Nintendo
Nintendo
Nintendo
INTRODUCTION
Nintendo is one of the world’s leading video games console companies. The company was
established in 1889 in Japan as a playing cards company but has improved over time
specializing in video games. The company faces stiff competition in the video game console
industry from two other companies that also specialize in video game console, Sony and
Microsoft. This competition has kept all the three companies on toes with each company
trying to modify its console in the best way possible to win the largest market share of the
industry. Since early 1990s the market leadership has been alternating among the three
companies based on the release of new and updated consoles by the companies.
In the recent past, the video game console industry has been facing a threat from the entry of
mobile phone games which are providing gamers with an option. This has greatly affected the
industry. Although all the three companies, Nintendo, Sony and Microsoft have been affected,
Nintendo has been hit most recording years of losses and declined market share. Nintendo’s
troubles have been worsened by the growth of its competitors who have overtaken its market
share.
This case analysis seeks to investigate the video games console industry and the strategic
steps that Nintendo has made and is planning to make to regain its position in the highly
competitive market and also increasing its revenues to profitable margins again. The analysis
will focus on the internal and external factors that are a hindering the company’s success and
ways on how those challenges can be overcome to have the company back to its old golden
days of success.
CASE ANALYSIS OF NINTENDO 3
Mission statement: providing customers with a world of fun which is both innovative and
entertaining with creative elements that have never been experienced. (Nintendo Corp. 2013)
Vision statement: expansion of the gaming audience, taking risks and encouraging
employees to make creative decisions to challenge the notion of what a video game is capable
With the current (above) mission and vision statements for Nintendo, I do not see the need of
coming up with another option. The mission statement focuses on what the company does,
creating games, and goes beyond just games but games that are innovative and creative
creating a new experience for the players. This mission is perfect. The company has a vision
of expanding the gaming audience and using its employees to develop much better gaming
devices. This is the dream of every company in the video gaming industry.
SWOT Analysis
a. Strengths
Nintendo is one of the largest and most popular video game console companies there is. The
fact that it has been a market leader at several times give it’s a motivation to reclaim its lost
glory. Nintendo has good marketing strategies that enabled its Wii console to withstand stiff
competition and outdo the sales of Microsoft’s Xbox 360 in the US in 2008 even with Xbox
being American. Nintendo has another strength in its innovative workforce that has been
behind the various releases of consoles that have taken the video game market by storm.
CASE ANALYSIS OF NINTENDO 4
b. Weakness
Nintendo has been outdone by its competitors because the company has not invested properly
in technology something that Microsoft and Sony have thus overtaking it. The company also
has poor strategies for attracting and maintaining gamers from shifting to competitor brands.
With the entry of mobile phone gaming into the gaming industry, Nintendo has not laid the
appropriate strategies to curb this threat which is affecting the console business.
c. Opportunities
The changing demographics in the consumer base of video game consoles with more
females joining the gamers is an opportunity for Nintendo as it opens a larger viable.
Another opportunity arises from the environmental awareness. Nintendo can use this
d. Threats
The main threat to Nintendo is from its main competitors Sony and Microsoft who have
another threat in that a leading console can be outdone by another console from the
market leadership just by slight advancements in its performance. Nintendo therefore has
to keep its consoles running with the most recent technology at every time.
Another threat comes from mobile phone gaming which is providing an option to gamers
mainly because it is cheaper and easily portable compared to consoles. Online gaming is
also another threat especially with fast and improved broadband connections thus making
a. Economics
CASE ANALYSIS OF NINTENDO 5
From the case on Nintendo’s disruptive strategy, the company was able to win a large market
share with its Wii video game console by taking advantages of the available economic
opportunities. Nintendo outsourced nearly all the production of Wii and DS. Having multiple
suppliers facilitated cheap supply. This reflected in the market as Wii console were the
Nintendo took the opportunity to develop its own games rather than depending on third
party developers. This played a great role in increasing the company’s revenues. Another
The economic status of the video game companies was threatened by the high cost of
developing the games. A lot of money had to be invested; it cost about US$12 million to
b. Physical
Nintendo is a Japanese company that has spread wings across the whole world. The home
population gives the company a large market for its video gaming gadgets before exporting
them to the US and Europe which are its other market strongholds. However, the home
market is under stiff competition from fellow Japanese electronics company Sony.
c. Demographic
Human populations have been changing from time to time due to various factors; social,
political and geographical. This changes in demographics have also affected the video games
d. Political/Legal
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Nintendo is registered locally in Japan and also internationally in all the countries it conducts
business. Nintendo follows all the rules pertaining to gaming in developing games which has
facilitated its entry to many countries of the world. This has helped expand Nintendo’s
market. In the US, for example, the senate mandated the Entertainment Software Ratings
Board with the responsibility to gauge the content of games (Ferguson, 2013).
e. Technological environment
The video game industry is wholly based on technology with technological advancements
playing the biggest role in the improvement of the games developed. Technological
advancements create room for improvements for existing gadgets. Seizing and applying new
technology is key in the highly competitive business. The success of Nintendo’s DS and Wii
consoles was based on better technology then the competitors’ consoles. The technological
environment creates an opportunity for improvement while on the other hand causing a
f. Social-cultural environment
Globalization has resulted in homogenization of habits and lifestyle due to the interaction of
people from different cultural and social backgrounds. This has reduced the necessity for
customizing product for each and every target market. This has further opened up the market
for Nintendo although the company has been reluctant to release consoles and game software
information and communication which has been the driving force behind globalization. The
global business environment has facilitated the entry of internal companies in many parts of
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the world. A person can place an order online and have a console shipped from oversees if it
The highly competitive video gaming industry a threat to all the companies in that industry.
Nintendo being the pioneer company in this industry has encounter stiff competition from
Sony and Microsoft companies which joined the industry later on. Each of the three
companies, Nintendo, Sony and Microsoft, all struggle to have the best console running with
The longest rivalry in the industry has been between Nintendo and Sony. The rival kicked off
after disagreement arose when the two companies were working on a joint project in 1991.
The cooperation between the two companies ended and Sony decided to venture in the video
game industry.
Rivalry among the three companies, Nintendo, Sony and Microsoft has been tough with each
company considering itself the best. In 2008, Microsoft announced that the sales of Xbox 360
consoles had overtaken those of Nintendo’s Wii and Sony’s PS3 (Wakabayashi 2008) but the
figures released in June the same year proved others with Wii leading the market sales.
c. Threat of Substitutes
The development of mobile gaming is a major threats to the video game consoles industry.
Mobile phone devices are easily portable as opposed to consoles. They are also relatively
CASE ANALYSIS OF NINTENDO 8
cheaper despite being multifunctional. Online gaming platforms are another threat to this
industry.
To have a console successfully complete, Nintendo relies on hardware and software supplies
from other companies. There are many companies that supply similar services in hardware
and software but the companies that require theirs services are not that many. This denies
them the bargaining power as suppliers and therefore they have to maintain prices that are
good for their client companies to prevent them from seeking the services elsewhere.
Most of the consoles are sold through Nintendo’s online platform which limits one on one
interaction with the customer thus reducing the bargaining power of that customer. Large
retail companies such as Amazon, Walmart and Alibaba have a better bargaining power that
f. Complementary Products
Advancements in technology have come up with new ideas that complement existing
technologies to make them better. When Nintendo launched DS in 2004, the device was
complement by a Wi-Fi connection that made it unique from the previous consoles which had
wired playing pads/ joysticks. The use of complementary products is rapidly changing the
video game industry as companies seek for the ways to complement their console in order to
COMPETITOR ANALYSIS
a. Microsoft
CASE ANALYSIS OF NINTENDO 9
Microsoft joint the videogame consoles industry in 2001 after realizing the potential
threat posed to their PC stronghold by video games. It marked its entry by launching their
first console named X box. Since then, Microsoft has been redesigning and improving its
console to keep up with the market competition from Sony and Nintendo.
Strengths
i. Microsoft has a strong brand name from its popular computer operating system
Windows.
iv. It has been able to incorporate its games in its Windows operating system for
computers.
Weaknesses
i. Microsoft has most of its efforts focused on their Window OS somehow neglecting
b. Sony
Sony has the oldest rival to Nintendo in the video games consoles industry. Sony marked
its entry to the industry in 1994 with the launch of its console, the first version of PS.
Sony has over the years been upgrading its gadgets in order to win and dominate the
Strengths
Weaknesses
that give or deny it an upper hand against its competitors in the same industry (Barney and
competitors are known as strengths while the limitations the organization faces are called
weakness (Dyson, 2004). Strengths are analyzed from the company’s side while weaknesses
Two main areas are investigated in the process of conducting a company’s internal analysis,
Resources
Resources are classified into two groups; tangible and intangible resources.
a. TANGIBLE RESOURCES
i. Company buildings
ii. Machinery
iv. Vehicles
b. INTANGIBLE RESOURCES
i. Technology
iii. Reputation
iv. Brand
Capabilities
resources to achieve its set goals (Helfat and Raubitschek, 2000). Capabilities are a product
of the integration of tangible and intangible resources. The capabilities of Nintendo lie in the
following areas;
i. Technology
iii. Procurement
Competencies
Competencies form the basis of an organization’s or company’s advantages against its
a. Economies of scale
c. Simplicity
activities that add value to its services or products. These activities are then analyzed to help
2013). This strategy is used in analyzing the internal activities in a company determining
which of the services are more important and which ones require improvement to raise the
This model was introduced by Porter (1985), and focuses on five functional areas of an
organization or company.
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Source. www.strategicmanagementinsight.com
Primary activities
a. Technological development
Nintendo has all its activities based on technology. In short, technology runs Nintendo.
Developments in technology result in the development of new and better consoles. To keep
up in pace with its competitors in the video game console industry, Nintendo has to always
With Nintendo stiff competition from Sony and Microsoft, sales and marketing are a primary
activity in the company. Each of the three companies is always working on ways on how to
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improve its existing console to the best possible form. This necessitates Nintendo to always
market its new consoles to make it known to the target market. Nintendo has created
c. Operations
Nintendo is a Japanese company where it has its manufacturing plant. This is where all the
consoles are assembled before being released to the market. Operations are key to the success
of this company because for it to survive in the highly competitive market, it has to
Support activities
a. Human resource
The success of Nintendo can be attributed to its employees, from the highest ranking down to
the bottom one. The employees are always motivated to work which positively impacts on
their productivity.
b. Infrastructure
Infrastructure is inclusive of all the other departments that ensure smooth running of the
company. The buildings housing the company, machinery used in manufacturing the
consoles, and all the facilities used to facilitate the arrival of a console to the customer all fall
PROPOSED STRATEGIES
Global level strategies refers to the process and efforts of expanding services and products to
the international globalized markets (Study.com). Nintendo is already a popular brand in parts
of the US and Europe. To reclaim its glory in the global market, Nintendo should ensure that
its gadgets are running on the latest technology because many gamers replace their consoles
with newer versions for better gaming. The company should also focus on the Africa which is
The company should also have sales representatives in all countries who sell and services the
consoles. This maybe expensive but it put Nintendo up with Sony who have representatives
selling and servicing PlayStation consoles together with other Sony electronics.
The organizations top leadership is mandated with the role of making decisions maters or
resources acquisition and allocation based on the organization’s strategic plan. Poor
leadership of a company results in poor decisions which in turn affect the performance of the
company. The development of Nintendo’s DS and Wii consoles was a corporate level
decision lead by the CEO Mr. Iwata. The decision to come up with an easy to use, quiet, and
little energy draining console was behind the development of Wii console which took over
Business level strategy is mainly applied in companies or organizations with more than one
business ventures. Under this strategy, the various business ventures are managed
independently to ensure that they achieve their set goals from the resources allocated to them.
In the case of Nintendo, there should be independent business management for the various
consoles and gaming devices. Each type of console should be managed as an independent
business. This will make it easy to realize which one is making good sales and which is not.
The purpose of any business is to make sales and increase profits which raises its
Functional level strategy is based on a plan for setting goals and allocating resources for
coordination between different operations towards the achievement of the set goals (Hitesh
2017).
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For any company to flourish in its business, there must be proper coordination between all the
departments. This ensures smooth running through the entire production period and even in
sales and marketing. Nintendo should ensure that all is departments are coordinating with
each other and producing the expected results in line with the set targets because the
After production, the marketing level carries the responsibility of making the products known
to the target markets. This is important in increasing sales and market competitiveness.
managers and keep reports of activities by employees under their jurisdiction and the
outcomes of those actions (Kaplan and Norton 1996). The use of a balanced scorecard relates
what appear as minor activities within a company or organization with the organization’s
b. I will ensure that all the activities carried each and every day are in line with the
c. I will monitor and measure the progress of the activities in the department under me
Conclusion
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After falling behind its competitors in the sale of consoles in recent years, Nintendo needs to
plan and reorganize itself on how to catch up with now the market leader Sony. After the
launch of Wii console that performed pretty well in the market sales, Nintendo has not been
able to launch another market winner which has in turn favored the success of Sony’s PS4.
In strategizing for a comeback, Nintendo will have to produce high quality consoles and
games better or like those by the competitors. It has also to take its marketing strategies to
higher levels to make its new consoles and games known to the people of the target markets.
Nintendo should also focus on the upcoming market in Africa and other developing countries
Nintendo should also focus on being unique. The success of Wii was based on its unique
features compared to Microsoft’s X box 360 and Sony’s PS3. It should find other
from the competitors’ consoles. If Nintendo focus on these areas, it can be assured of
References
Barney, J. B., & Hesterly, W. S. (2010). Strategic management and competitive advantage:
digital games and aggression revisited: A reply to Elson and Ferguson (2013).
2018
Kaplan, R. S., & Norton, D. P. (1996). Using the balanced scorecard as a strategic
management system.
Porter, M. E., & Millar, V. E. (1985). How information gives you competitive advantage.
Wakabayashi D. (2008). Xbox sales surpass Wii, PS3. Reuters. Retrieved from