Strategic Analysis of Nintendo's Competitive Environment

This assignment provides a comprehensive strategic analysis of Nintendo's competitive environment. It examines the company's corporate level and business level strategies, identifies key issues and difficulties faced by the firm in gaining competitive advantages, and analyzes the firm's internal strategic capabilities using the VRIO framework. The study also discusses how Nintendo used blue ocean strategy to surpass its competitors, Sony and Microsoft. The assignment recommends that Nintendo analyze its core competencies and devise appropriate strategies aligning with its internal strategic capabilities to sustain in the competitive environment.

Individual case
study report

Table of Contents
Executive summary...............................................................................................................................................3
BODY..................................................................................................................................................................... 3
INTERNAL ANALYSIS.........................................................................................................................................3
EXTERNAL ANALYSIS.........................................................................................................................................7
CONCLUSION.........................................................................................................................................................8
References............................................................................................................................................................9
APPENDIX I..........................................................................................................................................................10

Executive summary
Nintendo is one of the biggest computer video game organisations by
advertise capitalisation. It was began as a playing cards, founded in 1889.
It was known as one of the innovator of video game console in the early
1980s. It preserved as the market place leader with its excellent Nintendo.
Nintendo, the Japanese computer game support fabricating organisation, is
one of the enormous players in the particular business alongside Sony and
Microsoft. In 2006, when the contenders were following the business
standard to enhance the item includes, Nintendo took after a problematic
course to focus on another market with another item that none of the
contenders had: the Wii.
BODY
INTERNAL ANALYSIS
STRATEGY ANALYSIS
The strategic analysis of Nintendo has been conducted at the
corporate level along with the Blue Ocean Strategy that played a key
role in the formulation of its disruptive strategy.
CORPORATIVE LEVEL STRATEGY
At the corporate level, Nintendo is following an Innovation Strategy
that has played an important role in building its competitive
advantage. Figure 1 shows an analysis of Nintendo’s innovation
strategy through the framework of the Innovation Dilemma (Johnson
et al., 2008). The analysis of Nintendo’s innovation strategy indicates
that it used an innovative business model i.e. to position itself
completely different from its competitors and questioned how people
actually want to play through its in depth customer understanding
(Pontiskoski and Asakawa, 2009). Secondly, Nintendo used a

technological push i.e. to target an untapped or incomplete market
of gamers, as it had to convince the non-gamer adult to play on a
Nintendo platform. Through its largest advertising campaign in its
history, with costs over $200 million (Sliwinski, 2006), the company
offered family-friendly and easy-to-use motion sensor technology.
Thirdly, product innovation i.e. introduction of the Wii-mote and an
infrared pointer was regarded as innovative product design
(Farhoomand, 2009).
(Johnson et al., 2008)
Microsoft and Sony have now copied motion-detecting technologies
for their respective consoles, namely the Microsoft Kinect and
Playstation Move. Hence, it is arguable that Nintendo has set a trend
for the video game market, a dominant design that its competitors
are willing to follow.
Concerning inimitability the motion based family oriented concept of
gaming is copyable. However, according to Nintendo, the followers
will not have the same innovative impact as the Wii had back in
2006. Nintendo has already acquired a lot of prior learning from its
path dependency and acquired substantial experience regarding this
technology (BBC, 2009).
BUSINESS LEVEL STRATEGY
The Business level strategy is concerned with how to get
advantage over competitors (Johnson et al., 1999). Nintendo
followed a Blue Ocean Strategy (BOS) by avoiding the competition
from the industry and targeting the non-gamers segment. By offering
the Wii Nintendo created a new market or a blue ocean. We could
argue that this was an emergent strategy for Nintendo as the
company had been hardly hit by Sony’s success which led Nintendo

to sense a consumer trend emerging in the gaming industry i.e. the
gamers market was shrinking due to a lack of time and high
difficulty levels of games (Watts, 2009).Therefore, in order to survive
in the industry, Nintendo had to come up with a product that none of
its competitors provided. It used this trend and customer
understanding to conduct a BOS. Figure 4 shows the method
through which Nintendo implemented its BOS (Nintendo, 2011). The
imitiability in the motion based family oriented aspect of gaming is
copyable, thus it is essential that the strategic management of
Nintendo must devised and use different approach to sustain in the
competitive environment. According to the management of
Nintendo, the followers will not be provided with the same
innovative impact as Wii had back in 2006. Company has acquired
substantial knowledge and shifts from its path dependency regarding
motion based gaming technology.
Gaming industry is developing rapidly with the development in
the field of computer technologies (Jung, 2011). As one of the
renowned games and gaming equipment manufacturing
organisation, Nintendo have all numerous core competencies which
segregate the organisation from its competitors. Nintendo possess
numerous valuable robust brands which have been pillars of the
gaming industry since the launch of popular games like Mario,
Donkey Kong, Pokemon, etc. These gaming brands greatly influence
the audience especially younger children towards the organisation
(Afuah, 2014). Even the key competitors like Sony and Microsoft
does not possess such strong and valuable brands. In order to
protect its development, management adopted very strict licensing
policies and intellectual property rights. The brands under the
company can only be used by the Nintendo.

Blue Ocean Strategy
The ability to execute the blue ocean strategy framework is another
essential competence of Nintendo which makes it different from its
rivals. This tremendously crucial asset of the company enables them
to explore the untapped industries which have not been touched and
contested before (Hollensen, 2013). For instance, unlike its rivals
Sony and Microsoft, Nintendo aim to enhance its video game
experience to children, women and even people above age 60. As a
part of its blue ocean strategy, Nintendo has launched Nintendo DS
and then Nintendo Wii which yielded motion based gaming in the
gaming industry.
VRIO Framework
Value Rarity In-
imitability
Organisationa
l
Gaming
Brands
Yes Yes Yes Yes
Family
Friendly
Set-up
Yes Yes Yes Yes
Blue
Ocean
Strategy
Yes Yes Yes Yes
From the above VRIO analysis it can be understood that all the
resources and capabilities of Nintendo are valuable, rare, in-imitable
and organised. With robust internal strategic capabilities, the firm is
able to survive in the competitive environment. With such strong
internal capabilities Nintendo is able to make continuous
improvements in its performance which eventually leads the

organisation on the path of growth and development.
EXTERNAL ANALYSIS
Drivers of Industry Development
Brand: In console market, brand plays prominent role in the growth
and development of Nintendo. From the above strategic analysis it
can be Nintendo possess robust brands which helps them in gaining
competitive advantages (Subramanian, Chai and Mu, 2011). In 7th
generation console market organisations like Sony, Microsoft and
Nintendo can only survive because of their strong brands. It is not
easy for new ventures to take over the console markets from these
dominators.
Cost: By considering the expected revenues, the cost for consoles
must be done. Inconsistent cost control with the planned revenue
leads console manufacturers to fail in the console market. The cost
of console delivered by Nintendo is relatively low as compared to its
rivals. This allows the company to gain competitive advantage and it
became essential diver for industrial development.
Exclusive Games: Another driver that led the organisation towards
growth and development is the exclusive and in-imitable games
provided by Nintendo (Lee, Lin and Yu, 2017). It keeps the
organisation on sustaining trajectory in the console market. For
instance, Super Mario Bros series and Final Fantasy Series are
greatly likeable in the market which helps the organisation in
sustaining the market environment.
Innovation: Nintendo is committed towards innovation and it can
be witnessed in the past with the inception of Wii and Nintendo DS.
Even in present times, the research and development team at
Nintendo is working ceaselessly to provide unique and innovative
consoles to their target market. This helps the organisation to

outshines its competitors and gain the competitive advantages.
Technology: Technology is another driver that led the organisation
towards growth and development. Nintendo used patented
technologies which are rare and in-imitable. The corresponding
technology of exquisite console should be steadily enhanced by a
sustaining Research and development (Lee, Lin and Yu, 2017).
Nintendo utilised latest technology in order to provide quality
products and develop creative games for all segments of customers.
CONCLUSION
In summing up, it can be understood that Nintendo in order to
sustain in the competitive environment faced many issues which
influence them to transform their strategies. Nintendo faced issues
such as declining customers and sales which hits company’s profits
very hard. In order to mitigate the damages, precise strategies has
been developed by the organisation. In this context, the strategic
analysis of the firm has been made in the study in order to gain
comprehensive understanding about the Nintendo’s strategies. The
corporate level and business level strategies has been examined in
the essay to highlight the key issues and difficulties faced by the firm
in gaining competitive advantages. VRIO analysis have been made in
order gain insights of firm internal strategic capabilities. It has been
identified in the essay that firm used blue ocean strategy in order to
surpass its competitors i.e. Sony and Microsoft. It is recommended
to Nintendo to analyse its core competencies and devised
appropriate strategies which align its internal strategic capabilities
to external environment influence. Through this, the firm will able to
sustain in the competitive environment.

References
Books and Journals
Afuah, A., 2014. Business model innovation: concepts, analysis, and
cases. Routledge.
Hollensen, S., 2013. The Blue Ocean that disappeared - the case of
Nintendo Wii. Journal of Business Strategy, 34(5), pp. 25-35.
Lee, S.J., Lin, G.T. and Yu, W.H., 2017. The Strategic Analysis of
Driving Forces Determining Success for a Console
Manufacturer in the Console Market–the Positioning Strategy of
Nintendo.
Subramanian, A.M., Chai, K.H. and Mu, S., 2011. Capability
reconfiguration of incumbent firms: Nintendo in the video game
industry. Technovation, 31(5-6), pp.228-239.
Online
Jung, C., 2011. A strategy analysis of Nintendo-Executive summary.
[Online] Available at:
<https://www.grin.com/document/183155>
Jurevicius, O., 2017. VRIO Framework. [Online]. Available
through:<https://www.strategicmanagementinsight.com/tools/vri
o.html>

APPENDIX I
Blue ocean strategy: In blue oceans the industries aim to establish ventures in
untapped market which is unknown to the competitors. In blue oceans,
demand is developed rather than conquer over. Loads of opportunities are
their for growth which is helps in enhancing profitability and productivity
of the firm.
Illustration 1: VRIO Framework
(Source: Jurevicius, 2013)

VRIO framework: VRIO stands for Value, Rarity, Imitable and Organised. It is
the strategic framework which is used to analyse the internal strategic
capabilities of the firm by measuring the organisation internal resources.
It is effective tool which helps the organisation to assess its overall
internal strategic capabilities.