SWOT Analysis
Strengths
Nintendo has been in the market for a long time and its established and strong brand gives the company a competitive advantage (Gaudiosi, 2015).
It is known for gaming by the consumers, unlike other competitors who are also in other fields (Nintendo, 2014). As such, consumers can only make decisions about their products based on other gaming products they have released before.
The company prides itself on making gaming affordable for people in different economic classes.
Its basic strategy of expanding the gaming population gives the company a wider customer base currently and in the future.
Nintendo provides consumers with innovative game-play devices mixed with other technologies that improve the sensitivity and aim of the devices.
Weaknesses
The brand has not made establishments in other emerging economies (Gaudiosi, 2015).
The inability to enforce intellectual property rights in some countries has increased the number of counterfeit products.
The company highly depends on the gaming titles it has attained so far unlike its competitors who have their hands in other related businesses, increasing their popularity (Kittilaksanawong and Gillet, 2015).
Opportunities
Nintendo has the opportunity to expand the digital business by providing add-on content and other distribution software packages (Kittilaksanawong and Gillet, 2015).
There is an opportunity for expanding the gaming demographics.
An increase in focus on software development may benefit Nintendo since it employs simple technology and lower development cost compared to its competitors.
There is an opportunity to employ significant Research and Development for Nintendo to diversify into other fields.
The enhanced Wi-Fi capabilities give Nintendo an opportunity to come up with innovations that will expand its presence in the gaming sphere.
Threats
The high number of overseas sales has increased the company’s risk in relation to the fluctuation of the foreign exchange rates (Nintendo, 2014).
Nintendo faces a threat in the increasing popularity of online and mobile gaming. This popularity threatens the handheld and console gaming companies like Nintendo (Gaudiosi, 2015).
PEST Analysis
Political
There is an increase in political concerns about the controversy surrounding violent games. There is pressure for the government to implement laws that will limit or control content in video games. For instance, we have the Entertainment Software Rating Board that rates gaming content.
Economic
Economic changes alter the purchasing behaviour of consumers and their purchasing power as well (Nintendo, 2014). The development of console products follows the computer industry cycle. Most times it is not possible for consumers to upgrade their consoles without having to buy a new system. As such, tough economic times affect Nintendo since gaming is a luxury for most people.
Social
Even today, the large number of gamers is young males and there is an increase in the number of non-gamers who did not have an interest or experience in video games.
Technological
The innovation of devices like tablets and smartphones has changed consumers’ lifestyles (Gaudiosi, 2015).
Improved technology has improved features like processor speed, memory capacity, and visuals of gaming consoles.
Business System Model
Inbound and Outbound Logistics
Nintendo recently announced its collaboration with DeNA, which is presumed to be a move to the mobile platforms (Gaudiosi, 2015).
Nintendo plans to create a new and current online membership with the aim of gaining a competitive advantage to its competitors (Kittilaksanawong and Gillet, 2015).
Its alliance with DeNA has led to a rise in the stock market while other gaming companies have taken a hit.
Operating Results
Nintendo continues to embrace the strategy of ‘Gaming Population Expansion’ and by doing so all people regardless of their gender, age, and experience can enjoy gaming (Nintendo, 2014).
Research and Development Activities
Nintendo engages in the active development of software and hardware and console systems with support from other organisations.
With regards to hardware, the company researches on key technologies like display technology and semiconductor memories (Nintendo, 2014).
With regards to software, the company takes advantage of the hardware features in its created devices and uses them to create games whose elements include music, graphics, and game scripts.
Procurement and Manufacturing
Nintendo examines and finds the relevant technical know-how, finds ways to apply and test the technologies, and uses the set procurement standards and regulations (Nintendo, 2014).
Recommendations
There is a need for Nintendo to come up with strategic measures to remain at the top with a competitive advantage on its competitors. Nintendo can implement resources, leveraging to its strategic planning. It will require the company to do more with what it has (De Wit and Meyer, 2010). That includes strategic moves like making alliances with other companies so that together they can be at the top in the gaming industry. For instance, the move on collaborating with DeNA was smart and similar strategic moves should be made. Leveraging can also include taking advantage of the current customer base and attempting to widen this base. That includes using technologies or trends that are popular to gamers today. For example, online gamers are a niche that the company should target. Other strategic decisions would include focusing more on the profitable first-party software development and less on the hardware. Enders, Konig, Hugenberg and Engelbertz (2013) explain that for any company to remain profitable, it should create a customer value that is more profitable than the cost of providing the said value. The strategy can be applied to Nintendo where their gaming devices and applications should remain more profitable than the cost of developing and providing them. During strategy implementation, Nintendo should pay attention to the different factors that can affect this process, including communication and the use of the right mechanisms to coordinate the process (Li, Guohui and Eppler, 2008). To be successful in implementing these strategies, Nintendo should identify and manipulate the relationships among the issues or challenges facing the company. In addition, it should identify the global trends that affect its success (Fairholm, 2009). Nintendo should create products with the emerging features of visionary, viable, and comprehensible. Meeting these features will ensure the company comes up with sustainable solutions and profitable products (Manzini, 2010). According to the Strategic Management Society (2011), for companies operating in different locations or whose products are sold to people of different locations, it is important to pay attention to using different strategies for different locations. The journal explains how strategies implemented for one niche or location may not be successful in another, an explanation that Nintendo can implement.
Bibliography
De Wit, B. and Meyer, R., 2010. Strategy Synthesis: Resolving Strategy Paradoxes to Create Competitive Advantage. 3rd ed. Hampshire, UK: Cengage Learning EMEA.
Enders, A., Konig, A., Hungenberg, H. and Engelbertz, T., 2013. Towards an Integrated Perspective of Strategy: The Value-process Frame work. Journal of Strategy and Management, [online] 2(1), pp. 76-96. Available at: https://opus4.kobv.de/opus4-fau/files/2907/enders_towards_4143.pdf [Accessed 14th February 2016].
Fairholm, M.R., 2009. Leadership and Organizational Strategy. The Innovation Journal: The Public Sector Innovation Journal, [online] 14(1). Available at: http://www.innovation.cc/scholarly-style/fairholm3.pdf [Accessed 14th February 2016].
Gaudiosi, J., 2015. Why Nintendo is entering the mobile games business. Fortune, [online]. Available at: http://fortune.com/2015/03/19/nintendo-mobile-games/ [Accessed 14th February 2016].
Kittilaksanawong, W. and Gillet, G., 2015. Nintendo Wii U: Lessons Learned for New Strategic Directions. Harvard Business School: Ivey Publishing.
Li, Y., Guohui, S. and Eppler, M.J., 2008. Making Strategy Work: literature Review on the Focus Influencing Strategy Implementation. [pdf] Available at: http://www.knowledge-communication.org/pdf/making-strategy-work.pdf [Accessed 14th February 2016].
Manzini, E., 2010. Small, Local, Open, and Connected: Design for Social Innovation and Sustainability. The Journal of Design Strategies, [online] 4(1), pp. 8-13. Available at: http://www.ut-ie.com/articles/darwin-journal.pdf [Accessed 14th February 2016].
Nintendo, 2014. Annual Report 2014 for the fiscal year ended March 31, 2014. [online] Available at: https://www.nintendo.co.jp/ir/pdf/2014/annual1403e.pdf [Accessed 14th February 2016].
Strategic Management Society, 2011. Global Strategy Journal [online]. Available at: http://gsj.strategicmanagement.net/pdf/GSJ-LaunchBrochure.pdf [Accessed 14th February 2016].
