Business Analysis of Nintendo: Strategic Direction and Strategies

This report provides a comprehensive business analysis of Nintendo, a prominent Japanese multinational company in the electronics and video game industry. It examines Nintendo's history, major products like Mario, Zelda, and Pokemon, and its strategic direction, which focuses on providing fun for diverse age groups. The report delves into Nintendo's key strategies, including innovation, and utilizes the Business Model Canvas to outline key partners, activities, value propositions, customer relationships, segments, resources, channels, cost structure, and revenue streams. It also analyzes the company's organizational channel environment, including suppliers, distributors, and online channels, and how environmental factors influence them. Furthermore, the report conducts a PESTLE analysis, evaluating political, economic, social, technological, legal, and environmental factors affecting Nintendo. It also assesses the competitive landscape, highlighting key competitors like Sony and Microsoft. Finally, the report discusses the implications of the organizational channel environment and suggests strategies for Nintendo to maintain its market position and adapt to industry changes.

Management 1
Business description
Business
Nintendo is one of the well-known Japanese multination company that majorly provide the
electronics as well as the video game company with head office present in Kyoto. This company
is considered as the largest video game companies when it comes to the market capitalization
and it has create the games like Mario, The Legend of Zelda, and Pokemon which are in list of
the top-selling video game. The company came into existence in the year 1985 that was one of
the immediate winners. In the sequence of the next 2 centuries, the company has practically
single-handedly strengthened industry of the video game (Nintendo, 2019). The company is able
to sell more than 60 million units in which the customers brought the games include Mario and
Zelda into their homes that were available for first time on NES.
Product/service
The product and services that are provided by the company majorly include the video games and
the other electronic parts majorly for the purpose of entertainment. The major popular products
of the company include Mario, The Legend of Zelda, and Pokemon. The aim of company is to
endeavours to offer the products as well as services that provide the enjoyment of the people of
different age groups as well as with different abilities ( Nintendo, 2019). One of the major
products of the company is Game Boy whose shade was 4 colours of grey but device was able to
offer the service of the portable gaming with the benefit of the enormous fun that came out in
year 1989. The game boy is considered as one of the most positive video game system that is
ever introduced in market. Since the year 1989, this game boy product of the company has sold

Management 2
to over than 150 million systems across world. Later in year 2012, the company cane up with
their new product with the name of Wii U with the innovation in the game as well as in the
service (Kittilaksanawong & Gillet, 2015). Further, New Nintendo 3DS XL was introduced by
the company in the year 2015 with the new technology that provide the super-stable face-
tracking 3D and screens. Currently in the year 2017, the company introduced the New Nintendo
2DS XL with the improvement in the screen which is 82% more than the previous model of the
Nintendo 2DS. All these changes show that the company bring the improvement in their video
games with the changes in technology.
Strategic direction
The major strategic direction of the company is to offer the products with the strategy of fun for
everyone. The company have the several groups of customers to whom they can offer their
products and services in the market. Until the time, the company was one of the major provider
of the games that engage the customers and used to provide them fun. In the year 2017-2018,
company decided that they would shift from the high quality games to extend the reach to the
third party developers majorly for the killer apps (D'Argenio, 2018).
Key strategies
Nintendo corporate level strategy includes the innovation strategy that contribute effective role in
forming the competitive advantage for the company. The innovative strategy of the company
reflects that they are position itself very differently in the market among the competitors
(Minotti, 2018). The effective use of the technology makes the company to target the casual
gamers and families.

Management 3
Business Model Canvas
Key Partners
Game
developers
(Ubisoft, Sega,
Activision,
Electronic Aryts
and Capcom)
Investors
Sponsorship
Partnership
Off the shelf
hardware
component
manufacturers
(Professor
Nerdster, 2017)
Company has
29 subsidiaries
with 6
Key Activities
Offering the
video game in
the market with
proper research
and
development
Concept design
of the video
game
Customer
support
Value
Propositions
New radical
features
Fun and play
facility
Casual players
(less concerned
about the
technological
aspect)
Console broke
the sales record
in US
Fun factor with
group family
experience
Customer
Relationships
Direct sales
with delight
experience
Online service
with quick
delivery
Distributors
make the
products easy
available which
form the good
relationship
with customers.
Customer
Segments
Large market of
the casual
gamers as well
as families
Game
developers
(Nintendo,
2019)
Key Resources
Connectivity
New proprietary
Channels
Website
Retail

Management 4
associated
companies
technology
Wireless motion
sensitive remote
controllers
Revolutionary
features
Suppliers
Wii System
software
(Nintendo,
2019)
distribution
WiConnect 24,
Wi shop
channel
Cost Structure
Console production price
Technology development costs
Low cost (Console subsidiaries not
necessaries)
Revenue Streams
Profit from the sales of the video game
Royalties from the game developers

Management 5
Organisations channel environment
Environment factors affect the organisation channel
The environment factors of the Nintendo affect the organisation channel that creates the impact
on the business operations. The channels of the organisation include the suppliers as well as
distributors or other members who contribute effectively in selling of the products as they work
as the organisational channel.
 Suppliers: - The suppliers are those people who are majorly responsible for supplying
the essential inputs to the organisation in order to ensure the smooth flow of production.
There are different suppliers present in the market who provide the services to Nintendo
to enhance their business operations in marketplace (David, 2011). Technology is
required to purchase by company with the hardware for which they need to contact their
suppliers. However, some factors affect the working of suppliers in the marketplace that
occur due to rise in competition in the market. The rise in the market affects the suppliers
demand because they start providing the services to those who pay them comparatively
high price than the other people.
 Distributors: - The distributors of the company are organisation channel that get affects
due to the modification in ecological factors. The factors that affect distributors in the
market include the rise in companies in video game, customer demand, commission rate
and many other factors (Dawson, 2014). The change in the demand is one of the external
factors due to which the distributors of the company might get affect because they supply
the products that are highly demanded by the customers in the market.

Management 6
 Online channel: - These channels are one of the emerging channels through which the
company can provide the products to the customers through online channels. This
channel might get positively affected by the high use of the online platform by the
customers in the market.
PESTLE factors
Factors Discussion
Political factors Political factors comprise changes in rules and regulation by administration
for the industry that affects their operations. It has been found that because
of the positive economic effective of gaming industry the government has
provided incentives to thee Ninetendo company.
Economic It has been found that sales of video games and consoles is recession-proof
as games offer people with benefit and getting escape from all their personal
worries (Dawson, 2014). The sales at the recession times depict the slight
declines that occur from the lack of game development.
Social factors The changes in preference and trends can affect sales. It has been found that
more of the people are getting attracted towards the games. The average age
of gamers is approx. 35.26% of games that are younger than 18 and 30% are
between the age of 18 and 35 years (Nintendo, 2019).
Further, 44% of the games include female and the count of male is 56%,
which is increasing.
The gamers are producing more games in the field of education that is
attracting the students as well as their parents (Ho, 2014).
Technological The up-gradation in the technology affects the Nintendo company

Management 7
factors negatively because with the change in technology they have to bring the
changes in game and introduce the new one. In addition to this, this new
game will require the more capital for the investment (Rothaermel, 2015).
The rise in the online games sales is increasing which gives the tough
competition to the company.
Legal factors The company need to consider different legal elements that include
intellectual property that is essential competitive advantage due to which
they required to be defended as per the views.
Various institutions evaluate games and its impact on children as the use of
video games is increasing across the market (Nintendo, 2019).
Environmental
factors
It has been found that the companies need to ensure that they take positive
steps to ensure that environment is not affected. The console industry is
heavily uses different chemicals as well as material. Thus, this is the reason
due to which the Nintendo company have the promises to recover the
environmental influence of their products.
Competition
Nintendo Company is the leader in the market who finds the intense competition in the market
from the companies like Sony, Microsoft and many other companies. This has been found that
Sony Company is targeting the console to their valuable customers. In the year 2009, the
company introduced the PlayStation 3 in market. Presently, company introduced the
PlayStation4 in market to appeal to the customers for their new product. On the other hand,
another competitor of the company is Microsoft, offers the diverse games to the customers in the

Management 8
market. One of the popular products of the company includes Xbox 360 that has geared its
console and games to the hard-core gamers (Leather, 2013). The Microsoft as well as Sony
Company generally targets the customers who are considered as the hard-core gamers. On the
other hand, Nintendo company targets to the customers who are only the gamers but also the
people who are normal players that include generally youth and families who like to enjoy by
playing the games.
Implication of organisations channel environment
The gaming industry is considered as very dynamic with the competition that is happening on
console and gaming front. It has been found there are many factors due to which the operations
of the company are affected. Thus, it is high time for the business to apply effective strategy to
reduce impact. This includes the new high technology game that can give the tough fight to the
competitors present in the market (Baker, 2014). The company should bring some more games
considering the people who are non-players. Nintendo Company should comply by all the legal
rules and regulations that can influence operations of company. In addition, the company should
adopt the market expansion strategy because this is high time for expanding business in the
overseas market.

Management 9
References
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David, F.R. (2011). Strategic management: Concepts and cases. India: Pearson/Prentice Hall.
Dawson, J.A. (2014). The Marketing Environment (RLE Marketing). New York: Routledge.
Frynas, J.G. & Mellahi, K. (2015). Global strategic management. USA: Oxford University Press.
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Directions. London, Canada: Ivey Publishing
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xbox-one-and-ps4/#37356181787323dfd567873b
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Nintendo. (2019). Company History. Retrieved from: https://www.nintendo.com/corp/history.jsp

Management 10
Nintendo. (2019). Corporate. Retrieved from: https://www.nintendo.com/corp/accessibility.jsp
Professor Nerdster. (2017). Nintendo Business Strategy Analysis for 2017 and Beyond. Retrieved
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