Nintendo Essay Example
Nintendo Case Study Analysis
Nintendo Case Study Analysis
1. Who are Nintendo’s competitors?
Despite However, Nintendo operates in a highly competitive industry from both local and international competitors. Among the key competitors that Nintendo has had to compete with for the market share include Microsoft Xbox, Sony PlayStation and Sega. In order to maintain a competitive edge over these rivals, Nintendo has had to not only manufacture quality products by adopting advanced technologies, but has also been differentiating itself from rivals in the market.Sheff, 2011).Nintendo is a Japanese multinational software and consumer electronics company. Founded in 1889, Nintendo has grown to become a worldwide brand and is presently the largest video game company in Japan in terms of net worth (
2. Is Nintendo’s strategy of leaving excess demand a good idea?
The case indicates that Nintendo could not meet the demand for it video games in 2007. According to the case, as much as Nintendo was producing more than one million units of games per month in 2007, this was not enough to meet the demand in the market. As much as the management of the company understood that it was not producing enough games to meet the quantity of the video games demanded, the company ignored excess demand by sticking to its production capacity.
The excess demand that Nintendo left out translates to lost sales and profits that the company needs to understand. Besides, when Nintendo is unable to meet the quantity of video games demanded in the market, this makes customers look at Nintendo as unreliable company, which plays to its disadvantage. Besides, the excess demand that Nintendo left must have switched to competitors in the market, such as Sony, Microsoft or Sega for that were able to meet their demand and this could threaten the sustainability of Nintendo in the long run. Sheff, 2011).However, the strategy of leaving the excess demand would be counterproductive to Nintendo. The video game market is highly competitive. Therefore, one of the best ways to gain a competitive advantage over rivals in the market is to ensure that it attracts as many customers to its brand and ensuring that customers are able to get the video games all the time. The advantage of meeting excess demand is that it would have resulted in increased sales of Nintendo video games by a large percentage (
How can Nintendo know how many game systems to produce for the holiday season?3.
Demand forecast will involve the management of the company using the sales data from the past holiday seasons to predict the number of game systems that are likely to be in demand during the future holiday seasons. For instance, it the company found from the past sales data that one million game systems were sold during the past holiday season, then the company can go ahead to produce game systems that number slightly over one million so as to cater for any increase in demand for the game systems. Doing such a forecast will be advantageous for Nintendo as it will ensure that the company does not experience shortage in the number of game systems available, reduce lead time and ensure better customer service. Sheff, 2011).According to the case, it emerges that the demand for video games is usually high during holiday seasons compared to the other months. For example, the case indicates that demand for games usually goes up during holiday seasons, such as during Charismas holidays compared to ordinary days or months. Therefore, to avoid experiencing game system shortage during holiday seasons, it is important for Nintendo to have a way of knowing the demand that is likely to be experienced during holidays so as to be able to know the amount of game systems to produce. The best way that Nintendo can know the number of game systems to produce is through demand forecast (
4. Nintendo has long had a policy of creating its own games. Is this idea good or bad?
The main disadvantage associated with this policy is that it requires Nintendo to invest a lot in the manufacturing facility and human resource that is needed to produce consistently quality games.Sheff, 2011).Therefore, the fact that Nintendo creates its own games without relying on third parties have enabled the company to react quickly to the market forces, thereby ensuring that it keeps with the trends in the market. Second, the idea of creating own video games is good for Nintendo as it has enabled the Japanese company to lower its costs of production as the company is in control of all the production process. Today, companies compete not just on the technology or sales that a company is able to generate, but also on cost. Therefore, because Nintendo creates games by itself, this has given the company the opportunity to control the cost of products, thus giving it a competitive edge over rivals in the market. Additionally, creating games in-house was a good idea as it has enabled the Japanese firm to the enjoy flexibility as well as the chance to customize the games according to needs of each client (Sheff, 2011). The case indicates that Nintendo in a company that has adopted a policy of developing its own games instead of relying on third party companies for creation of its games. Analysis of the case indicates that this policy has been a good idea for Nintendo despite some few challenges and shortcomings that are associated with this policy. The first main advantage to this policy is that it has enabled Nintendo to react to the market quickly. The game market is experiencing changes in technologies as well as consumer tastes and preferences (
5. How difficult will it be for Nintendo’s competitors to build similar features in their products? How long can Nintendo maintain its advantage?
Regarding inimitability, Nintendo has been in the game industry for about one and a half centuries and has built a strong culture and brand name that will take its competitors many years to match. Additionally, Nintendo has Human Capital that is non-substitutable as its executives of the company are formed within the firm as expertise are also developed in-house within the firm’s unique culture and environment. Therefore, this is a resource that no company in the industry can supply with ease in the market. Therefore, based on the VRIN analysis, it emerges that Nintendo has resources that will give it a sustainable competitive advantage in the game industry. Sheff, 2011).Whether or not Nintendo’s competitors will be able to build products with similar features as those of Nintendo and the ability of Nintendo to achieve a sustainable competitive advantage can be analyzed using Michael Porter’s VRIN framework. VRIN framework analyzes looks at whether a company’s resources are valuable, rare, inimitable and non-substitutable. Analysis of Nintendo’s case indicates that the company has strong human capital that acts as a valuable resource for the company, which delivers excellent software and hardware products that takes advantages of the opportunities available in the market and minimizing the threats. In the video console market, it emerges that Nintendo is the sole possessor of this resource, thus rare (
6. Write a report to management that describes the primary cause of the problems, a detailed plan to solve them, and show how the plan solves the problems and describe any other benefits it will provide.
The problem has been that the company has been losing a significant percentage of its market share to rival firms, such as Sega, Sony and Microsoft and this has affected its sales and profitability that has been on the declining trend. The solution to the problem is that Nintendo should consider differentiating from rivals in the market by being more creative and adopting the latest technologies in creating games that suits the market trends. The company will benefit from the solution as it would ensure the production of quality game systems that suits market trends, make the brand attractive to customers and ensure high sales and profits.Sheff, 2011).High competition is the primary sour problems faced Nintendo in the game industry (
Knopf Doubleday Publishing Group.. London: Game over: How Nintendo conquered the worldSheff, D. (2011).
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