Introduction

Nintendo is one of three big players in the highly dynamic gaming industry. However, in recent years
Sony and Microsoft have gained a competitive advantage over Nintendo and new trends in the industry
have caused setbacks for Nintendo, thus creating the need for strategic realignment. The consultants
have conducted a thorough analysis of Nintendo’s position in the macro- and industry-environment, as
well as a detailed analysis of Nintendo’s core competences. Based on the desire to build on Nintendo’s
previous success, five proposed strategic options have been critically evaluated and recommendations
will be made on the implementation of three of those strategies. Finally, further strategic
recommendations will be made that focus on leveraging Nintendo’s FSAs in accordance with the
identified trends and opportunities.

Nintendo’s Vision
Nintendo is one of the few companies ever which were started not with the vision to earn money, but rather to
make a change in somebody’s life and to help people interact and spend time together ONE GAME AT A TIME. So,
it’s only fitting that the following is the vision statement for the company.

Nintendo’s Mission
While analyzing Nintendo, everyone usually asks the same question “What makes a company stay on top of their
game for more than a century?”. And the answer is, “Their mission impacts the longevity of its success.”

The mission statement of Nintendo is as follows:

 Strong commitment towards production and marketing of best products and services
Nintendo firmly believes that one can only establish customer loyalty by providing quality products and services.
Hence, the company has a strong commitment to quality.

 Listening to the customers and tuning the product according to their needs
It is the customer that will use the end product, so the product needs to be built around the demands and needs of
the customer. Nintendo Company focuses on the customers and any complaints made by them and adjusts their
products accordingly.

 Treatment of employees the same as the treatment of customers.

The company makes sure that no expense is spared when it comes to their employees. They offer market-
competitive salaries and many perks along with it.

Nintendo’s Values
Nintendo cooperation places great emphasis on these three core values and instills them in every employee. The
values which the company holds very dear are as follows:

 Uniqueness

The goal of the company is to produce goods and services that differentiate them from their competitors; hence,
uniqueness is an essential core value.
 Flexibility

To ensure that an employee gives their best to the company, flexibility with their time schedule and attitudes is a
critical skill. It is necessary for the person as an individual and for the company as a whole to succeed.

 Sincerity

In order to succeed anywhere in life, a basic core skill that is required is sincerity. The goal of the company is to
hire individuals that can be trusted and will always be sincere towards the organization.

External analysis

General environment

Economic Development
During the global economical downturn, the video game industry still continues growing, driven by expansion of
software sales and installed new generation of console hardware. Some places, U.S. and Japan, video game
business contributes their GDP with huge dominated market. Nintendo distributes its product globally with
overseas sales accounting for approximately 80% of total sales (annual report 2008). Therefore, interest rates have
less influenced the video game business as they produce their own units. However, the video game business is
depended on disposable income of customer. Nintendo grasps this opportunity with low manufacturing cost that
increases sales volume towards normal price.

The exchange rates is another majority condition to be considered that company holds a substantial amount of
assets consisting on cash deposit denominated in foreign currencies without exchange contracts. When the
exchange rate fluctuates, the company revaluated for earnings while foreign currencies are converted to Japanese
yen. In other hands, Japanese yen appreciation against the U.S. dollar or Euro would have negative affect
Nintendo’s profitability.

Social-Cultural and Demographic Lifestyle Changes

The social factors impact on the video game industry from population demographics, income distribution, lifestyle
changes, social mobility, attributes to work, level of education, consumerism, and consumer behaviour namely.
Nintendo use the World of Nintendo showroom to attract and show interest to customers in order to affect
customer through satisfaction their needs. Games also have magic to influence the culture of people, especially
brings violent to children. These all elements will be exercised influence over the industry. Due to negative
perceptions of the business viability of video games following the video game crash of 1983, Nintendo decided to
position the NES more as a toy than a computing device. This corresponded with targeted marketing towards the
demographic of young boys, a choice which set the tone for marketing across the industry for more than a decade
At the release of the Nintendo DS in 2005, Nintendo attempted to expand the audience toward older males with
the sexually suggestive "Touching is Good" advertising campaign.] Advertising for the DS later pivoted towards
adult women, emphasizing health and productivity while avoiding referring to products as games. Nintendo
continued this emphasis on older and female audiences with the Wii console. The Wii's motion controls and casual
software helped Nintendo expand its audience, even as many in Nintendo's traditional market regarded the
system dismissively Ben "Yahtzee" Croshaw identified The Legend of Zelda: Majora's Mask as exemplifying the
type of complicated game beloved by core gamers that would not be replicated by newer titles emphasizing
accessibility.
Nintendo designer Shigeru Miyamoto commented in 2014 that due to the pervasiveness of mobile phone games,
Nintendo no longer needed to work at convincing all audiences that games are for them.He further expressed a
desire to develop for more engaged audiences who want to challenge themselves. The release of the New
Nintendo 3DS, with more complicated controls and launch titles, was seen as a pivot back towards a hardcore
gaming audience.] This repositioning was a retreat from competition in mobile gaming from smartphones, while
Nintendo prepares new health-oriented game devices to once again tap the non-traditional gaming market.
After the disappointing sales of the Wii U, partly due to poor marketing and the rise of mobile phone gaming,
Nintendo pushed its latest console, the Nintendo Switch, with strong advertising and promotion. The portable
home console aims to appeal to both casual and core gamers, focusing on portability and multiple modes of
playing. Nintendo showcased its first-ever Super Bowl ad during Super Bowl LI, with a 30-second advertisement
for The Legend of Zelda: Breath of the Wild on the Nintendo Switch.

Technological
Focused on technological is giving Nintendo higher competitive advantage than normal video game console. The
speed of technological innovation always restricts gaming industry developing. Nintendo has attributed the
success of the Wii to idea of blue ocean strategy that reflects from “price, movie playing, graphics, physics, fun,
game library, and magic wand”. Nintendo create new technologies both in game and console. For game, brain
training of Nintendo DS Lite, and Wii sport brings new experience to players which they never played before. For
console, it is the most distinguishing technology, Wii Remote, which contains motion sensing capability that allows
the user to interact with and manipulate items on screen via gesture recognition and point through the use of
accelerometer and optical sensor technology. At last, the online capability of Nintendo Wii is a major change in the
technology of the video game industry.

Political, Legal and Government aspect

Political environment consists of laws, government agencies, and pressure groups that influence and limit various
organizations and individual. (Kotter, 2003, P174) There are many factors impact on video game industry, such as
taxation policies, foreign trade regulations and social welfare policies. Due to video game play has associated as
emotion of people which introverts some people to threat peace and law, therefore, government control the
contents of video game with strong attitude.

Another problem is copyright, which one of the recent products launched by company, Nintendo Wii, is in a
controversy involving patent infringement. The company has been sued by Maryland-based Hillcrest Laboratories,
which filed a case alleging a patent infringement against Nintendo. The lawsuit that is currently placed with the US
International Trade Commission in Washington D.C. alleges the company of being guilty of infringement in four
patents, particularly the technology used in handheld pointing device and also regarding the display interface
system that manages graphic content. This allegation, if proved right, could cause the company to pay up heavily
for the damages and could also result the company refraining to use the product further. The Wii console,
launched in 2006, has been a huge hit and a judgement against the company could have a material impact on the
company.

Market demand and opportunities

Types of products

Home consoles
Color TV-Game
Main article: Color TV-Game

Released in 1977, Nintendo's Color TV-Game was Japan's best-selling first-generation console, with more than
three million units sold.[81]:27
Nintendo Entertainment System
Main articles: Nintendo Entertainment System and NES Classic Edition

The Nintendo Entertainment System, Nintendo's first major success in the home console market

The Nintendo Entertainment System (NES) is an 8-bit video game console, which released in North America in
1985, and in Europe throughout 1986 and 1987. The console was initially released in Japan as the Family
Computer (abbreviated as Famicom) in 1983. The best-selling gaming console of its time,[81]:349 the NES helped
revitalize the US video game industry following the video game crash of 1983.[82] With the NES, Nintendo
introduced a now-standard business model of licensing third-party developers, authorizing them to produce and
distribute games for Nintendo's platform.[83] The NES was bundled with Super Mario Bros., one of the best-selling
video games of all time, and received ports of Nintendo's most popular arcade games. [19]
Nintendo produced a limited run of the NES Classic Edition in 2016. The NES Classic System was a dedicated
console modeled after an NES with 30 built-in classic first- and third-party games from the NES library. By the end
of its production in April 2017, Nintendo shipped over two million units.[84]
Super Nintendo Entertainment System
Main articles: Super Nintendo Entertainment System and Super NES Classic Edition

The Super Nintendo Entertainment System, the successor to the Nintendo Entertainment System

The Super Nintendo Entertainment System (Super NES or SNES) is a 16-bit video game console, which was
released in North America in 1991, and in Europe in 1992. The console was initially released in Japan in 1990 as
the Super Famicom, officially adopting the colloquially abbreviated name of its predecessor. The console
introduced advanced graphics and sound capabilities compared with other consoles at the time. Soon, the
development of a variety of enhancement chips which were integrated onto each new game cartridge's circuit
boards, progressed the SNES's competitive edge. While even crude three-dimensional graphics had previously
rarely been seen on home consoles,[85] the Super NES's enhancement chips suddenly enabled a new caliber of
games containing increasingly sophisticated faux 3D effects as seen in 1991's Pilotwings and 1992's Super Mario
Kart. Argonaut Games developed the Super FX chip in order to replicate 3D graphics from their earlier Atari
ST and Amiga Starglider series on the Super NES (more specifically, Starglider 2),[86] starting with Star Fox in 1993.
The SNES is the bestselling console of the 16-bit era although having experienced a relatively late start and fierce
competition from Sega's Mega Drive/Genesis console.
Nintendo also released a limited run of the Super NES Classic Edition in September 2017 through the end of the
year. Like the NES Classic Edition, the Super NES Classic Edition is a dedicated console with 21 built-in games from
its library, including the never-before-released Star Fox 2.
Nintendo 64
Main article: Nintendo 64

The Nintendo 64, named for its 64-bit graphics, was Nintendo's first home console to feature 3D computer
graphics

The Nintendo 64 was released in 1996, featuring 3D polygon model rendering capabilities and built-
in multiplayer for up to four players. The system's controller introduced the analog stick and later introduced
the Rumble Pak, an accessory for the controller that produces force feedback with compatible games. Both are the
first such features to have come to market for home console gaming and eventually became the de facto industry
standard.[87] Announced in 1995, prior to the console's 1996 launch, the 64DD ("DD" standing for "Disk Drive") was
designed to enable the development of new genre of video games [88] by way of 64 MB writable magnetic disks,
video editing, and Internet connectivity. Eventually released only in Japan in 1999, the 64DD peripheral's
commercial failure there resulted in only nine games being released and precluded further worldwide release.
GameCube
Main article: GameCube

The GameCube is Nintendo's first home console to use optical discs as a primary storage medium

The GameCube (officially called Nintendo GameCube, abbreviated NGC in Japan and GCN in North America) was
released in 2001, in Japan and North America, and in 2002 worldwide. The sixth-generation console is the
successor to the Nintendo 64 and competed with Sony's PlayStation 2, Microsoft's Xbox, and Sega's Dreamcast.
The GameCube is the first Nintendo console to use optical discs as its primary storage medium.[89] The discs are
similar to the miniDVD format, but the system was not designed to play standard DVDs or audio CDs. Nintendo
introduced a variety of connectivity options for the GameCube. The GameCube's game library has sparse support
for Internet gaming, a feature that requires the use of the aftermarket GameCube Broadband Adapter and Modem
Adapter. The GameCube supports connectivity to the Game Boy Advance, allowing players to access exclusive in-
game features using the handheld as a second screen and controller.
Wii
Main article: Wii
The Wii, Nintendo's best selling home video game console and first to use motion controls

The Wii was released during the holiday season of 2006 worldwide. The system features the Wii
Remote controller, which can be used as a handheld pointing device and which detects movement in three
dimensions. Another notable feature of the console is WiiConnect24, which enables it to receive messages and
updates over the Internet while in standby mode.[90] It also features a game download service, called "Virtual
Console", which features emulated games from past systems. Since its release, the Wii has spawned many
peripheral devices, including the Wii Balance Board and Motion Plus, and has had several hardware revisions.
The Wii Family Edition variant is identical to the original model, but is designed to sit horizontally and removes the
GameCube compatibility. The Wii Mini is a smaller, redesigned Wii which lacks GameCube compatibility, online
connectivity, the SD card slot and Wi-Fi support, and has only one USB port unlike the previous models' two.[91][92]
Wii U
Main article: Wii U

The Wii U, the successor to the Wii

The Wii U, the successor to the Wii, was released during the holiday season of 2012 worldwide. [93][94] The Wii U is
the first Nintendo console to support high-definition graphics. The Wii U's primary controller is the Wii U
GamePad, which features an embedded touchscreen. Each game may be designed to use this touchscreen as
supplemental to the main TV, or as the only screen for Off-TV Play. The system supports most Wii controllers and
accessories, and the more classically shaped Wii U Pro Controller.[95] The system is backward compatible with Wii
software and accessories; this mode also utilizes Wii-based controllers, and it optionally offers the GamePad as its
primary Wii display and motion sensor bar. The console has various online services powered by Nintendo Network,
including: the Nintendo eShop for online distribution of software and content; and Miiverse, a social
network which can be variously integrated with games and applications. As of 31 March 2018, worldwide Wii U
sales had totaled over 13 million units, with over 100 million games and other software for it sold. [96]
Nintendo Switch
Main article: Nintendo Switch
Nintendo's hybrid console, the Switch.

On 17 March 2015, Nintendo announced a new "dedicated games platform with a brand new concept" with the
codename "NX" that would be further revealed in 2016.[50][52] Reggie Fils-Aimé, president of Nintendo of America
at the time, referred to NX as "our next home console" in a June 2015 interview with The Wall Street Journal.[53] In
a later article on 16 October 2015, The Wall Street Journal relayed speculation from unnamed inside sources that,
although the NX hardware specifications were unknown, it may be intended to feature "industry leading"
hardware specifications and include both a console and a mobile unit that could either be used with the console or
taken on the road for separate use. It was also reported that Nintendo had begun distributing software
development kits (SDKs) for NX to third-party developers, with the unnamed source further speculating that these
moves "[suggest that] the company is on track to introduce [NX] as early as [2016]." [54] At an investor's meeting on
27 April 2016, Nintendo announced that the NX would be released worldwide in March 2017. [55] In an interview
with Asahi Shimbun in May 2016, Kimishima referred to the NX as "neither the successor to the Wii U nor to the
3DS", as well as it being a "new way of playing games," but it would "slow Wii U sales" upon reveal and
dissemination.[56] In June 2016, Miyamoto stated that the reason Nintendo had not released any information on
the "NX" up until that point was because they were afraid of imitators, saying he and Nintendo thought other
companies could copy "an idea that [they're] working on."[97][98] The same day, Kimishima revealed during a Q&A
session with investors that they were also researching virtual reality.[58] On 19 October 2016, Nintendo announced
they would release a trailer for the console the following day. [99] The next day, Nintendo unveiled the trailer that
revealed the final name of the platform called Nintendo Switch. [100] By March 2018, over 17 million Switch units
had been sold worldwide.[101]
Handheld consoles
Game & Watch
Main article: Game & Watch

This section needs

expansion. You can help
by adding to it. (March 2014)

Game & Watch is a line of handheld electronic games produced by Nintendo from 1980 to 1991. Created by game
designer Gunpei Yokoi, each Game & Watch features a single game to be played on an LCD screen in addition to a
clock, an alarm, or both.[102] It was the earliest Nintendo product to garner major success.[103]
Game Boy
Main article: Game Boy line
The original Game Boy

After the success of the Game & Watch series, Yokoi developed the Game Boy handheld console, which was
released in 1989. Eventually becoming the bestselling handheld of all time, the Game Boy remained dominant for
more than a decade, seeing critically and commercially popular games such as Pokémon Yellow released as late as
1998 in Japan, 1999 in North America, and 2000 in Europe. Incremental updates of the Game Boy, including Game
Boy Pocket, Game Boy Light and Game Boy Color, did little to change the original formula, though the latter
introduced color graphics to the Game Boy line.
Game Boy Advance
The first major update to its handheld line since 1989, the Game Boy Advance features improved technical
specifications similar to those of the SNES. The Game Boy Advance SP was the first revision to the GBA line and
introduced screen lighting and a clam shell design, while later iteration, the Game Boy Micro, brought a smaller
form factor.
Nintendo DS
Main articles: Nintendo DS and Nintendo DS family

The Nintendo DS Lite is the bestselling handheld console of all time

Although originally advertised as an alternative to the Game Boy Advance, the Nintendo DS replaced the Game
Boy line after its initial release in 2004.[104] It was distinctive for its dual screens and a microphone, as well as
a touch-sensitive lower screen. The Nintendo DS Lite brought a smaller form factor[105] while the Nintendo
DSi features larger screens and two cameras,[106] and was followed by an even larger model, the Nintendo DSi XL,
with a 90% bigger screen.[107]
Nintendo 3DS
Main articles: Nintendo 3DS and Nintendo 3DS family

Nintendo 3DS XL

Further expanding the Nintendo DS line, the Nintendo 3DS uses the process of autostereoscopy to produce
a stereoscopic three-dimensional effect without glasses. Released to major markets during 2011, the 3DS got off to
a slow start, initially missing many key features that were promised before the system launched. [109] Partially as a
result of slow sales, Nintendo stock declined in value. Subsequent price cuts and game releases helped to boost
3DS and 3DS software sales and to renew investor confidence in the company.[110] As of August 2013, the 3DS was
the best selling console in the United States for four consecutive months. [111] The Nintendo 3DS XL was introduced
in August 2012 and includes a 90% larger screen, a 4 GB SD card and extended battery life. In August 2013,
Nintendo announced the cost-reduced Nintendo 2DS, a version of the 3DS without the 3D display. It has a slate-like
design as opposed to the hinged, clamshell design of its predecessors.
A hardware revision, New Nintendo 3DS, was unveiled in August 2014. It is produced in a standard-sized model and
a larger XL model; both models feature upgraded processors and additional RAM, an eye-tracking sensor to
improve the stability of the autostereoscopic 3D image, colored face buttons, and near-field
communication support for native use of Amiibo products. The standard-sized model also features slightly larger
screens, and support for faceplate accessories.

Intensity Competition
Michael Porter’s 5 forces model is one of the more refined analysis tools available today, and allows an accurate
picture of a business’s position in the market place to be build up.

The first part of the five Forces analysis involves the threat of substitute products, this choice could be affected by
any number of factors, but the most common are related to cost, either the alternative product is materially the
same but cheaper, or it’s the same price but offers more features. The Nintendo Wii had no concerns on this front
when it was launched; the USP was the control system, which in turn allowed for a particularly innovative range of
games. As O’Brien has noted, The Wii was so technologically advanced that other companies knew they would
have to spend a number of years catching up. Furthermore, the Wii arrived at the market fully formed, and as it
were, it had no serious deficiencies that could cause consumers to look elsewhere.

Porter’s 5 Forces analysis then goes on to consider the threat of new products entering the sector. Nintendo had
enough reason to be concern about this, since the launch of the Wii instantaneously showed that consumers were
interested in the possibilities offered by this new piece of technology. During the time of Wii’s launch the other
competitors of Wii, Sony and Microsoft would effectively have to abandon their most basic research and
development program’s in order to follow a path that already appeared to have been almost entirely colonized by
the Wii. In other words, while the Wii opened a new market that was incredibly attracting other businesses had to
radically re-design their product to in order to enter that market, with the result of lost profit and innovation in
other area. Nintendo can also rely on the curve advantage that it had gained with the Wii.

Porters model than looks at the intensity of competitive rivalry. The Wii has only two genuine competitors the
Xbox 360(Microsoft) and the Play station 3 (Sony), and the market before the WIi launch was considered to be
extremely matured. The informal complexity of the market was largely based on strong shared values, and
Nintendo broke these values in a number of ways with the Wii, furthermore, the company was confident that it
would develop a sustainable competitive advantage that would lessen the effects of any perceived industry
overcapacity.

The final force to be analyzed is the bargaining power of buyers and suppliers, an area in which the Wii has a stint
advantage since it offers something that neither of its competitors has that is a unique way of gaming style and
strong game-play. Nintendo designs some of the hardware and games for the consoles but manufacturing and
assembly are often out sourced as stated in the article. And many components are purchased “off the shelf” from
large companies. It buys parts from companies such as Panasonic (batteries), IBM (processors), ATI (video cards)
Nintendo commissions a number of third-party manufacturers to produce key components or assemble finished
products. The Wii has a distinct advantage since it offers something that neither of its competitors has – a unique
gaming style and strong game-play. In terms of the market of outputs, the Wii had significant leverage from the
outset, as is evidenced by the fact that software manufacturers, initially reluctant to commit to the Wii, and they
quickly changed their minds and began to develop titles for the console. In this way, the Wii was able to avoid the
need for backward integration, and although buyer switching costs were certainly a factor, the market was at a
point of change anyway and consumers were waiting for all three major consoles to be released before deciding
which one to choose.

Supplies and distribution

The Power of Suppliers is very high as there are more suppliers available to a handful of companies in the video
game industry. The suppliers are companies themselves that companies are developing their own video games.
There are lots of products to innovate and develop may consist of CD’s disk, hard disk, electronic components,
software’s, game writers, packaging of the consoles, printing of manuals and additional features like graphics and
so on for marking the game more acceptable and popular. Nintendo is one of the most influential companies with
a product presence in most parts of the world. Its headquarters base is at Kyoto in Japan with American
headquarter base at Redmond in Washington and European base at Frankfurt in Germany. The company’s
Australian subsidiary has its base in Melbourne and handles operations in Australia, Oceania and New Zealand.
Nintendo has a highly developed R&D department which has its focus on innovative products. Its facilities are in
Europe, France, United States and Japan.Nintendo has built a powerful and widespread distribution channel across
different parts of the world so that its products are easily and conveniently available in the consumer market. Their
physical distribution network includes product availability in gaming stores, shopping malls, hypermarkets and
electrical retail outlets.The company also offers online distribution facility to several shopping e-portals from
where products can be purchased. Some portals facilitate resell of used products for people who are unable to buy
them at their actual prices.

Cost of doing business

Nintendo is ranked at third position as the most valuable company in Japan with the market value of 85 billion
dollars. In the financial year 2018, it has posted its revenues and net income at 1.056 trillion Yen and 139.590
billion Yen respectively.A lot of thinking and planning is required behind pricing strategy of gaming products. This is
a technological market and the company has to take into consideration several factors before determining its
correct price value so that the customers can easily afford it. Customer loyalty for the brand cannot be taken for
granted because customers will always go for the most in-demand game.Nintendo has kept a diversified pricing
strategy throughout the life cycle of a particular product. During the first phase which is the launching period, the
product has a new user experience and new technology. Hence the company adopts a premium pricing range and
it helps the brand to earn good and fast profits if the item becomes a success.Later when the product becomes
established in consumer market the company adopts a competitive pricing policy to keep up with its rival brands.
As the products goes in a declining stage, Nintendo adopts a promotional pricing strategy. The company offers
additional benefits, discounts and other incentives as part of its promotional pricing strategy to push the product
sales a bit because it has reached the bargaining stage.

Industry and Competition Analysis

Market information

Nintendo is a multinational consumer electronics and software company headquartered in Kyoto, Japan. Founded
in September 1889 as a small Japanese firm producing handmade playing cards, Nintendo has evolved into one of
the largest video games manufacturing companies generating about ten billion U.S dollars in net sales in 2018. The
largest share of Nintendo's revenue is generated in the Americas, which contributed around 4.2 billion U.S dollars
for the fiscal year of 2018. Nintendo possesses a global workforce of 5,501 employees as of 2017.

While its two main rivals in the gaming industry, Microsoft and Sony, rely almost solely on third-party software for
their consoles, a significant proportion of Nintendo games are created and developed in-house. The company is
known to have created some of the most popular video game franchises in the industry, such as Mario and The
Legend of Zelda, and it also is a part owner of The Pokémon Company. One of the newest games in the Mario
franchise, Super Mario Odyssey, has sold about 14 million copies as of December 2018.

The Nintendo Wii (succeeded by the Wii U in 2012) is the company’s most popular brand product. As of its 2017
fiscal year, Nintendo has sold altogether 115.2 million Wii and Wii U consoles worldwide. However, Wii's success
has come to an end, being replaced by that of Nintendo's newest console, the Switch, which sold about 32.3
million units as of December 2018, since its release in March of 2017.

Operation and Production Aspect

Competitor analysis

Main competitors

Sony

Approximately 80% PlayStation 3 consoles sold use online game

play.

PlayStation Portable offers array uses including online gaming, TV

shows, and Movies.

PlayStation offers much larger variety of gaming genres including

sporting, strategy, survival horror, first person shooter, arcade,
action, adventure, fighting, puzzle and casion /gambling.

Microsoft

Microsoft has a much larger spectrum of markets outside of the

gaming industry.

Xbox Kinect functions similar to Nintendo Wii providing an easy

substitute (Buyer power).

Kinect has better reputation for gaming experience out performing

Wii’s motion sensors.

Apple

Iphone 4, Iphone 4S, and Ipad2 offer features such as faster

touch response better graphics, and better performance with
new Dual core A5 chip.

Apple Store has endless quantity of games and applications

available.
Iphone’s wide diversity of abilities attract a wider scale of customers and give it the All-in-one appeal.

Competitor’s profile
Sony Corporation
Sony is a consumer electronics company, which has its roots dating back to 1946, when the company was founded
as Tokyo Telecommunications Engineering. The company manufactures a variety of offerings, such as batteries,
cameras, computer monitors, DVD players, flat-screen TVs, home-use game consoles and software, image-based
software, MiniDisc and Walkman stereo systems, and semiconductors. The company also makes stereos, TVs,
VCRs, and other consumer electronics, which account for most of its revenues. Sony's wares are chiefly targeted
toward those in the consumer and industrial markets. It also conducts its operations in various financial service
businesses, such as banking operations; insurance operations; and leasing and credit financing operations. Other
operations include an advertising agency business located in Japan; Internet-related businesses; and a location-
based entertainment business in Japan and the US. Additionally, the company's entertainment assets include
recorded music and video, motion pictures, DVDs, and TV programming. Sony employs an estimated 163,000
people worldwide and has sales of US$70.3 billion.

Strategy of Sony

Sony has been focusing on CSR, or Corporate Social Responsibility. It recently issued a report on its pastyear CSR
activities, which include an alliance with the World Wide Fund for Nature (WWF) global environmental NGO, to
join its "Climate Savers Programme." It also received a Sustainable Energy Europe Award from the European
Commission, which recognizes Sony for its commitment to improve the energy efficiency of its products, as well as
for its disclosure of information to consumers. Additionally, the company is engaged in environmental
conservation activities at its sites as it works towards its "Green Management 2010" mid-term group
environmental targets, which it is working to achieve by 2010. In terms of supply chain management, Sony
implemented a program based on the Electronic Industry Code of Conduct (EICC), an industry-wide framework for
promoting legal compliance, occupational health and safety, and environmental protection throughout the supply
chain. Also, In April 2007, Sony Corporation earned the Tokyo Labour Bureau's "corporate support for parenting"
mark. It received this title for achieving targets of the action plan it formulated in response to the "Law for
Measures to Support the Development of the Next Generation." In terms of product development, Sony has been
focusing on a number of areas. For example, it is working to position image sensors as a key area of its
semiconductor business. Accordingly, in June 2007, the company reported that it would invest approximately 60
billion JPY in Sony Semiconductor Kyushu Corporation's Kumamoto Technology Center (Kumamoto TEC) Fab 2
facility, to extend clean room facilities by 5,000m² and reinforce image sensor fabrication capacity. This investment
will take place from fiscal year 2007 to fiscal 2009. Sony reports that, over the next three years, it will be
strengthening its CMOS sensor manufacturing operations to provide growth markets such as mobile phones and
digital still cameras with CMOS sensors. In other product development areas, the company is launching several
new audio and video devices. The company will soon be launching the "Rolly" audio device, and is looking to offer
a digital single lens reflex camera for advanced users in November 2007. In a move to take on Cannon and Nikon,
Sony is slated to introduce the "DSLR-A700" camera, which comes with 12.24 megapixel resolution and is expected
to sell for about 180,000 yen (US$1,560). In September 2007, Sony extended its Portable Media Player lines with
the Walkman devices NWZ-A810 and NWZS610. They both feature eight gigabytes of Flash memory storage
(similar to the Apple iPhone). Also, in October, Sony is expected to challenge the Apple video iPod with Walkman
devices that have enhanced screens and two types of H.264 codec playback. To ensure success for these Walkman
audio devices, Sony needs to establish relationships with online video stores to make content available. It has shut
down its Connect service, but promised to offer conversion tools to help customers convert the Atrac 3 formatted
audio to the Windows Media Audio. There are rumors that the company will offer new services, such as one that is
part of the PS3 network. In addition, the company recently introduced the sub brand name "x.v.Color" for products
that conform to "xvYCC", the international standard for wide color space within moving images. Sony is promoting
"x.v.Color" in the industry to be a unified brand name borne by future products compliant with the standard. Blu-
Ray technology has also been a focus for the company. In September 2007, it released the HES-V1000 media
server, which is a Sony-branded version of Windows Home Server. It uses Blu-ray technology as a drive and
includes a 200-disc Blu-ray/DVD changer. During the fall of 2007, it plans to launch two new players: the BDP-
S2000ES model, as well as the BDP-S500. They will be available for about US$1,300 and $700, respectively. Both
players support high-definition 1080/60p and 24p output, as well as 7.1 channel linear PCM and Dolby TrueHD,
Dolby Digital Plus, and dts-HD High Resolution Audio bitstream output via HDMI 1.3. In accordance with its
September 2005 restructuring plan to reorganize its electronics business, close facilities, and eliminate certain
positions within its workforce to remain competitive with Samsung and Sharp, Sony made several personnel
changes over the past year. Most recently, Sony Ericsson's Miles Flint reported plans to step down. This move was
not Sony's decision. A successor has yet to be named. On October 1, 2006 Sony realigned certain executive
responsibilities in its electronics business with the goal of strengthening its mid to long-term growth strategy,
support its current core businesses, and put focus on product development and product quality. Under President
and CEO Ryoji Chubachi’s direction, core consumer product businesses are now led by Executive Deputy President
Katsumi Ihara. The semiconductor and component device businesses is now led by Yutaka Nakagawa, who was
promoted to Executive Deputy President. It also appointed Keiichiro Shimada to President of the Technology
Development Group. Makoto Kogure is now Corporate Executive in Charge of Product Quality and Safety. Ryoji
Chubachi is now also the Officer in charge of Technology Development Group. Most recently, Hideki Komiyama
was named President, Sony Ericsson Mobile Communications; Kiyoshi Shikano was appointed Senior General
Manager, Global Marketing Division; Kyung-soo Ahn was named Executive Vice President, Corporate Executive
President of B2B Solutions Business Group, and Chairman of Sony Korea; Shigeki Ishizuka was appointed President
of Digital Imaging Business Group; Keiichiro Shimada was named President of Technology Development Group; and
Takashi Fukuda was made President of TV Business Group. The company has also named a number of new
members to its board of directors. Strengths Sony is one of the largest companies in the world, operating globally
with a variety of products. Along with its electronic offerings, such as its PlayStation gaming system and VAIO
computer products, Sony develops, produces, manufactures, markets, distributes, and broadcasts image-based
software, including film, video, and television. It also has various financial service businesses, along with an
Internet-related businesses and an advertising agency business in Japan. It strives to maintain consumer loyalty by
continually being recognized for having one of the leading brands in its class. Brand loyalty is expected to help the
company achieve its minimum consolidated operating profit margin goals of 10 percent, not counting its financial
business. Vulnerabilities Sony has been having problems with its computer battery packs as of late. In July 2007,
Toshiba, after working with Sony, began recalling specific production lots of lithium-ion battery packs that
contributed to overheating incidents in Toshiba's notebook PCs. The cause of the incidents has not yet been
identified, though it is believed that there was some type of irregularity in the specific cell production lot. This
recall comes after Dell began recalling approximately 4.1 million laptop and notebook lithium-ion batteries last
year. The batteries caused overheating and resulted in fires. In October 2006, Sony announced a global voluntary
replacement program for certain notebook computer battery packs using Sony-manufactured lithium ion battery
cells. The program is being implemented in cooperation with the US Consumer Product Safety Commission and
other regulatory agencies worldwide. The replacement program was offered for all notebook computer battery
packs containing the same types of Sony-manufactured battery cells as were involved in the Dell, Apple, and
Lenovo recalls. In addition, Sony has recently been facing criticism for its PlayStation 3 marketing strategy. Upon its
introduction, the product was marketed as a home-electronics product. It is now being marketed as a game
machine, which neglects its other features such as a Blu-ray high-definition DVD player and Cell microchip. Its high
price has hindered sales, for it costs approximately twice as much as Nintendo's Wii system. Outlook In regards to
the battery fiasco with Dell and others, most experts feel that any negative impact will be shortlived. While this is
an issue that will have some bad publicity for Sony, it probably shouldn't have any lasting effects. Once the
affected batteries are returned and replaced, the majority of the problem will be taken care of. Dell has had
problems with other battery makers in the past, so this is not a rare occurrence. As the company looks to grow
market share in all of its product categories, it is planning a slew of new product introductions in the areas of
electronics, games, and entertainment. In electronics, the company is looking to focus on HD products, mobile
products, and the semiconductors/key component devices. In terms of games and entertainment, Sony is looking
to motion pictures, music, games, and brand recognition to deliver enhanced products and services.

Microsoft Company

Microsoft Corporation is a technology company. The Company develops, licenses, and supports a range of
software products, services and devices. The Company's segments include Productivity and Business Processes,
Intelligent Cloud and More Personal Computing. The Company's products include operating systems; cross-device
productivity applications; server applications; business solution applications; desktop and server management
tools; software development tools; video games, and training and certification of computer system integrators and
developers. It also designs, manufactures, and sells devices, including personal computers (PCs), tablets, gaming
and entertainment consoles, phones, other intelligent devices, and related accessories, that integrate with its
cloud-based offerings. It offers an array of services, including cloud-based solutions that provide customers with
software, services, platforms, and content, and it provides solution support and consulting services. Though it
might not be quite as dominant as it once was, Microsoft remains a huge company, with the majority of desktop
and laptop computers using its Windows software. Long targeted by campaigners, governments and other
companies for using its size to shut out competitors and rival products (one US judge called it an “abusive
monopoly”), it has made fortunes for investors, most famously its co-founder Bill Gates.

MARKET SHARE AND IMPORTANCE

To say Microsoft is a large corporation is like describing its founder’s ego as large – a gross understatement. They
are huge. Microsoft (and probably also Bill Gates’ ego) takes up 18.3 million square feet of office building space
alone3.
Microsoft is ranked 15th in the world’s top 500 companies and its operating software has driven 93% of the
world’s desktop computers since 19914. At its peak, the company had a market value roughly equal to the gross
domestic product of Spain5. Its Office software, encompassing a suite of e-mail, word-processing, spreadsheet and
presentation tools, dominates 90% of the market and bring in $9 billion annually, a third of the company’s
revenue.

HISTORY AND STRATEGY

Bill Gates was born in Seattle in 1955. His first exposure to computers was at school in the late 1960s with his
friend Paul Allen. By the time Gates was 14, the two friends were writing and testing computer programs for fun
and profit. In 1972 they established their first company, Traf-O-Data, which sold a rudimentary computer that
recorded and analyzed traffic data. Or as one tracker of the software industry saw it “the idea was to get a nickel
very time the traffic lights changed7.”
Inspired in 1975 by the new Altair microcomputer kit just released by MITS Computer, Gates and Allen wrote a
version of BASIC for the machine. Later that year Gates left college to work full time developing programming
languages for the Altair, and he and Allen relocated to Alburquerque, New Mexico, to be near MITS Computer,
where Allen took a position as Director of Software Development. Gate and Allen named their partnership
Microsoft. Their revenues for 1975 totaled $16,000.

A year later, Gates published “An open letter to hobbyists” in the Altair newsletter. Arguing that software piracy
prevented “good software from being written”, Gates went on to say that “nothing would please me more than
being able to hire ten programmers and deluge the hobby market with good software.” Soon after, Allen left MITS
to devote his full attention to Microsoft and the company’s tradename was registered.

Microsoft’s big break came in 1980 when Gates got the chance to provide the crucial operating system, DOS, for
IBM’s landmark PC. He could hardly be satisfied with a market limited just to IBM, so he, along with Intel Corp.,
which provided the microprocessors that are the powertrains of most PC’s, encouraged other entrepreneurs to
create the PC clone industry that today dominates the market.

It was in 1990, though, with the introduction of Microsoft’s Windows 3.0 program, that Gates showed just where
he intended Microsoft to go. Not only did Windows – of which 60 million copies have been sold –effectively made
Microsoft the sole keeper of the PC software standard, it permanently stunted IBM’s incipient OS/2 system, which
until then had been a joint development project with – who else? – Microsoft. Windows didn’t just leave IBM
hanging, nor merely relegate Apple’s famously friendly Macintosh to the fringe of the market. It also threw into
confusion the leaders in the applications software industry – Lotus and WordPerfect – because they had been
gearing up new spreadsheet and word processor products for OS/2. This, in turn, left the window open for
Microsoft to become a real player in the applications software business – which it did with a vengeance8.

Before 1990, Microsoft was primarily a supplier to hardware manufacturers, but after 1990 the bulk of the
company’s revenues came from sales to consumers. That year Microsoft became the first software company to
reach $1 bn in revenues. In 1993 Microsoft introduced the first version of Windows NT, an operating system for
users on corporate networks. It was disappointing and an upgrade soon followed which boosted sales of NT to
more than one million copies by the end of 1994. Microsoft announced an agreement to purchase Intuit, the
producer of the leading package of personal financial software, called Quicken; however, after the US Department
of Justice filed suit to prevent the takeover on the basis of antitrust concerns, Microsoft withdrew its offer.
Revenues for 1994 exceeded $4 bn.

In August 1995 Microsoft launched its next version of Windows, called Windows 95, which sold more than one
million copies in the first four days after its release. For the rest of the decade Microsoft expanded aggressively
into new businesses associated with its core franchise. Its projects included two joint ventures with the National
Broadcasting Company under the name MSNBC: an interactive online news service and a cable channel
broadcasting news and information 24 hours a day. The company’s web-based services included the Microsoft
Network online service, a travel agency, local event listings, car buying information, a personal financial
management site, and a joint venture with First Data that allowed consumers to pay their bills online.

Microsoft purchased 11% of the cable television company Comcast for $1 bn and cut a licensing deal with the
largest US cable operator, TCI Communications, to put Windows into at least five million set-top boxes. The
company also purchased WebTV, whose core technology allows users to surf the internet without a PC.

Microsoft’s next generation of Windows, Windows CE, was designed to expand the franchise into computer-like
devices including mobile phones, point-of-sale terminals, pocket organizers, digital televisions, digital cameras,
hand-held computers, automobile multimedia systems, and pagers. By early 1999 the company had secured more
than 100 licensing agreements with manufacturers of these “intelligent appliances”9.
In 1998, Microsoft launched Windows 1998. The year 2000 saw the acquisition of the Visio Corporation, the largest
acquisition in Microsoft’s history. Windows 2000 was also launched together with the unveiling of the .NET
platform.

Up to now, Microsoft has grown by serving the seemingly limitless supply of new customers for PCs and software.
Microsoft’s high market valuation and the accompanying high expectations for continued growth have forced the
company to find new businesses and markets. But, as is true of other monopolies, they simply aren’t competitive
in open markets. While Windows has a profit margin of 85%, and Microsoft Office has a margin of 79%, every
other Microsoft division is losing money in reams10. Its attempts to expand outside the PC arena have been less
than successful as it faces entrenched adversaries with management far more astute and aggressive than anything
they saw in the PC market11. It has now become reliant on the less saturated replacement markets with the bulk
of its best customers upgrading their existing software at much lower profit margins than new business. This
“upgrade plateau” is already dampening Microsoft’s dramatic growth. Its stock price has trended down for three
years and recently led to the ‘surprise’ announcement of its first dividend. This was a ploy to allow funds that
require dividends to buy Microsoft shares for the first time. Microsoft hopes more buyers will bring the stock price
up. Countering this is the growing feeling among investors that Microsoft is badly overvalued at its current price of
25 times earnings12. Microsoft’s desperate reliance on repeat revenues have caused it to raise costs to their
customers – mostly by changing licensing terms. This is creating resentment in formerly docile customers, many of
whom consider the new terms extortion.

Apple Company

Apple Inc is one of the leading companies in the world and deals majorly in manufacturing and selling of consumer
electronics, computer software, and other online services. It is a global company that originated in California USA. The
founders of the company are the world-renowned Steve Jobs with Steve Wozniak and Ronald Wayne.

Apple started with manufacturing and selling personal computers but has now expanded into many sectors. Today
(October 2018) Apple is the second largest phone manufacturer in the world after Samsung. In fact, Apple Inc is the
largest IT Company in the world (by revenue). It operates nearly 500 retail stores worldwide and employs nearly
120,000 people.

Mission and Vision

The core of Apple’s Vision is to provide customers with user-friendly, non-intimidating technology at low prices. It
understands the fact that not all users are computer experts and makes the user comfortable with their interface.

The Mission of the company is to bring the best personal computing experience to all walks of people – from students
to teachers and professionals.

Portfolio

 Mac (Personal Computers): MacBook, MacBook Pro, MacBook Air, MacMini, etc

 iPad (Tablets): iPad Pro, iPad Mini, etc

 iPhone: iPhone 8, iPhone X, iPhone XS etc

 Apple Watch Seris

  Apple Smart TV

 Online Services: Apple Music, iTunes, etc

Intel Corporation

Intel Corporation is one of the biggest companies in Silicon Valley. It is an American multinational IT company based in
Santa Clara California. Intel is mainly in the business of manufacturing and selling semiconductor chips found
in computers.

The company was founded in 1968 by pioneers of the semiconductor processors Robert Noyce, Gordon Moore, and
Andrew Grove. Currently, Intel is the second largest chip manufacturer in the world after Samsung.

Other than semiconductor chips it also manufactures and sells other hardware products such as motherboards, flash
drives, interface controllers, graphics cards and chips, embedded processors, etc. And Intel supplies its chips and
processors to other electronic manufacturers such as Lenovo, Apple, HP, Dell, etc.

It currently (October 2018) averages nearly 60 billion USD in revenue every year, with nearly 18 billion in operating
income. Based out of USA, Intel has operations around the world, including India. It invests significantly in Research and
Development, especially in China. Overall Intel has over 105,000 employees worldwide.

As of now, Intel is trying to expand in the automated driving sector. It has collaborated with Mobileye to become one
of the largest investors of this self-driving car industry.

Philosophy
The Mission of Intel is to satisfy and delight their customers, employees and all other stakeholders by
delivering technological advancements that become essential in our life and our work.

Intel also has a list of core values that it encourages all its employees to imbibe. These values include discipline, risk-
taking, quality and customer and result orientation.
Summary and Conclusion

Nintendo changed the perception of the videogame and its industry by this product. It was an act of inviting
participation from everyone as this extract states. Nintendo defined a need for a new direction of development;
they recognized the way things were in a state of revolutionary technological direction. They used different
strategies like backward integration, differentiation and innovation to maintain and stick to their goals. The new
Nintendo Wii was appealing to all ages. The current market surveys shows that the Wii remote controller (Wii
mote) is more wide spread and is the most used computer input device worldwide.

The success of the Wii depended on software and successfully identified and it took gaming into ints main stream
the Wii has arguably changed the world of consoling game forever.

Nintendo Wii’s competitive advantage is product differentiation, backward integration and porters 5 force. They
continue to produce a product that creates value to all the customers. And Nintendo has a good relationship with
all its suppliers and this helps them to sell their product cheaper than the competitors. The research shows that
the Nintendo Wii is very convenient to everybody. The difference Nintendo is establishing with the Revolution is a
low-cost device with an accessible interface. Nintendo believes its easy-to-use controller will give it an edge.

We also concluded that Nintendo holds a number of very valuable strong brands which have been pillars of the
gaming industry since its inception such as Mario, Peach, Donkey Kong and Pokémon. These gaming brands have
strong, dedicated followings and are extremely marketable past simply gaming titles and into other products, such
as TV shows and cards for Pokémon along with stuffed toys for both. Looking at Nintendo’s competitors such as
Sony and Microsoft, none of them holds such strong and valuable brands. These properties can be considered
valuable as they differentiate Nintendo from its competitors by enabling the firmto pursue a different business
model compared to its competitors and by considerably increasing its market share. Unlike its competitors that
develop their profit policies upon the sales of their systems, these brands constitute the basis of Nintendo’s
business model. For instance,

External Factor Evaluation

Internal analysis

Revenue Sales for Past Three Years

2017 2018 2019

$ 4.36 billion $9.95 billion $9.26 billion

Company’s Growth
Super Mario has certainly been delivering for Nintendo shareholders this year. Since the new Nintendo Switch hit
store shelves about one year ago, the company's stock has more than doubled.

So what has made the Switch ? Well, for one, it has a number of interesting features, like the ability to be played
both as a home console as well as a handheld device. It's also technologically advanced, with a slick thin frame and
high-resolution screen, and most notably, it's the company's first new console since the Wii-U came out in 2012.

However, another reason for the Switch's success -- and what may determine its ability to hit management's target
of 20 million units in 2018 (versus 17 million last year) -- is a two-pronged strategy to expand the device's target
market. Here's how management is going about it.

With family-friendly games like the Super Mario and Zelda series, Nintendo has made kids a large part of its
audience. But to expand this customer base, Nintendo must also win over parents who are wary of giving their kids
a video game console too early in life -- or at all.

To appeal to concerned moms, the company recently introduced Labo, two custom cardboard-construction sets,
which are meant to playfully integrate with the Switch. Labo features a number of formats that essentially allow
kids to build their own intricately designed toys out of cardboard, such as a fishing rod, steering wheel, and piano.
In addition, these creations can actually interact with the Switch.

It's a creative way to enhance the playability of the console and may also convince reluctant parents that these
accessories are more of a learning tool than fun distraction (but also that).

Management appears to believe Labo could eventually stand as its own platform, even without the electronic
device: "Nintendo Labo is a product intended to broaden the possibilities of Nintendo Switch. We hope to develop
Nintendo Labo into a product that is not bound by the conventional boundaries of video games, and that endears
itself to an even broader range of consumers."

By launching Labo and other accessories, management also hopes to lengthen the typical five to six year life cycle
for video game consoles. The introduction of these new peripheral products is apparently one of the ways to
achieve that.

... and hardcore gamers

And while Nintendo's roots may be in kid-friendly games and characters, much of the growth in video gaming over
the past few years has been with adult gamers who are willing to pay big bucks for high-end, adult-themed games.
That was, according to The Wall Street Journal, one of the failures of the Wii U.

But Nintendo has now changed its tune, allowing and encouraging software developers of either violent or risque
games to create software for the Switch. That may be because higher-capability software and smartphone
applications now allow parents to more easily monitor what games their children are playing -- and for how long.

The openness to a wide range of game genres is a new development and does come with some risks. For instance,
parents could become confused about the Nintendo brand. But so far, it hasn't stopped Nintendo's red-hot
growth: Management just raised its trailing 12-month guidance for Switch games sold from 50 million to 53 million
units.

Profitability, Other Relevant Performance Indicator

Strength and Weaknesses

According to Datamonitor’s company profile on Nintendo, published on September 17, 2007, Nintendo has
following main strengths-

A strong brand name-

Nintendo’s strong brand is due to its 25 glorious years in the video gaming industry. They are not only the leaders
in handheld console market buy also in gaming industry. First successful hit was the Gameboy in 1989. The
Nintendo Wii is the most upgraded console consisting of motion sensors that makes the game more interactive.
Major market segment covered by Wii is of college students being a part of that segment I realized that I will
prefer playing Mario for several hours than using any technically advanced console.

2)High Returns-

Nintendo always believes in innovative ideas and for higher profit they also have invested there resources in
company like the Seattle Mariners and the Atlanta Hawks.

Which gives Nintendo a high return on their assets making them more profitable.

3)High employee efficiency-

Acoording to the figures recorded by Datamonitor company the revenue generated by Nintendo was about
$206,960 per employee which proved Nintendo’s high employee efficiency as compared to other companies of
same industry.

4)Debt free status-

The greatest benefit to Nintendo was efficient use of there financial resources and despite of investing huge
amount of data Nintendo was able to stay Debt Free. Nintendo always enjoyed financial flexibility as the Debt to
equity ratio was zero recorded by Datamonitor Company.

5)New games-

Wii with many games like Wii Fit offers a bit more to the customers. The gameplay is different but highly attractive.
Game producers are also inventing new things like Guitar Hero and others for Wii.( According to Edge magazine, in
2009)

According to the Strategy Canvas of Wii following strengths have been evaluated:

6)Unique Sense of Marketing

Nintendo uses a marketing strategy to make consumers want what they cannot have. This is seen currently
because Nintendo Wii is not producing enough of the product to meet the demand from customers. Last holiday
season Wii’s were hard to find. NY Times reported that in San Francisco, New York, Boston and Austin, TX, stores
turned up several with PlayStation 3’s in stock, while the Wii was sold out (New York Times). John Weeks, a worker
at a Target Store in Boston, said “The last time they were here, we had 40 and they sold out in 15 minutes” (New
York Times).

Interactivity

Another strength that Nintendo has is their unique player interaction. The Wi

introduced motion sensing gaming in 2005. It was the first video game to use the new technology and get people
up and moving. This makes them truly ahead of the game in family entertainment.

8)Product Innovation
Mario cart, for example, is one of the most popular Wii games. The game that gave Nintendo its start was
innovated and updated to become, again, one of the most popular games played. This shows the longevity of the
company and the constancy of the brand.

WEAKNESS

The Nintendo Wii is a strong competitor in the gaming market, but it does have some

weaknesses. A few of the Nintendo Wii’s biggest weaknesses are; the fact that they do not own the motion sensing
technology, graphics, and limited online game play. These weaknesses are determined mostly by comparisons with
the capabilities of Xbox 360 and PS3. ( refer to appendix)

Do not own motion sensing technology

A large weakness of the Nintendo Wii is that it does not own its motion sensing technology (Zimbio). They were
the first to use this unique idea, but since they do not own the technology, problems are probable. There is room
for competitors to use the same technology and take away one of Wii‟s strengths; their uniqueness.

More demand less production-

As Nintendo GameCube and Nintendo 64 were not that much successful therefore Nintendo was cautious while
manufacturing Wii so it produced too few Wii’s but the current demand was very much high.

Graphics

Compared to the Xbox 360 and PS3 the Wii does not have the graphic quality that the others do. This may be
viewed as a weakness to some of the more extreme gamers, yet some of the novice gamers may not mind as
much. Many blogs and interviews say that younger people are disappointed with the graphics such as the article
Head of Factor 5 Calls Early Wii Graphics “Disappointing” by Box News Channel stated. The fact that the Wii does
not have the graphics that the Xbox and the PS3 have makes it cheaper, but many hardcore gamers will be turned
off by this fact; making it a weakness.Hardcore gamer customers expected the graphics to be a enchanced one but
in order to keep the prices affordable Wii used a 64MB GDDR3 graphics card. It made Wii cheaper as compared to
Sony’s Playstation with initial price of $250 only. This desire to keep the product affordable proved to be a double
edged sword for Wii.

4.Dependence on contract manufactures

Nintendo has tried to establish good relations with companies to produce the main parts of their Wii consoles as
well as assembling all the parts until finished products are formed. The biggest problem was the new Wii console
that was in very high demand that the manufactures were not able to supply parts timely . this shortage affected
company’s overall profit as there was lack of finished goods to be sold.

5.Limited Online game play

The Wii also does not compare to the Xbox 360 or PS3 in its level of online game play. Xbox has Xbox Live that
allows for online multiplayer gaming as well as communication with opponents through a wireless headset. PS3
also has a way for players to connect through the internet and compete in tournaments in various games. Unlike
the Xbox and PS3 the Wii does not have a consistent online network, and there is no verbal communication
between online opponents.

Internal Factor Evaluation

Summary and Conclusion

We concluded that in the gaming industry Nintendo has established a good brand name Wii product enjoyed a
great success due to economic and other features and with new games it was one of the most demanding console
which has unique console with sensors that makes it most enjoyable and lively. Wii has paved a totally new path
for more interactive future of gaming industry, the innovative Wii is one of the unique resources that Nintendo
possess with the help of which it was able to give powerful competition to the other companies. Nintendo is
constantly trying to do “more with less”. The Swot analysis of Nintendo Wii shows its standing in the market along
with it also reveals various opportunities that Wii can took advantage of. Also Wii helps Nintendo to earn more
profits, but nowadays mobile games capture the attention of customers so that Nintendo must take action to pass
this problem and win the competition.

Strategy formulation

SWOT Matrix

STRENGTH WEAKNESS

 A strong brand name  Do not own motion sensing

 High Returns technology
 High employee efficiency  More demand less production
 Debt free status  Graphics
 New games  Dependence on contract
 Unique Sense of Marketing manufactures
 Limited Online game play

OPPORTUNITIES THREATS

 Willingness of consumers to have  Economic Problems

multiple gaming systems  New Competitors
 Wide range of customers  Technical Problems=Bad Reputation
 Teen Purchasing Power  Eliminated Movie Playing.
 Fitness
 Indian Console Market
This particular SPACE matrix tells us that our company should pursue an aggressive strategy. Our company has a
strong competitive position it the market with rapid growth. It needs to use its internal strengths to develop a
market penetration and market development strategy. This can include product development, integration with
other companies, acquisition of competitors, and so on.
BCG Matrix

we noticed that many of Nintendo’s IPs lie in the Question Mark

section of the matrix. There are also many lesser known IPs such as
Luigi’s Mansion or Pikmin that would also be in this section. What
Nintendo should take notice of is the consoles they have to run these
games on. The 2016 NX console is very important because if it doesn’t
become a Star there is very little Nintendo can do with the Wii U and
the 3DS family to further develop strategies for many of their IPs.
While the 3DS is a very profitable product for Nintendo, outselling the
Playstation 4 and Xbox One even in some months of 2015, it won’t be
there for much longer with investments in mobile gaming and the fact
it is reaching the end of its product life cycle.
Objectives and Strategies Recommendation and Plans

Strategic and financial objectives

 Nintendo’s Key Success Factors (1/2) Key Success Factors Definition: The combination of factors required
to accomplish organisational business goals,
 Nintendo’s Key Success Factors (2/2) • Dominance over the casual gamers and portable gaming market -In
2001 – 2006, Nintendo have a big share over the casual and mobile gamers market with the Nintendo Wii
and Nintendo DS. • Pricing advantage -Nintendo’s consoles are more affordable than its competitors. •
Strong brand name. -Nintendo is well known for its games including Super Mario, Pokemon and Zelda.
 Analysis of Key Uncertainties• Rapid advancement of tablet and smartphone technology- Tablets and
smartphone becoming more powerful• Uncertainty to the market size and potential returns• Other
alternative forms of digital entertainment.-Facebook, digital platforms, Google +, internet TV, Apple TV
 . Analysis of Future Trends (1/5)• Increase in social networking, mobile and digital markets- Social
networking platforms become morepopular.-Availability of cheap or free games fordownload on digital
platforms, ieiTunes and Facebook.-Smartphones and other mobile devicesWill penetrate into
Nintendo’smarket share
 Analysis of Future Trends (2/5)• Tablets as the next generation of console games-The gaming industry will
drive the evolution of technology fortablets.-Apple is already using games to promote and sell its iPads-
Developers viewing tablets as the ideal foundation for developing games.
 Analysis of Future Trends (4/5)• Shift into games-as-a-service model-Games are evolving to become a
service.-More social games and virtualworlds are created to fill in market space.-Subscription base
models,in-gamePurchases and premium membershipMemberships, virtual goods andmicrotransactions
will become the revenuestreams for such games.
 . In-game purchases (3/5)
 . Analysis of Future Trends (4/5)• Slowed growth of traditional game retailing and publishing-Console
game manufacturers will continue to decline in sales in both hardware and software-Traditional retail
game stores will gradually exit the market.-Gaming giants will produce their final console (8th generation)
before going completely digital.
 . Analysis of Future Trends (5/5)• Emergence of digital content and new publishing models-Third-party
software developers suchas Ubisoft and Electronic Arts willconcentrate on developing games for the mass
market and serious market.-Business models for gaming will change.

Recommendation Business Strategy

Corporate level

Nintendo should adopt a “focus” generic strategy based around targeting alternative customers (not the serious
gamer)
Nintendo should continue to invest in true innovation as with the development of the Wii as opposed to adding
bolt on technologies to its products

Business Unit

A greater level of co-operation should be seen between the activities of the business units. This is particularly
prevalent in the case of the games unit which may be seen as providing the ultimate success of failure of all other
business units such as the consoles or hand held units.

Functional

Nintendo should pay particular attention to its supply chain management, as has been seen the success or failure
of a product can often be related to a company’s ability to get the product to market in time. This is demonstrated
with the significant success of Apple’s products (Wailgum 2008) vs the poor performance at times for rivals such as
Sony (Hendricks 2005).

Recommendation Organizational Strategy

We advise the Nintendo CEO to utilize the financial potential of the character IP rights in theshort term, through
increases in merchandizing and the continuation of the Amiibo concept,which may fund R&D into new gaming
technologies (including VR) which could be utilizedin the next upcoming console known as Nintendo NX. By
revitalizing the existing productsthrough the development of complimentary smart technology, important lessons
andoptimizations may be learned towards this upcoming launch. We recommend furtherdevelopment and expansion
of the Wii Fit concept, as wearable technology is projected to bethe number one fitness trend worldwide in 2016
(Thompson, 2015). Nintendo is in anexcellent position to seize this opportunity as they already have experience in
providing anexercise gaming experience and increase its attractiveness to parents who may also identify
with their exclusive gaming franchises introduced in the 80’s and 90’s. To do this successfully
Nintendo will need to develop the technology itself, or partner with existing providers oftechnology (possibly Polar
Systems, Finland) integrating this technology with the Wii U, andin the future the NX. Another possibility for the
management is to be more aggressive in their pursuit of these strategies would be to increase their allowance of
utilization of their IP rights, possibilities could be kids TV shows with their characters as well as other forms of
licensing.

Strategy Implemantation

Department action plans and programs

in 1980s, Nintendo, after developing Famicom, used these games to change its business model by selling the
system without margins but making profits from games bundled to it
”(Moreover, with intellectual property rights to these brands and very strict licensing policies pursued by Nintendo
(Nintendo, 2016), they can only be controlled and used by Nintendo, which makes them both rare and inimitable.
For example, “during the first two years after the release of Famicom, licensees were not allowed to develop
similar games on other competitors’ platforms”. The company also has had a long history of successful
implementation and marketing of these brands, meaning it is very organised to continue leveraging this strong
core competency. For example, Nintendo kept updating and releasing new versions of these games throughout the
years such as Donkey Kong Country and Super Mario World. One of Nintendo’s largest strengths is its family
friendly set-up as it allows parents to purchase the company’s hardware knowing none of the games are
particularly unfriendly to children. This also means that their consoles can become family activities and appeal to
generations outside the main gaming market. This is a valuable asset due to the different demographics it appeals
t o along with creating a strong option for parents more concerned about violence in video games or other
inappropriate content and was identified as such by Nintendo in their 2015 CSR report. (Nintendo, 2015). While
other console manufacturers such as Sony and Microsoft do offer many child friendly games, Nintendo is the only
platform that offers parents an exclusively child-friendly option they can be confident in, making Nintendo’s family
friendly
set-up rare. The company is well organized to continue leveraging this strength though it should re-enforce its
family friendly values in the minds of customers through marketing to make certain that potential customers are
aware of this.
Blue Ocean Strategy:
The other important competence of Nintendo relative to its competitors is its ability to implement the blue ocean
strategy. This extremely valuable asset allows Nintendo to tap into the industries that have not been touched and
contested before. For instance, unlike its competitors Sony and Microsoft, Nintendo aims to expand videogames to
children, women and people over 60 years old rather than try to take away customers from its rivals. Nintendo, as
a part of its blue ocean strategy, launched Nintendo DS and then Nintendo Wii, which is a unique system that
allows people to play games by moving their arms naturally and also allows Nintendo to tap into the casual gamers
rather than hard-core gamers that have already been targeted by its rivals’ systems, PS
and Xbox (O'Gorman, 2008). These assets have a low chance of imitation as it would require very large barriers of
entry for competitors to not only enter the console market but to then do
so against Nintendo’s brand dominance. This is the main reason why PlayStation Move and Kinect have not been
able to compete with Nintendo’s W

ii. However, as Hollensen (2013)discusses, it is important that Nintendo continue this innovative structure as new
ideas in the gaming market may not be replicated to the same quality quickly but will soon become expected
features across all platforms. The company is well organized to continue to leverage these strengths though it
should focus on making sure consumers are aware of them.