Nintendo – Strategic Analysis

Existing Business Strategy

Strategic competitiveness results only when the firm is able to satisfy a group of customers by using its competitive advantages as the basis for competing in individual product markets. A crucial business-level strategy decision is the one made about the target customers for the firm’s goods and services. Nintendo adopted the strategy of attracting non-traditional gamers aged 25 and above including women, parents, and old generation people Thus the product broke the wall that separated players and non-players, while the target market for the competitors were different. The extension of consumers was a distinct core competency that was developed by Nintendo by allowing both in-house and third party developers to develop games.

After the firm decides the target customers it must identify the needs of such customers that the goods or services of the firm can satisfy. Wii was one of the products that Nintendo identified in this respect. This enabled Wii to offer games that could be played by everyone in the family (Pawlina, 2008). Another interesting aspect of Wii is that it offered games which help the consumers do yoga and other light exercises to burn 40% more calories than other consoles.

Core competencies are resources and capabilities that serve as a source of competitive advantage for the firm over its rivals. By the year 2007, Nintendo could sell 5,84 million Wii consoles and 28.84 million units of game software because of the fact that Wii was compatible with the best selling games of the year 2007. This compatibility with the best selling games is an important factor that made the product successful. Wii could bring a complete to the video game industry by appealing to a wide range of users. The introduction of Wii has changed the average age of the gamers to 33 years. The success of Wii had attracted many renowned game developers as developing games for Wii cost 50% of the cost of developing games for other manufacturers. Through rigorous marketing efforts Nintendo was able to capture 46.7% of the global market share for video games.

Product line and product positioning strategies included the allocation of a large marketing budget which is the largest in the history of the company to introduce Wii in the market. The company positioned Wii as a low-budget alternative to PS 3 and Xbox 360 and as a pure gaming machine. The marketing efforts in the form of brand ambassador programs that identified three categories of customers; multigenerational families, hardcore gamers and modern moms and made representatives of these categories were made to play and exchange their experiences at the events organized by Nintendo has created the required hype for the product. The company also introduced massive sampling programs across different larger shopping malls throughout the country for the promotion of the product.

Technologies provide the basic capabilities needed to develop products or services as well as associated processes used in developing or delivering them to the market place. Even though Wii did not match the technological power of Xbox 360 (Microsoft) or PS3 (Sony) the product had a core competency of offering a new experience of playing video games (Wagner, 2008). The innovative product presented a low energy consuming wand-shaped wireless controller which in effect was of the same kind as a TV remote. The product has used the technology that enables the controller to detect the players’ movements in three dimensions which is a distinct technological competence as compared to the products of the competitors (Engadget, 2008).

Strategic Options in Realistic Terms

Strategic options are creative alternative action-oriented responses to the external situation that an organization is bound to face while introducing a new market or expanding the market for an existing product line. “Strategic options take advantage of facts and actors, trends, opportunities and threat of the outside world. Strategic options can be identified after an institutional assessment, keeping in mind the aspirations (basic question) of an organization. The tool ‘Strategic options’ helps to identify and make a preliminary screening of alternative strategic options or perspectives.”(MDF Tool, 2006)

The strategic options for Nintendo may include the following recommendations.

Recommendation Steps to Implement Who will be Responsible Who will do Finish by date
Development of New Games Market research and analysis of competitors’ products Research and Development R& D technicians April 2010
Product upgrades Technical research and feasibility studies Production Engineering Engineers in Production Engineering Department June 2010
Cost Reduction Analysis of product designs and production processes Production Engineering and production department Engineers and production technicians June 2010
New Game Introduction in the market Market research Marketing department Sales personnel September 2010

As exhibited in the above table the strategic options for Nintendo would include working on innovative ideas to create new games and to make updates in the existing product lines. Cost reduction which makes the company more competitive is another strategic option that the company can look at. Once the company is able to make new and innovative products and changing the product design to upgrade them, the marketing department has to take up the introduction of these changes in the market. Since innovation alone is the factor that would improve the marketability of the product the recommendation for focusing on development of new products is recommended as the major strategic option.

In order to take or maintain the market leadership position technologically sound products having different characteristic features than those of the competitors need to be developed by the company. The example is the Wii produced by the company which was a resounding success for the company. This calls for continuous research and development activity in the area of product development and redesigning. Cost reduction is another important area when combined with product excellence will provide an opportunity for the company to take or maintain the leadership. Innovative products with excellent working features would provide a product differentiation that makes the products competitive. The company should also strive to improve upon the core competencies in technological areas which also enhances the opportunities for the company to maintain the leadership position.

References

Engadget, 2008. Nintendo Prepping WiiHD for 2011.

MDFTool, 2006. Strategic Options. Web.

Pawlina, M., 2008. Top 10 reaaons why Senior Citizens Love Nintendo. Web.

Wagner, J., 2008. Why the Wii could win the World (but probably won’t).

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