Nintendo Case Study, Comparative Analysis, and Recommendations

This report provides a comprehensive analysis of Nintendo's business operations, focusing on its challenges and strategic positioning within the gaming industry. The report begins with a rich picture analysis using the CATWOE framework, followed by an application of Porter's five forces to assess the competitive environment. A comparative analysis between Nintendo and its key competitor, Sony, is then conducted to highlight strengths and weaknesses. The study also includes recommendations for improving Nintendo's business strategies, emphasizing the importance of information technology and systems for enhancing communication, decision-making, and overall operational efficiency. The report concludes by summarizing the key findings and suggesting areas for future development to help Nintendo maintain its market position and competitiveness.

Knowledge Management
Systems and Information
Systems

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
PART 1- THE NINTENDO CASE STUDY ..................................................................................3
2.1.1 Rich Picture ........................................................................................................................3
2.1.2 Porter's five force analysis .................................................................................................5
2.1.3 Recommendation................................................................................................................7
PART 2- COMPARATIVE ANALYSIS .......................................................................................8
2.2.1 Introduction ........................................................................................................................8
2.2.2 Comparative Analysis ........................................................................................................9
2.2.3 Conclusion .......................................................................................................................12
PART 3- PRESENTATION .........................................................................................................12
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13
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INTRODUCTION
The business environment is exposed to various changes and reforms that affects
strategies and decisions of organisations. In this report, an exclusive research has been produced
regarding Nintendo and the situations it is facing. Furthermore, a comparative analysis is
performed on various parameters between Nintendo and its key competitor Sony. Both these
organisations have been dominantly ruling the gaming console industry.
PART 1- THE NINTENDO CASE STUDY
2.1.1 Rich Picture
The rich picture is an important part of the CATWOE framework which is used in Soft
Systems Methodology. Nintendo being one of the largest producers of gaming consoles
worldwide. Following details have been acquired when applying CATWOE framework in the
current situation of the company (Wang, Liu and Mingers, 2015).
C:: Client
The groups or individuals that are receiving products and services from the company are
considered as clients (Green and Hardman, 2014). Nintendo is known for its high quality and
unique producer of electronic devices and video games. The clients of company include video
game lovers, individuals trading in electronic devises like hardware and software. Furthermore,
customers of organisation include young men, small kids and gaming artists majorly. Clients are
having a problem of inappropriate design as compared to competitor's products. The new product
with a wireless rod that will help clients to mimic real life actions while playing the game.
A:: Actors
There are some individuals that need to implement the proposed changes in the company
strategically (Bergvall-Kåreborn, Mirijamdotter and Basden, 2004). For Nintendo, these actors
are the designers and marketers who would communicate the benefits of product to stakeholders.
Considering the new game console design, the reaction would be out of the world. It is quite
astonishing to implement a completely alien technology which no one has ever imagined.
T:: Transformation
The process of designing the video games or consoles is considered as transformation
when considering Nintendo. Inputs are in the form of small electronic components and tools
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while output is gaming console device. The designer has a significant contribution in assembling
different components at one place. Fabrication, annealing, digital designing, etc. are some of the
steps that are involved in this transformation.
W:: World View/ Weltanschauung
The new video game with a wireless gesture rod is something that no other company has
ever produced. Company's past developments have produced a positive corporate image world
wide. The growing competition and use of advanced technology has resulted in decreasing sales
and market share of the organisation. The solution proposed for fighting this situation is a
completely new product with a vision to decrease the impact of severe competition (Ghobadian,
O'Regan and Viney, 2003).
O:: Owner
Fusajiro Yamauchi was the founder of Nintendo. Tatsumi Kimishima is the current
president of this organisation. The entire decisions and business functioning is based on their
approvals and preferences. The uniqueness of design and great potential of product can influence
them to adapt to product development strategy.
E:: Environment
The production of commodities would be having some sort of impact over the
environment and ecological balance (Checkland, 1989). Nintendo's manufacturing and
production processes have not been reported of developing any negative impact over ecology.
From the above analysis, Nintendo's current functioning and the major problems faced by
the company have been addressed. Severe competition and launching of better products in terms
of quality and pricing is a threat which is experienced by the company.
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2.1.2 Porter's five force analysis
Porter's five forces is an analytical tool which is used for analysing the functioning of a
company with regards to the different components of business environment (Dobbs, 2014). This
framework when applied to Nintendo's scenario following conclusions were obtained.
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Illustration 1: Rich Picture

Threats from new entries: The growing technology has led to developments of more
unique skills amongst the population. Moreover, in the past few years there has been a
significant growth in entrepreneurial activities. This implies that new entries can create a
threatening situation for the organisation. Nintendo's sales have declined because of the lack of
efficiency in products and services. If new entries come up in the markets then there will be more
sharing in the customer segment and company's profits will be affected simultaneously (Porter
and Heppelmann, 2014). On the other hand, this threat of new entries is low because new
ventures require good amount of capital and development costs which is difficult to manage.
Bargaining power of Suppliers: This force is one which helps in understanding the
authority and power which is being shared and experienced by suppliers. The situation is more in
favour of an organisation if the raw materials which are acquired for further processing are cheap
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Illustration 2: Porter's five force model

in price (Magretta, 2013). Suppliers are also engaged in the distribution activities when
concerned products are delivered to different locations according to demands of customers.
Hence, it is important to keep the bargaining power of suppliers under control so that overall
production cost is not maximised and contrary impact is not assessed in terms of profits. The
availability of suppliers is another factor which affects business functioning. If more number of
suppliers are present then Nintendo will hold the advantage. Currently, the company holds a
significant advantage when it comes to bargaining power of suppliers.
As mentioned before, the suppliers of Nintendo are basically electronic device
manufacturers and digital circuit designers. These devices include fabricating chips, hardware
components, etc. The digital designers are those individuals who have expertise in graphic
designing. The images and layout of games are developed by these suppliers of skills. Hence,
suppliers are quite significant for the company to establish strong links for product development.
Bargaining power of Buyers: Pricing and quality are two parameters which are taken
into consideration by buyers or customers. It is important for the company to develop products
and services which are efficient in quality and affordable in terms of pricing (Grant, 2016).
Nintendo's pricing strategies for the produced gaming consoles were quite high and non-
standardised as compared to the products of competitors. This attribute gave competitors a
chance to take the advantage and acquire more profits. Bargaining power of buyer is the ability
of customers to slash down the selling price at which a product is being sold. For acquiring the
business objectives and sufficient profits, it is important to provide less bargaining power to
buyers (Fleisher and Bensoussan, 2015). Furthermore, the pricing strategies should be improved
by the company for reducing the opportunities of bargain.
Threats of substitution: Substitution is the process in which a customer replaces the
products and services of one company for the ones produced by competitors (Jarzabkowski and
Kaplan, 2015). The shift in choices and preferences happens when there is some component
missing in the commodities. For example, the product GameCube of Nintendo lost the 79%
customer share in United States market to Sony's Playstation 2. The reason behind this
substitution of product by the customer was lack of quality and very high pricing from the former
organisation. Despite of the fact that the newly developed product which has wireless control
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system can be a game changer for Nintendo but if not effectively priced the company will suffer
even more losses.
The advancements in technology has led to various inventions and developments like
smartphones, laptops, portable computers, smart televisions, etc. These gadgets have enhanced
the gaming experience of customers to a new level. If Nintendo doesn't utilise technology for
developing better products then threat of substitution will dominate the current markets.
Competitive rivalry: The level of competition is a factor which supports the strategy
planning and decision making process. Since, gaming console industry is completely dependent
on technology and electronic devices, there are large number of competitors present (Liu and
Tyagi, 2017). Nintendo has been experiencing roadblocks from Sony and Microsoft because of
their products Playstation and Xbox. The probability of competition being turned into rivalry is
maximum when number of competitive organisations is less and equally strong products and
services are available. It is important to keep an eye over the activities and strategies of
competitors and especially rivals so that customer share of Nintendo is not acquired by any other
organisation (Rothaermel, 2015). This situation was experienced in 2002 by the company when
rival group Sony developed Playstation 2, the sales decreased by 44%.
The Porter's five force model is a great technique for understanding both the internal and
external environment factors which can affect functioning in some form or the other. The current
functioning of Nintendo depicts that there are great opportunities of both product development
and market development if strategic planning and marketing processes are initiated. Furthermore,
there is scope of future developments to curb competitive rivalry by using efficient technological
developments in designing of the gaming consoles (Dobbs, 2014).
2.1.3 Recommendation
The CATWOE analysis and Porter's five force analysis are two strategic tools that help
in understanding the current functioning of business and maps the loop holes or road blocks
which are hindering growth and development. From these two analysis, it has been realised that
the current positioning of Nintendo is being threatened by the activities of Sony and Microsoft.
These two competitors and their products are causing the customers to change their preferences
and opt for Xbox or Playstation. The main problem which was recognised from all these analysis
is the lack of efficiency in design. The product Game Cube was the major concern which led this
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organisation realise its loop holes and manage to develop a better design in terms of design and
prices. Following recommendations can be incorporated by the company for managing and
implementing better strategies and action plans.
 Information Technology is one of the growing systems of computer networks that enable
smooth execution of many business operations. Nintendo's growing business can be aided
by introduction of Information technology. It not only facilitates communication between
clients and the company but also stabilises customer demands and preferences.
 Stakeholders are the most important groups of individuals that have significant impact
over the business decisions and strategies (Porter and Heppelmann, 2014). If Nintendo
develops collaborative approaches towards stakeholders by gathering feedbacks and
suggestions then better relations would be developed. Moreover, the information
collected from these feedbacks is useful in bringing specific changes according to
requirements of customers and other stakeholders.
 Overall strategic business processing of Nintendo is quite efficient in bringing growth
and development. The only point where company lacks efficiency is correct use of
marketing principles and marketing planning. If these principle concepts are introduced
in the functioning of organisation, then there are more chances of better product delivery
(Stair and Reynolds, 2013).
 Information systems is a new tool which if applied to the business strategy helps in
reducing various critical factors which often hinder business development.
Communication is the most important tool for conducting business operations smoothly.
Information systems enhance communication and help in developing business strategies
more effectively.
Information technology (IT) and Information systems (IS) are the most important and
accurate tools which must be used by Nintendo for improving their business operations. It will
help in placing effective communication channels and developing operations which are
favouring growth or progress (Galliers and Leidner, 2014). Decision making power of the
organisation shall improve wit these recommendations in effectiveness. Appropriate maintenance
of records and handling of data are some more advantages which are experienced by the
company through implementation of IS/IT. When effective management is prevalent in the
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organisation, then chances of innovation increases which implies that productivity and
profitability of organisation increases (Baskerville and Wood-Harper, 2016).
In order to improve the collaboration and communication processes of Nintendo with the
customer and client base, the organisation should adopt to information technology and
information systems as the key techniques. The operations management and administration of
the customer base has to be handled for strengthening the market share. When implementing IS
and IT as the prime functions then company shall recruit and train individuals to operate such
systems. The productivity and efficiency of employees will increase with introduction of these
new technologies.
PART 2- COMPARATIVE ANALYSIS
2.2.1 Introduction
Information technology and Information systems are two prominent scientific
developments which have transformed the entire business processing. Both of these strategic
tools are composed of computer networks and the data handling power. Procter and Gamble i.e.
P&G and Nestle are two multinational organisations that have their products and services
delivered in almost every corner of the world (Doherty and Tranchell, 2005). One of the critical
factors which has enabled the companies to gather this strategic position is introduction of
information systems. IS holds a lot of potential advantages when it comes to competition and
governing the target markets.
Rationale:The companies Nestle and P&G have been selected for conducting the
analysis because of availability of wider sources of information about these companies and a
greater ease and making judgements (Genovese, Lenny Koh and Tripathi, 2014). This analytical
study shall help in understanding the advantages and costs which have to be addressed by
companies when extending their operations towards information technology.
Dimensions for comparison: Productivity, profitability, current market position, market
share, type of organisations, functioning industry, major challenges and sales figures of the
companies have been considered as the dimensions or determinants for this comparative study.
2.2.2 Comparative Analysis
Information systems are considered as the processes and networks which are applied for
managing data or information by the company. With globalisation and industrialisation at its
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peak, there have been significant developments in the way businesses work or execute their
activities (Liu and Tyagi, 2017). This transformation has also changed perceptions towards aims,
objectives and vision of organisations. The principle of sustainability has also been included in
the current trading techniques. Following table depicts that comparative analysis which has been
performed between P&G and Nestle.
TABLE 01
Dimensions P&G Nestle
Type of organisation Public sector organisation Public sector company
Nature of industry Consumer goods Food processing
Organisational structure There are large number of
global business units which are
developed by the organisation
with specialisation in different
aspects like Marketing
operations, Global business
services, corporate functions,
etc.
Nestle has adapted a
hierarchical organisational
structure which has clear
definition of different
authoritative positions with
zones set-up according to the
functional markets.
Current market position P&G is considered as one of
the most renowned
organisations in current
scenario with sustainable
approaches and significant
profits. Despite of this fact,
there has been a reduction in
the total revenue value of the
company in last quarter of
financial year 2016. The
strategic position of company
The current market position of
Nestle is witnessing a little
decline in terms of shares and
stocks. On the other hand, the
market capital value of the
company has been affected
with implementation of
Information Systems in the
functioning (Management,
2017). There has been a
positive impact over this
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is getting affected by this
decrease when comparing with
competitors.
position of the organisation.
Market share Being an organisation with
operations in different sectors
and specific products, P&G
has been able to acquire good
market share as per the last
financial year reports. About
32% of the customer share has
been acquired by products and
services of Home care and
fabrics. Furthermore, the
company has been able to
dominate the markets of Baby
care products (Structure &
Operations, 2017).
About 60% of the market share
in food processing industry has
been acquired by Nestle. This
implies that the products and
services of this company are
efficient enough in satisfying
customers worldwide.
Key challenges Inefficient human resource in
handling the newly installed
information systems and the
economic stability just after
implementation of this system
are some of the challenges
which had been addressed by
the company.
Nestle already being under the
scrutiny for its harmful
products and great threats to
the human body had faced a lot
of criticism and decrease in
sales in the past few years.
Moreover, there was a decline
in the number of employees
and customers because of these
controversies. Hence, these
challenges interrupted the
functioning of Nestle
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