Nintendo Case Study Performance Nintendo\'s

Nintendo Case Study

Performance

Nintendo's current strategy is not to be the best at what its competitors do, but rather to be a leader of innovation n the video game industry by trying to be the only one -- or at least the first -- to do what it does. That is, the company has not tried to simply produce a better (i.e. faster, more realistic, and more gamer-targeted) video game console with the Nintendo Wii, but to produce an entirely new and different kind of game console. While its competitors have tried to produce consoles that can support games with ever-better graphics and more intricate games aimed at traditional gamers (primarily males in their teens to mid-30s), Nintendo has focused on making a console with broad appeal and a truly diverse offering of non-gaming options. This strategy appears to be serving it quite well, as demand for the Wii has remained quite high and generated nice profits for the company.

Resource Strengths and Weaknesses

While Nintendo has proven its ability to attract and retain talent with a high level of innovation and creativity, an evidenced by the development of many of its consoles culminating in the Wii, a major resource deficiency is visible in the still-limited production of the Wii. The inability to maintain production levels that meet demand for the product is a major internal resource weakness for the company. External resource opportunities for the firm include a much broader base of appeal in consumers around the globe and reduced costs of materials for the Wii compared to competitors. An external weakness can be found, however, in the difficulty and risks that game developers face in creating games for this console.

Nintendo's core competence is its ability to innovate, and it has proven this ability time and time again but especially with the radical departure from other consoles that the Wii represents. The fact that Playstation is only now (in 2010, following publication of the case study) attempting to copy the Wii's remote is evidence of this competency, which is also highly distinctive. The ctual material resources needed by the company are also fairly common and less valuable (i.e. less expensive) than those used by its competitors in terms of absolute value needed per unit, which can be seen from the cost of production and the consumer price per unit for the Wii compared to the Xbox and Playstation. The limited game development and problems of availability that plague the Wii, however, could damage the company's key strength factor of innovation by limiting the degree to which the Wii's offerings can continue to expand and adapt to consumer trends and newly developed niches.

Price/Cost Competitiveness

Nintendo's value chain helps to contribute to the company's competitiveness in some areas, though there are problems and inefficiencies here, as well. The inbound logistics of the company are in need of adjustment to increase the supplies available for the manufacture of Wii consoles, and operations must also be enhanced to accommodate an increased production schedule. Outbound logistics are essentially functioning at maximum capacity, though this capacity would be improved through increased production. The marketing, sales, and service efforts of the company continue to make the Wii profitable despite the production problems, however.

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 their relative strength immensely.

Issues for Managerial Attention