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Case Analysis of Nintendo

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Submitted By babyann11
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Case Analysis Of Nintendo.

Introduction

Nintendo was established in1889 and was founded in Tokyo Japan. At that time it used to sell playing cards and had its hands in other businesses as well. Later in 1985 it entered the video game market and since then has come up with numerous products for the game lovers like the playboys and Wii etc. Some of the most memorable efforts by Nintendo are Mario Bros. and The Legend of Zelda which created a landmark for Nintendo. The company with its Wii introduction in 2006 has managed to take the share from its competitors and the product has managed to create a sensation in the market. (Corporate, n.d.)

Case Analysis

Statement of Problem

A problem statement identifies the key problem in the case which is at times evident while at times it has to be found between the lines. (Steiss, 2003) Nintendo responded to its competitors by creating a new category for the non-game lovers by providing them easy games. They did not even try to compete with the advanced technological games for the hard core game lovers. This would cause them to lose the customers because once people have played a lot of these games they would want to switch to some difficult or more technological games which Nintendo does not offer. Thus, it might harm the company as those people would then switch to other brands. The only reason why Nintendo created a new category overall was due to the reason that it could not compete with the technological advancement of its competitors. Thus the problem statement would be “Nintendo does not have enough resources to spend on the technological aspect of the games. It could be said that the company is not as tech savvy as the competitors in the industry.”

Relevant Facts from the Case

When the competitors Sony and Microsoft came up with some cutting edge technological games, Nintendo had to face a lot of downward shift in terms of their sales because their product was not as technological and as the Xbox and play station. As they could not compete with the state of art technology used by the competitors, so they shifted into a new category over all and started catering to a different target market. The company with Wii is catering to the non gamers with easier and less tech savvy games leaving the hard core gamers out of their target market. This can later become a problem for the company because once the non gamers have played a lot of it they would want to shift to a more technological game in general conditions. Then since Nintendo is not providing such games so they would shift to its competitors. In this manner there is a chance that the company might lose their target market.

The price at which Nintendo is being offered is very less as compared to its competitors which can easily portrays the difference in the technologies used by Nintendo and its competitors. Though Nintendo is adding more and more features to its Wii but still it has completely neglected a major portion which can be served very profitability which is that of the game lovers who are even more brand loyal as compared to the non gamers.

Additional Data

Nintendo is the market leader in the industry where Sony and Microsoft are seen following it. The sales for Nintendo Wii have far outreached the sales of its competitors. Nintendo focuses on the nontraditional gamers aggressively who constitutes for the 36% of the market which is between the age group of 18-24. Nintendo is viewed as amore of a family oriented gaming which focuses more on family and wholesomeness and is also user friendly at the same time. (Bogner, Hung, Wang, & Wan, n.d.)

Assumptions

The assumption for this case would be that Nintendo would not be able to match up to the technology of its competitors which are Sony and Microsoft. Since the case said that it did not even try to compete with the games with high tech graphics by its competitors rather it preferred going into a completely new segment and left the hardcore gamers not catered. It is assumed that the company does not have enough resources and expertise to compete in the field of technology with its competitors.

Identification of Alternatives:

Following could serve as the alternatives for the current problem:

* Could create a separate category overall for the traditional gamers by making complex games which might not be as technologically sound as the competitor’s but would require more of mental processing and other qualities that the gamers look for in a game other than the graphics.

* Outsource the technological part of the game development as the company itself is not able to compete with its competitors. By outsourcing the whole thing, Nintendo would be able to save its resources that they may be implying for the development of technology and that resources can be used in what has now become their forte that is developing games for the nontraditional gamers. By focusing all the resources over here, Nintendo would be able to sustain its position in the non traditional gamers market. (Carbaugh, 2008)

* Nintendo can collaborate with the technological companies that develop games. By this they would not have to use their resources for the technology advancement while the company with which it has collaborated will be completely responsible for the technological part. (Abramson & Kieffaber, 2003)

Evaluation of Alternatives

The traditional gamers might also look for factors other than technological advancements and graphics. The company should look for those factors and incorporate those in its games in order to attract the traditional gamers. This would require an extensive research and a complete strategy would be required to change its positioning from family oriented game to also the games for traditional gamers. The advantage of this would be that the company would then be catering the whole market of gamers which would mean more revenue. But the whole process for research and implementation would require a lot of time and money to the company. (Wimmer & Dominick, 2003)

The second alternative would take away all the hassle from the company as every responsibility would then be of the outsourced company. Nintendo could outsource it to the best company and thus get technology which would be good enough to compete with that of Microsoft and Sony. This would have a lot of advantage as the company would then not have any burden regarding the technological operations and could also get the best technology. (Carbaugh, 2008) The disadvantage of this would be the cost which would be very huge (Bogner,Hung, Wang, & Wan, n.d.).

The third alternative would get another reputed company on Nintendo’s board. By this Nintendo will work in collaboration of the other company that will master the technology aspect. By this it can take advantage by the other company’s name by co branding itself by the other company’s name and the other advantage would be of the technology that it would get from the other company. Since this collaboration will only be for the products for the traditional gamers thus the profit sharing would also be restricted to those products only. The disadvantage could be that Nintendo would lose the autonomy as then it will be two companies operating on equal shares. (Tamm & Luyet, 2004)

Recommendations

I think that the third alternative would be the most suitable in Nintendo’s case. By this it would be able to compete with Sony and Microsoft as it will then have the technologies due to the other company. This will serve as the solution to the major problem as it will then serve the traditional gamers market without spending too much itself. It will have a company collaborating with it which will take care of the technologies and Nintendo would not have to spend too much for it then. Nintendo will be able to serve the rest of the market which currently it is not serving due to its lack of technologies. (Bogner, Hung, Wang, & Wan, n.d.)

Implementation

The implementation could be done by first approaching various companies with a proposal. The proposal should offer them enough to attract them in collaborating with Nintendo. Once the interested partner is found a mutual agreement could be done which would declare the two companies’ partners for certain unit or units (as required). Then this would follow the process of collaboration in designing and getting products to the market. (Munkvold, 2003 )

Conclusion

The case presented was a success story of Nintendo but still one problem that could be identified was that of lack of technology. The company was not able to compete with Sony and Microsoft in terms of technology so it decided to create a new category over all. Various alternatives have been given in the analysis of the case but the one selected to solve the problem is collaborating with other company that masters in gaming technology. By this Nintendo would be able to cater to the rest of the 64% of the traditional gamers in the market. (Sherman, 2010)

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