products to the market. The company’s strategy has always been to
look for a new market for the current services and products. This has enabled the company to
increase its revenue and customer satisfaction hence the brand loyalty.
Nintendo Company Limited has been faced with stiff competition on its poise to be the
leader in the video gaming industry. The company has been able to develop products and
services that have revolutionized gaming industry (Boomson Blog, 2008). It has come across
various challenges while developing and sustaining competitiveness. This paper delves into the
strengths and challenges the company has undergone during the recent past. The launch of the
Nintendo Wii Console has enabled Nintendo Company Limited to establish itself as a market
leader in the video games industry. The company has been able to scrutinize and re-examine its
approaches to maintain competitive edge.
Organic Development
Nintendo is trying to establish itself as the leading producer of innovative gaming
products using the company’s venture into creating easy to use environment. The company is
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developing an interactive social networking tool to enabled communication among users. The
company has been able to spread their investment easily. The company has been able to takeover
small company that produces gaming product hence developed strategic independence. The
launch of the Wii has given Nintendo a strong competitive advantage over the Xbox 360 from
Microsoft and the Play Station 3 from Sony. The company has been able to gain control over
other competitors by takeovers (Buerk, 2011). The increase in the company revenue is attributed
to the launch of a new video game product. In essence, Nintendo’s innovatiness has enabled
them to launch products that have received well.
The company has set the pace for other companies in the gaming industry. Additionally,
it has received rave review from customers and colleagues. This paper seeks to investigate the
strategies used by the Corporation in edging their competitors and increasing the market share.
The introduction of novel products to the market has enabled the company to advance its’ growth
in the industry. The Nintendo Wii console has enabled the company to establish itself as a leader
in the video gaming market.
Corporate Entrepreneurship
An internal analysis of Nintendo Company Limited reveals that the rapid growth,
development and emergence of the company can be attributed to a stronger revenue base
(Molina, 2011). Nintendo Company has been able to make drastic changes within its
organizational structure as well as business operations. These changes can be associated with the
ability of Nintendo Company to create and maintain its own competence and capability. In the
recent past, the company has been involved in several takeovers that have enabled it reduce its
operational costs by increasing and expanding the scale of production at the company. The
company also adapted exceptional cost management strategies in order to reduce its operational
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costs. The reduction in operational costs has enabled Nintendo Company to boost and expand its
market share in the industry. It has also enabled the company to globalize its brand worldwide.
Moreover, stiff competition from rival firms such as Sony Corporation and Microsoft
Corporation has enabled Nintendo Company to become more creative and innovative as a result
of increased pressure and rivalry. Increased pressure from competitors has also forced Nintendo
to shift its focus to the effects of social systems and mobiles devices. As a consequence, the
company has become more prominent and famous, because of its creativity, innovativeness and
ability to produce high quality products with high performance and efficiency. Consequently, the
annual revenues of the company have grown. Nintendo has also been able to create a strong
brand image as well as strong relationships with its major distributors in the industry. Thus, it
can be argued that creativity and innovativeness have enabled the company to survive the cutthroat competition in the video games industry through the adaption and deployment of latest
technological advancements in its operational and business processes.
The Nintendo Business Environment
Technology plays a fundamental role in driving marketing activities. It revolutionizes the
way marketers carry out their duties. It also provides new ways of conducting research.
Technology has proven to be a powerful tool in the progress of any company (Snider, 2011).
Technological advances that yield to market penetration and company-customer relations are the
best, which need to focus on enhancing communication, storage and processing of customer
information. This is evident in the current marketing firms that invest heavily in the information
technology.
The analysis of the external environment of Nintendo will investigate the economic,
demographic, technological and global market for the company. The company targets
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demographic markets that have been disregarded by many companies. The company has targeted
in-house game designers who have provided quality products (Snider, 2011). Compared to
competitors, the Nintendo objectives can be measured with the amount or quantity of goods and
services sold. It is important to measure the cost the company has incurred in buying raw
materials and paying for manpower, and then add to the pricing of products. Thereafter, the
number of sold products will be known.
The Five Forces of Competition and Their Effects
According to Albrecht (2009), the five major forces of competition that are likely to
affect an organization such as Nintendo Company Limited include the threat of new entrants, the
threat of substitute products or services, rivalry among competitors in the industry, the
bargaining power of buyers and the bargaining power of suppliers. Albrecht (2009) further
asserts that increased intensity of these five forces of competition among firms in industry is
likely to hamper the performance of firms of the industry hence leading to a reduction of
investment returns. In contrast, if the forces are less powerful or intense, an organization would
be able to make profits hence increased its return on investments.
SWOT Analysis of Nintendo Company Limited
A SWOT Analysis refers to a detailed examination of the strengths, weaknesses,
opportunities and threats faced by an organization through critical assessment and scrutiny of its
internal and external environments. With regard to Nintendo Company Limited, a SWOT
Analysis of its internal and external environments reveals the following factors that are likely to
impact its performance within the video games industry.
Table 1: SWOT Analysis of Nintendo Company Limited
TYPE OF FACTOR
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Positive
Internal
Strengths
hostile
Weaknesses

Strong global presence

Supply deficiency

Ability to develop high

High reliance on

quality products
contracted
Increased returns on
manufacturers
investments

Lack of video games

Increase in cash flows
produced by the

Employment of competent
company
and knowledgeable
workers
External

Low liquidity ratio

Lack of debts or liabilities
Opportunities


Growing market for

Poor pricing strategies
products of the company
which makes the
and related software
products of the
Growth and expansion of
company vulnerable to
the gaming software
lowly-priced products
market in the United States

Threats

Shorter product
Growth and expansion of
lifecycles. Products of
market for console
the company loss value
products in India
easily.
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
Increased demand for

gaming products in the
online market
Production of less
durable products

Unpredictable and
persistent rise and fall
of the exchange rates

Slow economic growth
in the main target
markets; namely Japan
and the United States.
As shown in Table 1 above, the major strengths of Nintendo are mainly founded on its
global presence, ability to develop high quality products, increasing cash flows, increased
competency of workers, low liquidity ratio and a decline in debts of the company. On the other
hand, insufficient supply of raw materials and finished products, high dependence of the
company on contracted manufacturers and inability of the company to produce own video games
can be cited as the weaknesses of Nintendo that are likely to slow down its performance and
growth in the industry. Dillon (2011) also asserts that Nintendo has a weak supply chain in most
countries and a poor distribution network in Japan, which are likely to inhibit its growth and
expansion in the video games industry. Moreover, the ability of the company to generate optimal
revenues form foreign countries is further hampered by the unpredictable rise and fall of
exchange rates and harsh global economic conditions. However, the growth and success of
Nintendo in the video games industry is threatened by the migration of online gaming as a result
of new technological advancements. Nintendo also charge premium prices for its products,
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therefore, making the products vulnerable to close substitutes, which are sold at lower prices in
the industry. The company also manufactures products whose lifecycles are relatively short thus
the products lose value quickly.
Competitive Advantage
A competitive analysis of Nintendo Company Limited reveals that it develops and
manufactures products targeting all members of the family. Although this can be viewed as an
excellent strategy for targeting the market, it can also reduce the ability of the company to attain
and maintain a competitive advantage in the industry. This happens because the development of
non-gamer’s products is simple and needs user-friendly equipment. It is a threat to the future of
the game console designs hence the need for the review of the strategy. However, Nintendo has
been able to attain competitive advantage by developing and implementing achievable and
attainable business goals and objectives. For instance, most of the business goals and objectives
set by the company are within the budgets of the firm. This clearly indicates that Nintendo
Company usually takes a detailed consideration of the limitations and constraints it faces as a
profit-making organization before it ventures in any business. Similarly, Nintendo Company has
been able to gain competitive advantage in the industry through increased product
improvements. According to Dillon (2011), the company is capable of making rapid and brisk
improvements on its products within a short period of time. As a consequence, the company has
been able to progress consistently and constantly with technological advancements.
However, Edery and Mollick (2009) asserts that Nintendo has not been able to persuade
and influence potential clients whom it would turn into turtsted clients hence hindering its baility
to gain competitive advanatge in the industry. In addition, the attainment or acquisition of raw
materials that are used for the production of its products has also been a major challenge to the
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Nintendo Company. In contrast, Molina (2011) argues that the compnay has effectively utilized
the presence of a good transport system and effective communictaion channels to faciliate the
movement of raw materials from suppliers to the company and to transport finsinhed goods to
target customers hence enabling it to gain competetive advantage in the industry. Nintendo has
also increased its competitive advantage in the industry by acquiring small companies in the
industry in spite of its limited resources.
Threshold Capability
Nintendo Company Limited has been able to compete effectively with other rivals firms
in the gaming industry through synchronization and combining of efforts with well-established
companies in the industry. This has enabled the company to introduce its products easily into the
market despite the products being new. Although Nintendo Company has a small number of
workers, it has managed to penetrate the video games market successfully through the
development of appropriate market penetration strategies such as excellent pricing strategies and
proper allocation of resources to facilitate marketing efforts. For instance, the company usually
develops marketing goals and objectives that are in line with the overall goals and objectives of
the company. For instance, the company developed a highly detailed Customer Relationship
Management (CRM) framework that strategically defined the relationships between Nintendo
and its clients. The Customer Relationship Management framework has enabled the company to
shift its focus from the provision of products and services to customers hence ensuring that the
needs and preferences of customers are identified and satisfied properly. The CRM framework
has also led to the streamlining of business operations of the company with the needs of
customers (Molina, 2011). Consequently, Nintendo has been able to become successful in the
video games industry.
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Dynamic Capability
Nintendo Company Limited has been able to redevelop its strategic strength through the
establishment of a comprehensive Customer Relationship Management (CRM) framework that
aims at minimizing wastage of resources in the organization, reducing complaints received from
customers and reducing the overall costs incurred by the company in operational and business
activities. In addition, the CRM framework has helped in reducing customer churn rates and
employee turnover. The customer relationship management framework has also resulted to
increased satisfaction of customers. As a consequence, the company has been receiving referrals
of novel customers thereby leading to an increase in customer base and market share in the video
games industry. It has also enabled marketing managers to gain a deeper understanding or
command of the different needs of customers. This enables the company to develop products that
meet the needs of customers effectively using the available resources. The company is able to
provide products that are both customer oriented and technologically oriented. Nintendo has
been effective in creating and incorporating technological experience in its products.
Threats
The company’s competitive advantage is under threat following its decision to develop
family centric products. This ideology has limited the company’s ability to protect the game
console designs, because the family centric approach will require production of simple and user
friendly products. Additionally, the economic environment is harsh for the game console, which
has resulted to a decline in the company’s revenue. However, the number of people using the
game console has increased significantly in the recent past.
Nintendo is somehow threatened by the power of distributers and supplier of hardware
parts. Moreover, the company has been faced with legal restrictions for environment damages.
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Compared to its competitors, Nintendo has improved its technology department more
environmentally friendly. Lastly, the threat of buyers is high in this industry since the company
relies entirely on selling gaming and console products, unlike their competitors like Sony who
generate revenue from other sources. The revenue of Nintendo can fall in case customers decide
to purchase product of their competitors.
The only advantage the company has is when it comes to reducing switching cost. The
Nintendo Wii product is the cheapest in the market hence advantage over switching.
Additionally, there is intense competition from other companies hence the urge to spend more on
innovation. The company has been able to neutralize the threat of competition by analyzing their
objective, strength, assumption, and current strategy.
Opportunities
The production, promotion and development of video games and console are expensive.
The existing companies in the industry have refined their business processes enabling them to
gain competitive advantage. There is a need for new developers to create more differentiated
products to compete effective in the market (Molina, 2011). The threat of new entrance is
minimal since Nintendo provides distinctive and patented products in the market. Additionally,
the company has a competent workforce with capability to produce technological products. On
the other hand, the suppliers in the industry are moderately powerful.
The Current Strategy
Differentiation and Segmentation
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For my part, Nintendo needs to invest heavily in research and development (R & D)
activities in order to be able to produce high quality goods and services. This can be achieved
through increased focus on the development of high quality products with exceptional
performance. It is important for the company to make good use of its economic resources such as
raw materials, technical knowhow, marketing team and the competent management team to
ensure that it gains competitive advantage in the video games industry. Buerk (2011) also asserts
that Nintendo should effectively utilize its resources in order to be able to produce valuable
goods for customers. Buerk (2011) further affirms that the ability of Nintendo to develop
innovative and highly differentiated products in the industry largely depends on its ability to take
advantage technological advancements and optimize their utility in the firm.
-
Differentiation product and premium prices
Advantage over competitor
Differentiation
product and
premium prices
Segmentation
-
Produce products for a market niche
Efficient manufacturing processes
Additionally, the company has established an effectual manufacturing process hence the
large scale production of game systems. This has enabled the company to create and exceptional
brand name. These resources have enabled the company to develop products that are atypical,
valuable and momentarily non substitutable. This has given the company a competitive
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advantage since they have patented their products. It has been difficult for competitors to imitate
their products. Lastly, Nintendo has established a strong brand, which is critical and valuable.
Diversification
The future of the Nintendo Company lies in its ability to develop differentiated and
diversified products. The company main source of revenue is production of console and gaming
products. The company needs to develop new competitive products to sustain the current market
share. They should maintain the competitive advantage by expanding the video game genres
beyond the simple and family centric approach. The company should develop intrinsic and
mature games. It also has to improve the inventive technology and approaches. There is
increased competition in the gaming industry hence the need for innovative and differentiate
products.
-Related diversification
-Diversification
Involves developing
processes that are related
to the current business
Developing diversified
products served by the
organization
Merging and acquisition
-Conglomerate
diversification
Managing the
organizational processes
that have no relationship
with existing operation
The Nintendo Company requires acquisition and merging with other well established
company such as Sony to extend the market share thereby improving efficiency and economy of
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scale. Consolidation will enable the company to increase market power and technological
expertise. The online gaming industry has enlarged the number of internet consumers.
Consequently, the company needs to develop products that target the young population. This is
because they are technology savvy and innovative. On the other hand, brainstorming is the best
approach that the workforce needs to embrace. These techniques are used to create innovative
ideas hence the increased (Snider, 2011). Development of new products to the market has
enabled the company to advance its’ growth in the industry.
Merging
-International
expansion
Acquisition
Strategic
alliance
References
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Albrecht, K. (2009). Corporate radar: Tracking the forces that are shaping your business. New
York: AMACOM.
Boomson Blogspot. (2008). Nintendo swot analysis. BaBOOM. Retrieved from
http://boomson.blogspot.com/2008/02/nintendo-swot-analysis.html
Buerk, R. (2011). Nintendo bets on 3D gaming amid slumping profits. BBC News. Retrieved
from http://www.bbc.co.uk/news/business-12593712
Dillon, R. (2011). The golden age of video games: The birth of a multi-billion dollar industry.
Boca Raton, FL: A K Peters/CRC Press.
Edery, D., & Mollick, E. (2009). Changing the game: How video games are transforming the
future of business. Upper Saddle River, N.J: FT Press.
Molina, B. (2011). Sony drops price of PlayStation portable to $130. USA Today. Retrieved from
http://content.usatoday.com/communities/gamehunters/post/2011/02/sony-drops-priceofplaystation
Snider, M. (2011). Social media, mobile devices help video games grow. USA Today. Retrieved
from http://usatoday30.usatoday.com/tech/news/2011-03-01-videogames01_CV_N.htm