Nintendo Case Study: Strategy, Value Chain, and Competitive Advantage

This case study analyzes Nintendo's strategy, value chain, and competitive advantage in the video game console industry. It explores the external environment, primary and support activities in the value chain, tangible and intangible resources, and the firm's ability to sustain a competitive advantage.

Running head: NINTENDO CASE STUDY
NINTENDO CASE STUDY
Name of the Student
Name of the University
Author Note

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Table of Contents
1. Summarize the case in 300 to max 400 words.........................................................................2
2. How the external environment might affect Nintendo’ strategy? Assess the political/legal,
sociocultural/global, demographic, and technological forces..........................................................3
b) Which are the current forces in the industry environments that affect Nintendo’ ongoing
strategy? Please apply Porter’s Five Forces of competition to the video game console industry.. .5
3. What are the primary and support activities in the value chain of Nintendo? How did
Nintendo create value for the customer?.........................................................................................6
b.) What are the tangible resources, intangible resources, and organizational capabilities of
Nintendo?.....................................................................................................................................8
c.) Are the internal resources valuable, rare, difficult to imitate, or difficult to substitute (VRIN)
to help Nintendo sustain a competitive advantage?.......................................................................10
4. How did Nintendo compete? Could Nintendo sustain a competitive advantage?.................11
References......................................................................................................................................12

2NINTENDO CASE STUDY
1. Summarize the case in 300 to max 400 words
The given case study relates to the overall scenario of Nintendo which was originally a
card maker and video game company. The firm developed in the year 1979 and was one of the
first firms in the market to develop, the LCD video game with a microprocessor in place. The
original NES was largely successful in ensuring that, the graphics were largely superior and that,
it was using a comprehensive platform design (Ansoff et al. 2018). The case study focuses on
one such product of the firm which it came up with named the Nintendo WII U. The console
game was designed to ensure that the firm would be able to undertake a competitive league in the
market and be able to sustain the competition in the workplace. The case study further goes on to
explain the manner in which over the years, how the firm has been able to gain success by
coming up with the products which were new and the manner in which although enjoying
considerable success, the firm often succumbs to competition which exists in the workplace. The
case study reflects how the product of the firm Nintendo WII U had been performing very well
initially and how over the past few years, the popularity of the product has gone down
considerably. In the first few initial years, the firm enjoyed a monopoly in the market, with
respect to the same, however, later on when Microsoft and Sony came up with their particular
counterparts, the revenue of the firm decreased thereafter.
The case study then provided the background of the firm whereby the information about
the origin of the firm was provided (David 2011). This was then followed by an analysis of the
manner in which over the past few years, the firm has been able to come up with offerings which
will ensure that the firm and how over the years the firm has been able to come up with unique
offerings and how the different competitors of the firm were able to provide adequate

3NINTENDO CASE STUDY
competition in the long run. The origin of the term Wii, the making of the report, the Game pad
controller and the Console and its features have been described successfully.
Additionally, the demographics which the firm tends to cater to will also be provided.
Although the games were initially targeted for the children, the adults have also been a
considerate fan of the products which the firm has to offer (Freeman 2010). The latter half of the
case study, tends to provide information on the overall competition which takes place in the
business environment and in addition to this, details of competition with respect to the market
share has also been provided. The case ends with the discussion on the future of the firm and
describes the manner in which the company may perform in the future in order to see to it that, it
is successfully able to cater to the overall needs of the parties as present and maintain a sustained
positioning in the workplace.
2. How the external environment might affect Nintendo’ strategy? Assess the
political/legal, sociocultural/global, demographic, and technological forces.
External environmental relationship
The external environment forms an efficient part of the firm and with respect to this, it is
important to gain an understanding of the different factors which exist in the business
environment and comprise of the capacity to impact the overall operations of the workplace. In
line of this, it becomes crucial to understand that in the following section, the different factors of
the business environment will be understood namely Political, Economic, Social and
Technological.
Political

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The political environment largely comprises of the laws, governmental agencies as well
as pressure groups which go a long way in limiting the operations of a firm. For the video game
industry, there exist various factors limiting the overall operations of the firm like the taxation
policies, foreign trade regulations as well as social policies. In line of this, it needs to be largely
understood that, is the one related to copyright (Hitt, Ireland and Hoskisson 2012). In the past,
the firm has been successfully able to avoid a controversy relating to the patent infringement.
However, in line of this, there needs to be taken several steps by the firm to ensure that it will
successfully be able to meet with the needs of the business.
Economic
Although there exists a considerable economic downturn, the video game industry has
been growing considerably. In line of this, it becomes considerably important to understand that,
the video game market contributes considerably to the overall economy of the United States and
the Japan. The exchange rate is considered to be an important aspect which matters to the firm
with respect to the overall operations. In addition to this, the Japanese yen having been
appreciated against the US. Dollar or the Euro would impact Nintendo negatively.
Social
The social factors which the firm would be required to consider can be stated to be the
overall demographics of the firm, the income distribution, the social mobility, the level of
education as well as the overall behaviour of the consumer (Nintendo.com 2019). The firm
makes use of the World of Nintendo showroom in order to attract the different consumers
effectively.
Technological

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Technology can be considered to be a very relevant aspect of the Nintendo and will be
required to ensure that it provides Nintendo a higher competitive advantage than the video game
console (Teece, Pisano and Shuen 1997). The technological innovation rate impacts the
operations of the firm and hence, Nintendo needs to keep up with the environment to ensure that
it is being able to meet with all its needs.
b) Which are the current forces in the industry environments that affect Nintendo’ ongoing
strategy? Please apply Porter’s Five Forces of competition to the video game console
industry.
In order to understand the overall business environment and industry atmosphere of
Nintendo, the Porters five forces is being applied to the video game console industry.
Porter five forces
Power of Suppliers
The power of suppliers can be stated to be very high in the industry as there exist a
handful of companies present in the video game industry (Pearce, Robinson and Subramanian
2000). The different suppliers tend to develop their own game and in line of this, it can be
mentioned that, there exist many products like the hard disk, electronic components, game
writers, consoles as well as manuals.
The threat of potential entrant
Although the Sony and Microsoft are strong challenges to Nintendo, the industry rivalry,
it needs to be understood by the firm that, Nintendo needs to ensure that, they are being able to

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undertake considerable initiatives to achieve their overall goals as well as achieve success. As
these big players are present, the new companies would not be able to find long term success.
Bargaining power of Customers
The power of the buyers in the industry can be understood to be very low because there
are very successful companies who offer a small variety of video games available to the buyers
(Mahoney and Pandian 1992). The video games comprise of an increasingly large and defying
group and with respect to this, it is crucial to understand that, the power of the customers remain
relatively small and as the power of the players increase, the market forces the video game being
developed and bring the new and diverse audience into the scope of the firm.
The threat of Substitute product
There are various alternatives to the games available to the targeted audience and hence,
the threat of substitutes can be understood to be relatively high.
Competitive Rivalry
The competitive rivalry in the firm can be understood to be relatively strong as Sony and
Microsoft provide tough competition to the firm (Provenzo Jr 1991).
3. What are the primary and support activities in the value chain of Nintendo? How
did Nintendo create value for the customer?
The Nintendo can be largely understood to be a gaming firm which intends to provide the
right products to the customers in order to fulfil their overall gaming needs. The main value
which the firm aims to provide to the different customers can be stated to high quality as well as

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unique gaming software to the different customers which will enable them to achieve their
overall goals as well as objectives (Covin and Slevin 1989). In addition to this, the firm also
aimed to ensure that it provides the best after sales services to the firm which will ensure that the
organization is able to find success in the long run.
Primary value chain
Inbound
logistics
Calling off to the
different
suppliers
Materials
handling
Warehousing
(Soloway 1991)
Inventory
control
Operations
Conversion of
operations
Assembly
Packaging
Maintenance
Outbound
logistics
Warehousing
Order processing
Picking
Shipment
Delivery
(Nintendo.com
2019)
Marketing and
sales
Channels to
market
Product pricing,
as well as
advertising and
distribution
The customer
value, cost to
customer and
other
convenience as
well as
communication.
Service
Installation
Repair
Training

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The Sales force
effectiveness
Secondary value chain
Procurement
Purchasing raw
material supplies
Fixed assets
Technological
development
Process design
Product design
Research and
development
Human
resources
Recruiting,
hiring, training
and development
along with
compensation of
personnel.
Infrastructure
General
management
Finance
Accounting
IT
b.) What are the tangible resources, intangible resources, and organizational capabilities of
Nintendo?
Nintendo is a comparatively very large company which at a point of time had resources
which could make the company last for a span of 50 years. The different resources in the hands
of the company can be mentioned to be as follows:
Intangible resources

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 Research and development team: The research and development team can be stated to be
very important part of Nintendo with respect to which it needs to ensure that this team is
respected and developed.
 Marketing team: The marketing team can be considered to be a relevant resource of the
organization and with respect to this, it is important to understand that, in order to ensure
success in the long run, marketing team has to be supported (Burgelman, Maidique and
Wheelwright 1996).
 Supplier: The supplier team is also a considerable resource of the firm.
 Manufacturing procedure: The manner in which the different game designers tend to
come up with the manufacturing process can also be considered to be a crucial for the
firm.
Tangible resources
 Strong cash flow: The Nintendo is understood to have a very strong cash flow which can
be understood to have a huge influence on the overall operations
 Factory: The knowledge factory of the firm can be understood to be another key resource
Capabilities
The key capabilities of the firm can be stated to be as follows:
 The ability to predict the future of video gaming
 The brand name is very effective (Sheff 2011).
 To reach the economies of scale so that they can take initiatives

10NINTENDO CASE STUDY
c.) Are the internal resources valuable, rare, difficult to imitate, or difficult to substitute
(VRIN) to help Nintendo sustain a competitive advantage?
Resource or
Capability
Valuable Rare Inimitable and
non-
substitutable
Organized to
Exploit
Impact on
competitive
advantage
Research and
development
team
Yes Yes No Yes Realised and
sustained
competitive
advantage.
Marketing
team
Yes No Yes No Realised
comparatively
Supplier Yes No Yes No Realised
temporary
competitive
advantage
Strong cash
flow
Yes Yes No Yes Realised
comparatively
Factory No Yes Yes Yes Realised
temporary
competitive

11NINTENDO CASE STUDY
advantage
4. How did Nintendo compete? Could Nintendo sustain a competitive advantage?
Core competency of Nintendo:
 Creating a casual game
 Low cost in production
 Strong brand
 The console and in house game development department
It can be understood that, Nintendo will be required to make use of its resources and apply
the competitive advantage in case it wants to ensure success in the long run (Barney and Hesterly
2009). In addition to this, the firm will also be required to ensure that it is able to make use of its
strong brand name and research and development capabilities to engage in successful business
competitive and sustainable advantage.

12NINTENDO CASE STUDY
References
Ansoff, H.I., Kipley, D., Lewis, A.O., Helm-Stevens, R. and Ansoff, R., 2018. Implanting
strategic management. Springer.
Barney, J.B. and Hesterly, W.S., 2009. Strategic management and competitive advantage. Upper
Saddle River, NJ: Pearson Education.
Burgelman, R.A., Maidique, M.A. and Wheelwright, S.C., 1996. Strategic management of
technology and innovation(Vol. 2). Chicago: Irwin.
Covin, J.G. and Slevin, D.P., 1989. Strategic management of small firms in hostile and benign
environments. Strategic management journal, 10(1), pp.75-87.
David, F.R., 2011. Strategic management: Concepts and cases. Peaeson/Prentice Hall.
Freeman, R.E., 2010. Strategic management: A stakeholder approach. Cambridge university
press.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012. Strategic management cases:
competitiveness and globalization. Cengage Learning.
Mahoney, J.T. and Pandian, J.R., 1992. The resource‐based view within the conversation of
strategic management. Strategic management journal, 13(5), pp.363-380.
Nintendo.com 2019. Video games and consoles [online]. Available at:
https://www.nintendo.com/ (Retrieved on: 11 May 2019).
Pearce, J.A., Robinson, R.B. and Subramanian, R., 2000. Strategic management: Formulation,
implementation, and control. Columbus, OH: Irwin/McGraw-Hill.

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Provenzo Jr, E.F., 1991. Video kids: Making sense of Nintendo. Harvard University Press.
Sheff, D., 2011. Game over: How Nintendo conquered the world. Vintage.
Soloway, E., 1991. How the nintendo generation learns. Communications of the ACM, 34(9),
pp.23-ff.
Teece, D.J., Pisano, G. and Shuen, A., 1997. Dynamic capabilities and strategic
management. Strategic management journal, 18(7), pp.509-533.