Environmental Factors And Strategies For Nintendo In The Gaming Industry

Environmental Factors Affecting Nintendo

Nintendo is an organization in the gaming industry that has transformed over the years it has been operational. The company has been recording huge sales and profits except for its recent product; Wii U. the external and internal environmental factors have affected the company both positively and negatively. However, the company has identified areas of change, and it has drafted strategies that will make it successful. The case analysis will look at the environmental factors that affect the company as well as the possible strategies that can help the company to overcome the factors.

Nintendo has been in many industries from its establishments, but currently, it has heavily invested in the gaming industry. The gaming industry has been growing at a high rate, and this has seen the organizations that are in the industry increase their profits. The industry has become diverse, and in the modern day, one does not need to buy the gaming devices, and this is because of the availability of games on mobile phones (Avlonitis, and Lionakis, 2015). The industry targets the young consumers in the market, and it has a potential for continued growth. The needs of the customers in the industry are associated with advanced technology and enhanced innovations. The most advanced games in the industry act as attractions to the customers in the industry. Continued innovations in the industry have helped to increase the variety of products that customers can choose from.

The age and gender of the customers have an effect on the company. The products of the company target the young members of the society. Therefore, it is apparent that the availability of many young persons in the society will add to the success of the company. However, a decreased number of the young persons would go a long way in affecting the company negatively.

A deteriorated economy where the cash flow is limited and the members of the society are financially stable will have an adverse effect on the company. Games are not basic needs, and this means that they are purchased after meeting the basic needs are met (Savino, Manzini, and Mazza, 2015. Therefore, limited purchasing power would mean that the customers would not prioritize the products of the company.

Natural forces come to affect the organization’s business from an environmental perspective. Adverse natural forces affect the environment thus affecting the behaviors of the consumers (Ahuja, Sawhney, and Arif, 2018). Therefore, the concentration of the consumers might divert leading to adverse effects on the products of the company.

Rivalry Among Competing Firms

The availability of other organizations at the global level that manufactures the same or better products is likely to affect the company negatively (Barney, 2017). At the same time, the level of demand in the global gaming industry would have an effect on the company, and this is because the company also sells its products to the global customers.

Advanced innovations have an effect the products in the market. The gaming industry is growing at a very high rate, and that means that advanced technology comes to help in innovating better games. Advanced technology would affect the company’s products because the products introduced to the market by the competitors might be more advanced than those offered by the company. As a result, the customers might opt to buy from the competitors as opposed to the company.

Political decisions made in the countries of operations have an effect on the company. For example, restricted markets and increased taxes are likely to slow down the growth of the company.

The adoption of a culture that promotes games would affect the company’s products positively. However, the restriction of games in some cultures would affect the company adversely.

The threat level of new entrants in the gaming industry is low. The gaming industry is demanding, and it needs a huge capital, and at the same time, the professionals need to possess exceptional skills. Therefzre, it is a challenge for organizations to venture into the industry.

The rivalry level of the competing firms is high. Other gaming companies like Microsoft and Sony have been working around the clock to come up with more advanced products to beat the products of Nintendo.

Advanced technology has increased the threat levels where it comes to the availability of substitute products. Smartphones are installed with games, and this has led to some gamers opting to use the games rather than purchase the games from Nintendo.

The bargaining power of the buyers is high, and this is because of the types of customers that consume the products of Nintendo. Considering that games are a luxury in the community, the customers have the power to affect the prices of the products by demonstrating against the prices that they might feel are unfair.

The bargaining power of suppliers is low, and this is because the company can directly reach its customers. Technology has helped the gaming companies to sell their products using online platforms, and that eliminates the involvement of the suppliers. Therefore, the suppliers might not play a significant role when it comes to determining the prices of the products. 

The Firm’s Resources; Tangibles and Intangibles

The competitors in the industry have the same objectives as Nintendo, and that is to provide products that are advanced in technology and meet the needs of the customers. Currently, the production of 3D games is adopted by the competitor and Nintendo, and that means that the competitors and the company seem to be competing on the same level. The future of the gaming industry is unpredictable, and this is because the industry depends on technology and technology is advancing at a high rate. However, the company can utilize its strength of investing in technology and using e-Shop to reach as many customers as possible to beat the competitors.

The external environment presents an opportunity for the company to grow and increase its products. The reason behind it is because the external environment has presented the company with some of the challenges that ought to be addressed (Feijoo, Gómez-Barroso, Aguado, and Ramos, 2012). By knowing the challenges, the company has an opportunity to work on its strategies to make sure that it is competitive. The threat of stiff competition cannot be assumed as far as the external environment is concerned (Bergeron, 2006). The competitors want to achieve the same goals as the company, and that means that if Nintendo does not outsmart them, they might outsmart the company which is likely to affect the company adversely.

The tangible resources that are available at Nintendo are numerous, and this is because of the nature of the products that the company manufactures. The resources include; machinery, cars, computers, buildings, and land. These are resources that promote the production of goods at the company, and they are visible and tangible (Helfart, 2017). The intangible resources are the essential resources in the gaming industry. The resources that the company has at its disposal are human resource, patents, and software. The three resources are the most significant in the gaming industry.

Nintendo has different capabilities that can make it a fierce competitor in the gaming industry. The capabilities include presenting innovative products to the market and reaching a wide range of customers (Feng, Morgan, and Rego, 2016). The innovative capability is evident in the two most recent products of the company; Nintendo 3DS and Wii U. the two products are advanced in technology and better than the previous products launched by the company. At the same time, the products have proved to be competitive in the gaming industry (Fraj, Matute, and Melero, 2015). Therefore, it is apparent that Nintendo is capable of investing in technology to present products that are outstanding in the market. Nintendo has the capability of reaching a wide range of consumers, and this has been seen through its launch of e-Shop. Nintendo has a platform that allows its products to reach the customers through the internet. E-Shop is a platform where customers from different parts of the world can buy and download the games of their interest (Subramanian and Gunasekaran, 2015). The availability of a platform that can reach many customers shows the capability of the company in reaching many customers.

Opportunities Presented by the External Environment

The aspect of value addition at Nintendo is embraced and made the routine of the company. Looking at the history of the company, it is evident that it has grown from an organization that manufactured playing cards to an organization that is dealing with modern games (Jaligot, Wilson, Cheeseman, Shaker, and Stretz, 2016). The upgrading of Wii to Wii U is an indication of how value addition at the company is highly embraced. The company has demonstrated that it has the capability to transform its products from one state to another with the aid of advanced technology ( Kalkan, Bozkurt, and Arman, 2014). In marketing and distribution, Nintendo has also proved to be effective and to be capable of giving the competitors a hard time. The invention of a marketing platform where at the same time the customers can purchase the products of Nintendo shows that the company is doing well in adding the value of its functions.

The weakness that is evident at Nintendo is the failure to advance in terms of having diverse platforms where its products can be accessed. The competitors of Nintendo have advanced and are using different platforms to market and sell their games (Gereffi and Fernandez-Stark, 2016). However, Nintendo is still not available for mobile and online gamers. Considering that the targeted customers are users of smartphones, it is a weakness for a company to lack games on smartphones.

Strengths

1. The company has been in the industry for a long time, and therefore it has mastered and understood the industry (Chia, 2016).
2. Nintendo has innovative employees, and they have been involved in developing advanced games.

Weaknesses

1. The company has failed to avail its products to mobile and online gamers.
2. Branding of Wii U has not been done well leading to decreased sales.

Opportunities

1. Nintendo has the opportunity to reach more customers through partnerships.
2. With e-Shop, Nintendo has an opportunity to sell its products to a wide range of customers.

Threats

1. The competitors in the industry are a threat. PS4 and Xbox one which was manufactured by the competitors came to affect the sales of Wii U.
2. Technological advancements and the changing needs of the customers in the gaming industry are a threat, and if not addressed, they might lead to declined sales.

Currently, Nintendo has focused on two essential strategies, and they are innovations and distribution. The company is working around the clock to make sure that it introduces products that are competitive in the market. As a result, this has seen the company come up with Nintendo 3DS and Wii U. the second strategy is associated with the distribution of its games. The company has introduced a new platform known as e-Shop (Yip, 2015). At e-Shop, the customers are given a chance to shop the products of the company from the comfort of their homes.

Nintendo has the intentions of taking its products to a higher level and exposing them to more customers. The company has the intentions of taking its games to the online platforms and also making sure that the games are available on smartphones (Peng, Peng, and Chang, 2018). The strategy is aimed at making sure that the company continues to reach more customers. Nintendo has a plan of working together with DeNA; a mobile developer. The partnership comes in place to make sure that the company is in the best position to increase profits and meet a wide variety of customers.

Conclusion

In the business world, the external and internal environments have effects on the progress of the company. Nintendo has done well over the past years, but it is facing a challenge with its recent products. The declined sales of Wii U indicate that an organization can be affected by other external and internal factors. However, the company has an opportunity to redeem itself and continue making profits by exploring the markets that it has not and working in partnership with other organizations.

References

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