Nintendo's Strategy

Topics: Wii, Video game console, Nintendo Pages: 14 (4059 words) Published: September 3, 2010

To examine Nintendo’s position in its current industry the following SWOT analysis has been constructed.

Nintendo’s strengths include a well established brand name, well known franchises, ability to manufacture goods at a low price and innovative products as will be discussed later in this report.

Since its computer gaming establishment in 1977 Nintendo has maintained a strong and brand image. This has been supported by their success in quality products such as previous market leaders the Super Nintendo Entertainment System and Nintendo 64 (Edge, 2007).

The franchises that Nintendo possess such as their gaming icons, Mario, Donkey Kong, Zelda, etc have enabled them to maintain customer loyalty and recognition. These franchises have also allowed Nintendo to touch on other markets i.e. toy market (Parfitt, B, 2009).

Nintendo’s two major weaknesses would be their dependence on outside contracted manufacturers and lack of games compared to its competitors. Ironically, one of Nintendo’s strengths would also constitute as one of their biggest weaknesses. The dependence on specific manufacturers (Moats, B, 2008) leaves Nintendo vulnerable if those manufacturers were to fail or suffer any difficulty in producing the required amount. The inability for manufacturers to supply goods on a timely basis would significantly impact on Nintendo’s performance as the switching costs between competitors within the industry are relatively low. The unavailability of products would ultimately constitute in loss of market share.

Currently, the game variety of Nintendo has been overwhelmed by its competitors, capitalising on attaining franchises. Even though Nintendo does have a well known franchise, its variety limits them from producing other games (Hirooka, N, 2009). Also the motion sensing capabilities of the Wii console has restricted their compatibility to a wide spread of games. Game producers find themselves making alternative versions of the game to suit the Wii which in turn could be quite costly and time consuming (Schoenberger, C, 2009).

The main opportunity that Nintendo are exposed to is that the world evolving to which more people are becoming more technologically compatible. People are introduced to technology at an earlier age and are becoming more computer orientated. The number of sales if gaming consoles have exponentially increased (Parfitt, B, 2009), which my suggest an increase of gaming console awareness. Alike computers, soon, it may become standard that each household contain a gaming console.

Another opportunity for Nintendo would be the online gaming support system. It is anticipated that the sale level of gaming consoles will decrease as the number of online gaming subscriptions will increase (Shilov, A, 2009). This includes the possibilities of introducing newer systems or even upgrading current products to align themselves with current online innovations and to potentially compete against upcoming new competitors.

There are a number of threats that Nintendo may or have come across which include counterfeit products, competitors implementing motion detection additions and new companies planning to branch into the gaming industry.

Counterfeit products are an issue to which will affect the sales of games. Even though extensive measures have been implemented to prevent such from happening, with time, the market will also manage to find ways around any security imposed.

It has already been demonstrated that new technologies have been implemented by competitors which will “provide intuitive gaming experiences at almost the same level as Nintendo” (Hirooka, N, 2009). That being said this poses as a threat to one of Nintendo’s competitive advantage being product differentiation.

The ever advancing technology market has allowed companies to enter into the gaming market. A major threat would...
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