Submitted by: Preeti Agarwal

Strategy Decision sheet format

Power play - Nintendo 1. Decision Making Situation Industry Home video gaming industry began in 1972 with the founding of Atari. The industry reached to $3 bn by 1982, declined to $100 mn in 1985 and again rose to $5bn. Nintendo emerged out as a leader in this technology intensive industry. Because of its huge popularity it could outsource most of its operations on its own terms

Company Nintendo a family owned business started with making playing cards and then moved to making games. It had major presence in US and Japan Nintendos focus was to come up with 1-2 hit games per year (highly innovation driven) Release of Famicom, a main gaming console was a huge success for which Nintendo designed games by extensive use of its R&D Manufacturing was subcontracted. Started licensing on its own terms Distribution was done through toy stores merchandises and department stores

2. Decision Sheet Identify key decision questions (issues which requires/required strategic intervention) Should Nintendo continue licensing their manufacturing business or it should focus on expanding in-house development of games Would the repackaging of games help in targeting a wider audience How can the image of gaming industry be changed as skill enhancing industry Future strategic choice of Nintendo regarding the major baseball team league

My decisions (its rationale, feasibility, effects, and tradeoffs): What are my decisions (qualitative and quantitative)? Rationale and feasibility of implementing my decision What is the impact of my decisions and how will it make a difference to my inheritance? Gross margin would be huge, for e.g. in 1992 it was around 15 %. Patents attained will provide an edge in the competition Increase sales and profitability What are the tradeoffs in the decisions (qualitative and quantitative)? Cost of sales is also huge, around 60 % of sales

Focus on R&D and patenting Dont expand the manufacturing division

Gaming industry if highly innovation driven. Games having compatibility to run on other consoles were in much demand

Expanding manufacturing in house could not provide cost efficiency so it would be a wasteful expenditure Launching Game boy outside US and japan to capture larger markets Demand expected to rise by 100 % in 1992 Designed to appeal beyond teenagers would help in targeting larger audience Initial investment would be high

Target technology savvy youth, office goers

Video game genres beyond simple, family-friendly games would attract mature audiences Continuing with differentiation strategy is required

Market share would increase Using baseball team recently brought to attract more consumers

May dilute the image of fun games

Specify measures to mitigate the negative consequences Promote Nintendo as skill enhancing games to remove culture issue Release versions of Game Boy system as it was a major hit and would not require much R&D expenditure