Nintendo Strategy

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Strategic Analysis for Nintendo Co. Ltd.

Executive Summary
Nintendo Co. Ltd. is a longstanding member of the home entertainment software industry that has embarked on a mission to offer the highest quality products and services while treating their customers with attention, consideration and respect. Nintendo’s strategy thus far has been to take advantage of their video game development capabilities; nearly 60% of games sold by Nintendo are self developed. The innovative capabilities derived from various gaming platforms have allowed Nintendo to capitalize off of a series of attachment control devices. The biggest strength that Nintendo has is a strong brand name along with high returns. A well established brand name gives Nintendo an edge over its competitors. Nintendo is the only company that has managed to capitalize on both hardware and software components. The biggest opportunity for Nintendo is to incorporate themselves into the online gaming market due to short product life cycles. Nintendo maintains their competitive advantage through superior game and character development, for which it often owns the legal rights. In a technical comparison of the Wii against its major competitors, it is substantially outperformed in speed processing, memory, storage, networking, video output and multimedia output. If Nintendo wishes to maintain a competitive advantage, the niche market must be penetrated while maintaining the integrity of the Nintendo brand image. Nintendo Black would become a subsidiary company of Nintendo Co. Ltd. that will operate with a mission to specialize in advanced technological specifications to consoles that will compete with Microsoft and Sony. If the proper measures are taken then Nintendo has the opportunity to continue to position itself as an alternative to the gaming experience while increasing the level of competition for its rival companies with its subsidiary company.

Mission and Strategic Development
Nintendo Co. Ltd. is a longstanding member of the home entertainment software industry that has embarked on a mission to offer the highest quality products and services while treating their customers with attention, consideration and respect (Nintendo, 2009). In doing so, Nintendo Co. Ltd. has developed a strategy that has allowed them to offer a unique gaming experience which appeals to a larger consumer base, while maintaining competitive affordable prices. Unlike its competitors, Nintendo Co. Ltd. has earned consumer confidence in its industry through an established brand name known for inventing the video game console. Competitors such as Sony and Microsoft have entered the industry after finding success in the electronic hardware and software industries respectively. Despite opportunities for entry into the industry, Nintendo Co. Ltd. is the only company that has managed to capitalize on both hardware and software components. This is due in part to a strategy that focuses on the purchase of inexpensive components rather than making them in-house (Schoenberger, 2008). Sony’s Playstation 3 retails for $300, which is less than the actual cost, thus causing Sony to lose money on each console sale. Nintendo however is able to offer the Wii Console for $260 and has managed to earn a $6 profit on each unit sold (Schoenberger, 2008). In comparison, Microsoft’s Xbox 360 is sold at cost, equal to that of the Playstation 3 at $300 per unit (Schoenberger, 2008). Aside from earning revenues from the sale of hardware systems, Nintendo Co. Ltd. has also found a way to compete with the pricing of games. The average cost for a Wii game is $50 compared to $60 for games by each of Nintendo’s competitors (Schoenberger, 2008). The competition is able to afford losses on their consoles by earning revenues in the form of licensing fees from third-party developers (Schoenberger, 2008). Nintendo’s strategy thus far has been to take advantage of their video game development capabilities...
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