Strategic Management of Nintendo Co. Ltd

This report presents a strategic management plan for Nintendo Co. Ltd, analysing its core competencies, capabilities, weaknesses, strengths and current strategies to frame future strategies to gain competitive advantage in the market.

Running head: STRATEGIC MANAGEMENT OF NINTENDO CO. LTD
Strategic Management of Nintendo Co. Ltd
Name of the university
Name of the student
Author note

1STRATEGIC MANAGEMENT OF NINTENDO CO. LTD
Executive summery
The purpose behind writing this paper is to demonstrate how a gaming company should
operate in a competitive business environment considering the resources and capabilities. The
chosen company is Nintendo Co. Ltd based in Japan, which has been dealing with video
games since the year of 1975. Although it shares glorious history and experience of video
gaming industry due to a recent downfall in the market share, the company has felt to revise
their marketing strategy. Therefore, this report has elaborated its core competence,
capabilities weaknesses, strengths and current strategies in order to frame future strategies to
gain competitive advantage in the market.

2STRATEGIC MANAGEMENT OF NINTENDO CO. LTD
Table of Contents
Introduction....................................................................................................................4
Overview of the company and its business sector.........................................................4
General environment analysis........................................................................................5
Porter’s five forces analysis...........................................................................................6
Suppliers’ power........................................................................................................6
Buyer’s power............................................................................................................6
Industry rivalry...........................................................................................................6
Threat of substitution.................................................................................................7
New entrants...............................................................................................................7
Competitive environment...............................................................................................7
........................................................................................................................................7
Opportunities..................................................................................................................8
Threats............................................................................................................................8
Tangible and intangible resources..................................................................................8
Capabilities.....................................................................................................................9
Core competencies.........................................................................................................9
Value chain analysis.......................................................................................................9
Weakness......................................................................................................................10
SWOT analysis.............................................................................................................10
Current strategies.........................................................................................................11
Future strategies...........................................................................................................11

3STRATEGIC MANAGEMENT OF NINTENDO CO. LTD
Conclusion....................................................................................................................12
References....................................................................................................................13

4STRATEGIC MANAGEMENT OF NINTENDO CO. LTD
Introduction
This report aims to present a strategic management plan in the case of Nintendo Co.
Ltd., Japan, as the company is facing several issues in various levels, standing on the verge of
ninth generation of video games console (Pikachu, 2018). Currently the company is operating
in various genres of video games, which have been expanded worldwide. In order to ensure a
prosperous future from the very beginning of ninth generation, a strategic plan of managing
the business operations would be a smart approach to adopt. Therefore, according to
Cennamo and Santalo (2013), this report will identify and analyse issues in the general
environment first, then it will seek for the competitive strategies, needed against competitors.
Apart from that, identifying internal loopholes are important part of considering a strategic
approach. Several internal and external aspects will be evaluated in order to find out its
capability to enter into the market with improved products. Recommendations will be
mentioned to mitigate ongoing issues, as well as proper justification will be included for
every suggestion. A list of future strategies will help the company to sustain the position in
the market.
Overview of the company and its business sector
Nintendo Co. Ltd is a Japan based MNC, which deals with electronics and software.
In order to say more precisely, the company manufactures and designs cards and toys.
However, at the end of 1970, they shifted their focus into video games and the response was
huge from corners of the world. Their journey started with creating and launching Colour TV
games, which has been differentiated into 3D computer games and mobile games as well with
the progression of technology. Both the sales of hardware and software receives competition
from companies like Sony and Microsoft’s Xbox one. Yet the company has been struggling
through the competition to ensure a sustainable position in the market.

5STRATEGIC MANAGEMENT OF NINTENDO CO. LTD
For the sake of the dynamic business atmosphere organisation has opted for online
selling of products as well. Australian society is into the practice of playing video games
immensely both in a traditional way of playing home video games or with the help of
portable computing devices. Considering the fondness of gaming among Australians the
organisation is trying to revising their strategic plan to ensure a prosperous future (El Namaki
2013).
General environment analysis
 Demographic factors such as age, gender, culture of the citizens of a particular area
influence the business performance of a certain organisation. It has been observed
from surveys conducted in 2016, Millington (2016), that around 68% of Australians
play video games in order to improve coordination and to stimulate mental condition.
This proportion is continually increasing. Generations, who grew with the gaming
culture prefers to play games even now as a mode of recreation and has become
addiction to some extent (Lahti 2013). As per the study of Fox and Tang (2014),
considering the craze of games among teenagers and interest of older generation;
average age of an Australian gamer is 33, whereas female gamers have occupied 48%
of the total number.
 Economic forces are dynamic as it depends on the market competition, rate of
unemployment and fiscal policies of a certain demographic area. While launching a
game with the purpose of gaining a market share organisations must consider annual
household earnings of the target market. In the case of recession or inflammation,
company will be at stake, as the buying power of consumers will decrease.
 Technological innovation with the progression of time is important as video games
industry has several giant organisations. Nintendo has invested in R&D technology to
compete with major competitors. Product innovation must be unique and non-imitable

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to avoid failure. Considering the multiple electronic devices if games can be
compatible enough to give output in both the computers and television set
acceptability will be higher. Required development of software is needed according to
the rate of advancement.
 Gaming culture is very much present in Australian society. People who have grown
up with the progression of technology and experienced the evolution of video games
are immensely interested in playing games. The number is consistently increasing as
the number of handheld devices are present everywhere (Lucero et al. 2014).
 As per the study of Tsang and Park (2013), favourable political climate and stability,
government’s regulation regarding fair business practices help Nintendo to execute
business operation smoothly both via physical stores and e-commerce sites. The
company itself does not encourage practice of piracy in the matter of game consoles.
Porter’s five forces analysis
Suppliers’ power
As Nintendo has opted for more than single supplier, the bargaining power has
become moderate in this course and as at the same time the company realises extreme
competitive market. The company has a strong brand image; hence, suppliers find it difficult
to choose other companies over Nintendo.
Buyer’s power
Although gamers lose their purchasing power under a pressure of recession, buyers’
power can be marked as high as the proportion of gamers has increased irrespective of
demographic categories. In order to survive recession retailers share a moderate power when
it comes to buy video game consoles.

7STRATEGIC MANAGEMENT OF NINTENDO CO. LTD
Industry rivalry
Nintendo face high competition from Sony mostly as both the companies provide
premium products at high price and use of advanced technological innovation can be noticed
in both the brands. Microsoft’s product line is more expensive and extra ordinary. The
company is capable of influencing every demographic factors of the target market. Whereas,
high intensity of rivalry can be identified here, Chinese products have low competence to
compete with Nintendo.
Threat of substitution
Nintendo has covered the market of arcade and mobile games largely, therefore from
there threat of substitution is relatively low yet the company must rethink to innovate new PC
games as the company has neglected that area for a long span of time (Dhillon, Seldon and
Vadlamani 2014).
New entrants
Nintendo has been operating the market since 1975, and by now, it has established
their distribution chain globally along with a reliable brand image. Threats from new entrants
carries a low potential to damage the market position of Nintendo.
Competitive environment
Future strategies must be to
encourage digital
development and
promoting mental health
benefits
Current strategy is to
provide customer oriented,
simplified products
keeping the production
cost low
Competitors consider the
company superior due to its
long history yet low rate of
technological innovation is
assumed as their weakness
Reliable brand image is an
advantage and company
should adopt technological
innovation to gain
competitive edge.

8STRATEGIC MANAGEMENT OF NINTENDO CO. LTD
Opportunities
 The company’s capability of differentiation and development is higher due to years of
experience.
 Emergence of online store will help to increase the number of subscribers (Fong and
Yazdanifard 2014).
 Their practice of maintaining operational cost lower and monetary resources derived
from previous success is enough to capitalize future innovation.
Threats
 The availability of gaming equipment has increased with the technological
advancement. Apart from that, premium companies like Sony and Microsoft are its
strong competitors and hold a large proportion of market share.
Tangible and intangible resources
Tangible resources of Nintendo is their Australian audiences. Starting from the age of
10, even people of 55 years of age consider gaming as their regular routine. The average age
of a gamer is 33 and the number of female players are increasing day by day. Nintendo
mainly deals with software and metal or plastic body, which may not be environment
friendly. However, technological advance has made the nature of gaming virtual and least to
do with environmental purposes (Andreassen et al. 2016).
In spite of having Strong
brand image and
performance, the brand has
limited presence in market
with limited growth.

9STRATEGIC MANAGEMENT OF NINTENDO CO. LTD
With almost 60 years of experience in the video games industry, excluding the recent
downfall in market share Nintendo has extensive knowledge and human resource to innovate
within gaming industry (Stanislavov and Ivanov 2014). No question can be raised against its
brand image and popularity even if the company face extremely competitive business
environment.
Capabilities
 Having a strong HR background the company can predict the future of gaming
industry by adopting technological innovation.
 Effective use of marketing strategy can be noticed in its previous operations, which
makes it one of the recognisable brands in Australian market.
 Smart use of financial resources like keeping the production cost low as compared to
competitors, yet they deliver high quality products.
Core competencies
Core competencies are related to the company’s capabilities mostly. Creation of
casual games keeping the operation costs consistently low can be taken as one of the core
competencies of Nintendo. Strong brand image has already been developed, as the glorious
history can be associated with it. Moreover, as described in Miller et al. (2013), their
department of in-house game development is unique and non-imitable for other emerging
companies.
Value chain analysis
In order to fulfil the demand of market, both the inbound and outbound logistics must
be taken care of. The company decided to opt for various suppliers to decrease the power of
them, recruitment of skilled staff to handle the materials and inspect the warehouse. The

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success of outbound logistics depends on efficient picking, shipment and delivery of the
material including in-house installation. Operational activities including maintenance,
packaging and effective conversation must be executed in a professional manner.
Demand has to be generated by establishing distribution channels, various
promotional strategies, and communication with the customers. The point of sale depends on
highly on these aspects. Moreover, to support the entire business operations, according to
Repetti and Jung (2014), efficient practice of purchasing raw materials, technological support
regarding product design and development, recruitment of efficient human resource and both
the financial and IT infrastructure must be updated according to the market demand.
Weakness
The market is suffering from the after effect of recessional pressure. Acknowledging
the low purchasing power the company must innovate some product or marketing strategy to
maintain the sales and profitability to the highest extent. Extreme competition and lower
competence to compete with Sony and Microsoft in the area of technological innovation is
responsible for their recent downfall of market share.
SWOT analysis
Strength weakness
 Established and popular brand
 Video games are of premium quality
and deliver high quality performance
 Lack of technological competence.
 Profit depends on gaming devices
mostly
 Limited market presence in recent time
due to the loss of market share
Opportunities Threats

11STRATEGIC MANAGEMENT OF NINTENDO CO. LTD
 There is hope for reconstruction based
on the experience and development
capabilities
 Creating a virtual platform of business
is a smart approach according to the
consumer demand.
 Threat of substitution is low yet present
as availability of gaming devices in low
prices has increased
 Competitors are taking up challenges by
installing advanced technology into the
system.
Current strategies
The company’s current business model includes few static yet strategic principles.
Those are as follows.
 Keeping the operation cost low to ensure better profitability and use them for future
innovation or crisis.
 Development of casual games are successful to create a simplistic approach to the
gamers making it widely acceptable for the every age group (Whitbourne, Ellenberg
and Akimoto 2013).
 Their focus is to develop an advanced gaming concept not to install high
technological specifications.
 Entire operations of the company is extremely customer oriented.
Future strategies
 Differentiation is necessary to sustain the business in a competitive environment.
Therefore, strategy should be a combination of market demand and product
specification. The company will stick to its policy of creating family engagement

12STRATEGIC MANAGEMENT OF NINTENDO CO. LTD
keeping the specifications simple and casual. In order to diverse, the product quality
company must consider partnerships to gain financial support to innovate new
technological aspects. Besides, company can think of developing online games as
well considering teenagers’ perspective (Stein and Scholz 2016).
 Besides, improved customers’ service depart, online chatting and feedback collecting
facilities can make the service and operations better than it used to be.
Conclusion
It can be stated to conclude that, if Nintendo wants to sustain their historical position
in the gaming industry they must incorporate trendy technologies and creative ideas into the
system in order to make it widely acceptable. This brief strategic management plan has tried
to cover major areas of marketing which should be taken under consideration to improve
gaming experience of the Australians who are still trusting the heritage of Nintendo.

13STRATEGIC MANAGEMENT OF NINTENDO CO. LTD
References
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14STRATEGIC MANAGEMENT OF NINTENDO CO. LTD
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