“Nintendo Company Ltd .was founded in 1889 as a producer of Japanese playing cards, but by the 1980’s the corporation had turned its attention towards the production of video game hardware and software”. “Since then, Nintendo has gone on to become the third most valuable company in Japan selling more than 470 million home game consoles and handhelds as of 2009”. Nintendo was founded by Fusejiro Yamauchi the great grandfather of the current president of Nintendo.” Nintendo’s products arose in the mid-1980s from the relative obscurity of the amusement arcade to change the concept of home entertainment in both Japan and the United States”.
Strengths: Nintendo “strongly established brands”, “robust revenue growth”, “strong cash flow from operations, and “Nintendo derived most of its revenue from the video game business, Nintendo was in the lead in video console” (pg.C269).
Weakness: Nintendo weakness is “Inventory shortages”.”Nintendo was unable to meet demand during 2007 and also struggled throughout 2008”.”In an interview on the website Game Theory, Perrin Kaplin, Nintendo vice president of marketing and corporate affairs, suggested that shortages were expected some time”. “We are at absolute maximum production and doing everything we can…but demand continues to be really high” (pg.C273).
Opportunities: “Rising demand for company’s products and related software”, “growing US games software market”, and “increasing demand for online gaming”. Threats: “Short products lifecycle”, “slowdown of the Japanese, the US, and European economies”. “The five forces may be interdependent i.e. pressures from one direction can trigger off changes in another dynamic process of shifting sources of competition”. “Industry rivalry here occurs in the strategic alliances i.e. battle to control market”. “With huge players like Sony, Nintendo and Microsoft there is a tuff battle between companies to dominate the market”.
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“The threat of entrants into the industry can be negligible with the existence of players like Sony, Nintendo and Microsoft etc”. “There can be no substitute to the video games”. “The Power of Buyers in the video game industry is low as there are very few successful companies in the video game industry, therefore a small variety of video games available to the buyers”. “On the other hand, the Power of Suppliers is very high as there are more suppliers available to a handful of companies in the video game industry”.
“Nintendo’s goal was to create games that everyone could play and a system that would appeal to women and people who had never played video games in the past” (pg.c273).
Nintendo used the three generic strategies: overall cost leadership, differentiation, and focus. Nintendo’s strategy was to attract and target all age groups also to make the Wii easy to use whether the player is skilled or a novice. Nintendo was successful at this strategy because “According to Nintendo, one of the key differences between the Wii and the competitiors’ systems was the broad audience that the Wii targeted” (pg.c273).
“Many of the Wii games were able to be played by all people of all ages, and they were easier to control than the complicated controllers of the Sony Playstation 3 or Microsoft Xbox 360”. Nintendo’s TV commercials of the Wii showed people of different ages and social classes playing the Wii” (pg.c273).
Yes I believe all companies can use the strategy of attracting all age brackets with unique products that are easy, fun to use, and affordable.
The Nintendo competitive strategy are that the make their consoles cheaper to manufacture. They can sell the base console at a profit while their competitors have to subsidize the retail price. It also gives Nintendo far more room to maneuver when it comes to using the price mechanism to take on that competition. Nintendo will be able to sustain their competitive advantage if they lack in supply of product with a high demand. What Nintendo need to do is maintain their supply so that it will be able to keep up with their competitors and keep clientele. This is the problem they are having which is a high demand for product with low supply.
... Xbox360, Nintendo released enough product to meet demand while maintaining a higher price point. Within one year following the release of Nintendo Wii, both ... as the “Red Ring of Death” where the power supply would burn out prematurely as a result of over-heating ... Sony Settles Class Action Lawsuit: Over $1 Million in Free Games, Themes and PS+ Discounts Available for Canadians.” PlayStation ...
I believe Nintendo’s strategy has good intentions, if I was in position to advise Nintendo of their strategy is will be to change is their supply and demand. If you have a low supply of product how do you expect to make profit? I would advise them to make sure that there is a high supply of products to keep customers happy because there is a great possibility that the company can lose clientele to other competitors. Some customers go great lengths for entertainment and some will pay any price to have it. Nintendo needs to keep their ratings up along with the other companies that are competing and the only way to do that is to make sure that the products are available and the prices affordable.
This was an interesting case to work on and I hope I did a good job. I had no idea Nintendo was founded in 1889, I thought it invented in the 1980’s. After reading this case I know that even the popular companies sometime struggle in certain areas. I have a Nintendo Wii and even though I don’t get to play it often but when I do it’s so much fun. The Nintendo Wii is definitely for all ages like it was mentioned in the case. From reading the case and doing research online helped me learn about how Nintendo was founded and their timeline of products.
I learned about their rivalry with Sony, Microsoft, and their struggles with supply and high demand. How However Nintendo Wii price was reasonable compared to the playstation3 and xbox. I believe what attracts customers to the Nintendo Wii is that as far as I can remember Nintendo always included a free game with the console which Sony and Microsoft does not provide. My opinion Nintendo strategy has good intentions but to be the better competitor Nintendo needs all their areas to be strong especially their supply of products. Even if it means to hire more employees or outsource jobs to keep products in stock they should go that extra mile to keep their customers happy.
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