Critical activities for the company in regards to its current status -- that is, ignoring the need for continued innovation and the eventual development of the next generation of game console, which is no doubt already in the works -- include maximizing production capacity and distribution capabilities. Generating operating capital does not seem to be an issue for the company, and sales and marketing efforts also appear to be successful. Though critical aspects of Nintendo's business, these do not require a great deal of change as they are already successful aspects of Nintendo's operations and overall strategy. The activties that are the most strategically important for the company in the long-term at this stage, in addition to the need to increase production capacity for the Wii, is to continue to be a leading innovator in the video game industry, with Nintendo distancing itself still further from its competitors and establishing a truly separate niche or series of niches for itself.
Rivalry
Nintendo's position relative to that of its competitors is the result of a complex set of factors not entirely detailed in the case study. With its innovation and the low cost of production/low price to consumers, Nintendo appears to be relatively strong, and a strong, broad, and loyal consumer base also assists the company in it competitiveness. Sony and Microsoft, however, Nintendo's two major competitors, have many different departments and product offerings unrelated to the video game industry, providing them with more stability and much larger company-wide revenues and levels of operating capital, adding to...
A change in pricing (I.e. making the unit more expensive) could also be warranted, which would make an adjustment to the demand curve on its own; the fact that consumers were willing to spend double or even triple the retail cost of a Wii in order to purchase one via Ebay and other online resale sites suggests that the profitability of these units could be higher than it currently is. A combination of increased supply through increased production capacities and a slightly decreased demand by raising the per-unit price would increase the company's profits and help the company to operate more efficiently according to the macroeconomic principles of supply and demand.
The other major issue that should be of concern to management at Nintendo is increasing the potential profitability and minimizing the risks to game developers. This issue is difficult to balance with the continued innovation that the company also needs, and that has been a definitive trait of the video game console manufacturer since 1979 when its first games rolled off the line. Finding a way for cross-platform game design to be facilitated without limiting the innovative aspects of the Wii would be of enormous benefit to the company and increase its appeal and potential profits exponentially through licensing fees and increased unit sales.
