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Nintendo Wii Case Study

Essay by   •  February 5, 2012  •  Research Paper  •  1,254 Words (6 Pages)  •  1,974 Views

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CASE ANALYSIS

Nintendo's Wii

COMPANY NAME: Nintendo Co., Ltd.

INDUSTRY: Video Gaming Industry

COMPANY WEBSITE: (http://www.nintendo.com/)

COMPANY BACKGROUND/HISTORY/TIMELINE:

Nintendo Co., Ltd, was founded in September 1889 by Fusajiro Yamauchi. The company is primarily based out of Kyoto, Japan, with several smaller divisions in Canada, Germany, and also the United States (Nintendo, 2011). The company initially started as a card company, but later developed in into one of the world's most innovative and influential video gaming leaders in the industry. Satoru Iwata, the current president and CEO of Nintendo, is the fourth president of the company and took the position as such in May of 2002. The 2010 revenues for the company totaled 1.4 trillion, but this amount represents a decline in sales from the previous year by 22% (Bloomberg Businessweek, 2011).

SWOT ANALYSIS:

Strengths: Nintendo's creation of the Wii presented a more advanced, yet unique product that not only distinguished them from their competitors, but also allowed gamers to integrate older Nintendo products such as the GameCube and Nintendo 64 software with this wonderful new system. The Wii represented a system that gave not only high performance, but lower power consumption as well (Nintendo, 2011).

Weaknesses: From 2007 to 2008, the company faced many production issues, causing the company to struggle to keep the Wii in stores throughout the world (Dess et al. 2007, p. 273). One of the primary weaknesses of Nintendo during this time was their inability to properly foresee the demand of the product and could not give a definite date as to when the problems would be resolved. Another issue faced by the company was the sophistication of the system. Game developers found it very difficult to create or even convert games from consoles such as the Xbox 360 and Playstation 3 for the system due to its unique and advanced features (Dess et al. 2007, p. 274).

Opportunities: One of the primary opportunities that was addressed in the case study was the challenge Nintendo sought to reach a broad audience of people throughout the world (Dess et al. 2007, p. 273). The Wii system inspired people from all walks of life to pick up a game controller and experience true enjoyment. The primary reason for this was the ease at which people used the system's motion sensing-controllers to play games, allowing more experienced gamers and novice gamers to play with ease.

Threats: Upon reading the case, it can be inferred that the major threats towards Nintendo included those from Sony and Microsoft, who are both giants in the gaming industry. Apple is slowly emerging as well.

PORTER'S FIVE FORCES MODEL:

Threat of new entrants: With an abundance of smart devices being created from new power houses like Apple and the ease and price at which games can be purchased, Nintendo must remain vigilant in its endeavors to develop new products that protect their territory and deter new entrants from entering this industry.

Bargaining Power of Buyers: Nintendo offers high quality products and offers ones that distinguish them apart from their competitors, so I believe that it would be hard for buyers to drive down their prices especially since it is a fact that the Wii console could not stay stocked in most stores.

Bargaining Power of Suppliers: As stated in Chapter 2 of our text, the company's strategy could have been to sell the Wii at the highest price and trust that it's distinguishing features would drive sales. The cost for the consoles were relatively pricey for some consumers, yet the systems still sold. Sony and Microsoft could have marked down their prices to establish an advantage over Nintendo;

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