General Environment Analysis
This report aims to present a strategic management plan in the case of Nintendo Co. Ltd., Japan, as the company is facing several issues in various levels, standing on the verge of ninth generation of video games console (Pikachu, 2018). Currently the company is operating in various genres of video games, which have been expanded worldwide. In order to ensure a prosperous future from the very beginning of ninth generation, a strategic plan of managing the business operations would be a smart approach to adopt. Therefore, according to Cennamo and Santalo (2013), this report will identify and analyse issues in the general environment first, then it will seek for the competitive strategies, needed against competitors. Apart from that, identifying internal loopholes are important part of considering a strategic approach. Several internal and external aspects will be evaluated in order to find out its capability to enter into the market with improved products. Recommendations will be mentioned to mitigate ongoing issues, as well as proper justification will be included for every suggestion. A list of future strategies will help the company to sustain the position in the market.
Nintendo Co. Ltd is a Japan based MNC, which deals with electronics and software. In order to say more precisely, the company manufactures and designs cards and toys. However, at the end of 1970, they shifted their focus into video games and the response was huge from corners of the world. Their journey started with creating and launching Colour TV games, which has been differentiated into 3D computer games and mobile games as well with the progression of technology. Both the sales of hardware and software receives competition from companies like Sony and Microsoft’s Xbox one. Yet the company has been struggling through the competition to ensure a sustainable position in the market.
For the sake of the dynamic business atmosphere organisation has opted for online selling of products as well. Australian society is into the practice of playing video games immensely both in a traditional way of playing home video games or with the help of portable computing devices. Considering the fondness of gaming among Australians the organisation is trying to revising their strategic plan to ensure a prosperous future (El Namaki 2013).
- Demographic factors such as age, gender, culture of the citizens of a particular area influence the business performance of a certain organisation. It has been observed from surveys conducted in 2016, Millington (2016), that around 68% of Australians play video games in order to improve coordination and to stimulate mental condition. This proportion is continually increasing. Generations, who grew with the gaming culture prefers to play games even now as a mode of recreation and has become addiction to some extent (Lahti 2013). As per the study of Fox and Tang (2014), considering the craze of games among teenagers and interest of older generation; average age of an Australian gamer is 33, whereas female gamers have occupied 48% of the total number.
- Economic forces are dynamic as it depends on the market competition, rate of unemployment and fiscal policies of a certain demographic area. While launching a game with the purpose of gaining a market share organisations must consider annual household earnings of the target market. In the case of recession or inflammation, company will be at stake, as the buying power of consumers will decrease.
- Technological innovation with the progression of time is important as video games industry has several giant organisations. Nintendo has invested in R&D technology to compete with major competitors. Product innovation must be unique and non-imitable to avoid failure. Considering the multiple electronic devices if games can be compatible enough to give output in both the computers and television set acceptability will be higher. Required development of software is needed according to the rate of advancement.
- Gaming culture is very much present in Australian society. People who have grown up with the progression of technology and experienced the evolution of video games are immensely interested in playing games. The number is consistently increasing as the number of handheld devices are present everywhere (Lucero et al. 2014).
- As per the study of Tsang and Park (2013), favourable political climate and stability, government’s regulation regarding fair business practices help Nintendo to execute business operation smoothly both via physical stores and e-commerce sites. The company itself does not encourage practice of piracy in the matter of game consoles.
As Nintendo has opted for more than single supplier, the bargaining power has become moderate in this course and as at the same time the company realises extreme competitive market. The company has a strong brand image; hence, suppliers find it difficult to choose other companies over Nintendo.
Competitive Strategies
Although gamers lose their purchasing power under a pressure of recession, buyers’ power can be marked as high as the proportion of gamers has increased irrespective of demographic categories. In order to survive recession retailers share a moderate power when it comes to buy video game consoles.
Nintendo face high competition from Sony mostly as both the companies provide premium products at high price and use of advanced technological innovation can be noticed in both the brands. Microsoft’s product line is more expensive and extra ordinary. The company is capable of influencing every demographic factors of the target market. Whereas, high intensity of rivalry can be identified here, Chinese products have low competence to compete with Nintendo.
Nintendo has covered the market of arcade and mobile games largely, therefore from there threat of substitution is relatively low yet the company must rethink to innovate new PC games as the company has neglected that area for a long span of time (Dhillon, Seldon and Vadlamani 2014).
Nintendo has been operating the market since 1975, and by now, it has established their distribution chain globally along with a reliable brand image. Threats from new entrants carries a low potential to damage the market position of Nintendo.
- The company’s capability of differentiation and development is higher due to years of experience.
- Emergence of online store will help to increase the number of subscribers (Fong and Yazdanifard 2014).
- Their practice of maintaining operational cost lower and monetary resources derived from previous success is enough to capitalize future innovation.
- The availability of gaming equipment has increased with the technological advancement. Apart from that, premium companies like Sony and Microsoft are its strong competitors and hold a large proportion of market share.
Tangible resources of Nintendo is their Australian audiences. Starting from the age of 10, even people of 55 years of age consider gaming as their regular routine. The average age of a gamer is 33 and the number of female players are increasing day by day. Nintendo mainly deals with software and metal or plastic body, which may not be environment friendly. However, technological advance has made the nature of gaming virtual and least to do with environmental purposes (Andreassen et al. 2016).
With almost 60 years of experience in the video games industry, excluding the recent downfall in market share Nintendo has extensive knowledge and human resource to innovate within gaming industry (Stanislavov and Ivanov 2014). No question can be raised against its brand image and popularity even if the company face extremely competitive business environment.
- Having a strong HR background the company can predict the future of gaming industry by adopting technological innovation.
- Effective use of marketing strategy can be noticed in its previous operations, which makes it one of the recognisable brands in Australian market.
- Smart use of financial resources like keeping the production cost low as compared to competitors, yet they deliver high quality products.
Core competencies are related to the company’s capabilities mostly. Creation of casual games keeping the operation costs consistently low can be taken as one of the core competencies of Nintendo. Strong brand image has already been developed, as the glorious history can be associated with it. Moreover, as described in Miller et al. (2013), their department of in-house game development is unique and non-imitable for other emerging companies.
Internal Evaluation
In order to fulfil the demand of market, both the inbound and outbound logistics must be taken care of. The company decided to opt for various suppliers to decrease the power of them, recruitment of skilled staff to handle the materials and inspect the warehouse. The success of outbound logistics depends on efficient picking, shipment and delivery of the material including in-house installation. Operational activities including maintenance, packaging and effective conversation must be executed in a professional manner.
Demand has to be generated by establishing distribution channels, various promotional strategies, and communication with the customers. The point of sale depends on highly on these aspects. Moreover, to support the entire business operations, according to Repetti and Jung (2014), efficient practice of purchasing raw materials, technological support regarding product design and development, recruitment of efficient human resource and both the financial and IT infrastructure must be updated according to the market demand.
The market is suffering from the after effect of recessional pressure. Acknowledging the low purchasing power the company must innovate some product or marketing strategy to maintain the sales and profitability to the highest extent. Extreme competition and lower competence to compete with Sony and Microsoft in the area of technological innovation is responsible for their recent downfall of market share.
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The company’s current business model includes few static yet strategic principles. Those are as follows.
- Keeping the operation cost low to ensure better profitability and use them for future innovation or crisis.
- Development of casual games are successful to create a simplistic approach to the gamers making it widely acceptable for the every age group (Whitbourne, Ellenberg and Akimoto 2013).
- Their focus is to develop an advanced gaming concept not to install high technological specifications.
- Entire operations of the company is extremely customer oriented.
- Differentiation is necessary to sustain the business in a competitive environment. Therefore, strategy should be a combination of market demand and product specification. The company will stick to its policy of creating family engagement keeping the specifications simple and casual. In order to diverse, the product quality company must consider partnerships to gain financial support to innovate new technological aspects. Besides, company can think of developing online games as well considering teenagers’ perspective (Stein and Scholz 2016).
- Besides, improved customers’ service depart, online chatting and feedback collecting facilities can make the service and operations better than it used to be.
Conclusion
It can be stated to conclude that, if Nintendo wants to sustain their historical position in the gaming industry they must incorporate trendy technologies and creative ideas into the system in order to make it widely acceptable. This brief strategic management plan has tried to cover major areas of marketing which should be taken under consideration to improve gaming experience of the Australians who are still trusting the heritage of Nintendo.
References
Andreassen, C.S., Billieux, J., Griffiths, M.D., Kuss, D.J., Demetrovics, Z., Mazzoni, E. and Pallesen, S., 2016. The relationship between addictive use of social media and video games and symptoms of psychiatric disorders: A large-scale cross-sectional study. Psychology of Addictive Behaviors, 30(2), p.252.
Cennamo, C. and Santalo, J., 2013. Platform competition: Strategic trade?offs in platform markets. Strategic management journal, 34(11), pp.1331-1350.
Dhillon, J.S., Seldon, J.A. and Vadlamani, B.L., P4RC Inc, 2014. Social enablement of mobile casual games enabling mobile users to connect within and outside games with other mobile users, brands, game developers, and others online, on mobile devices, and in social networks. U.S. Patent 8,762,197.
El Namaki, M.S.S., 2013. Strategic thinking for turbulent times. Ivey Business Journal, 77(4), pp.1-4.
Fong, K. and Yazdanifard, R., 2014. The Review of the Two Latest Marketing Techniques; Viral Marketing and Guerrilla Marketing which Influence Online Consumer Behavior. Global Journal of Management And Business Research.
Fox, J. and Tang, W.Y., 2014. Sexism in online video games: The role of conformity to masculine norms and social dominance orientation. Computers in Human Behavior, 33, pp.314-320.
Lahti, M., 2013. As we become machines: Corporealized pleasures in video games. In The video game theory reader(pp. 179-192). Routledge.
Lucero, A., Karapanos, E., Arrasvuori, J. and Korhonen, H., 2014. Playful or gameful?: creating delightful user experiences. interactions, 21(3), pp.34-39.
Miller, K.J., Adair, B.S., Pearce, A.J., Said, C.M., Ozanne, E. and Morris, M.M., 2013. Effectiveness and feasibility of virtual reality and gaming system use at home by older adults for enabling physical activity to improve health-related domains: a systematic review. Age and ageing, 43(2), pp.188-195.
Millington, B., 2016. Video games and the political and cultural economies of health-entertainment. Leisure Studies, 35(6), pp.739-757.
Pikachu, D. (2018). Nintendo – Official Site. [online] Nintendo.com. Available at: https://www.nintendo.com/ [Accessed 28 Sep. 2018].
Repetti, T. and Jung, S.Y., 2014. The Importance of Finance and Accounting Competencies: The Gaming Industry’s Perspective. The Journal of Hospitality Financial Management, 22(1), pp.4-17.
Stanislavov, I. and Ivanov, S., 2014. The role of leadership for shaping organizational culture and building employee engagement in the Bulgarian gaming industry. Turizam: me?unarodni znanstveno-stru?ni ?asopis, 62(1), pp.19-40.
Stein, V. and Scholz, T.M., 2016. The intercultural challenge of building the European eSports league for video gaming. Case studies in intercultural management: Achieving synergy from diversity, pp.80-94.
Tsang, D. and Park, Y., 2013. How culture and government shape entrepreneurial innovation: the case of Korean and UK online gaming firms. Asian Journal of Technology Innovation, 21(2), pp.237-250.
Whitbourne, S.K., Ellenberg, S. and Akimoto, K., 2013. Reasons for playing casual video games and perceived benefits among adults 18 to 80 years old. Cyberpsychology, Behavior, and Social Networking, 16(12), pp.892-897.
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