Nintendo Company’ Internal and External Growth Strategies Report

Summary of the key findings

At the moment Nintendo is one of the leading developers of game consoles and videogames in the world. This company operates in a very competitive market; its key rivals are Sony Computer Entertainment, Sega Corporation, Apple, Nokia and so forth. Moreover, due to the intensity of the competition, the bargaining power of the customers is very strong. One of the key challenges, faced by this organization is the threat of substitute products; in particular, we need to speak about game emulators, which enable internet users to obtain their video games without paying any fee to the company¹. In 2007, the market value of this company constituted 85 billion dollars².

The competitive strategies of this enterprise are primarily based on product differentiation, which means that their products are perceived by the customers as unique. The most common example is Nintendo Wii, which was considered to be a breakthrough at the time of its release³. These are the key findings of this research; more detailed information will be presented in the next sections of this paper.

Strategic Direction

At this point we need to describe mission, vision, and values of this organization. According to the information that is presented at their corporate website, its vision can be formulated in the following way: to become the world leading developer of video games by providing only high-quality products and services to the customer (Nintendo Corporation, 2010, unpaged). Furthermore, judging from their corporate philosophy, we can single out the key values of this company:

1. quality;
2. uniqueness of design;
3. attention and respect of customer needs and expectations;
4. corporate social responsibility (Nintendo, 2010, unpaged).

These are the things that are of the highest priority for Nintendo Corporation. Finally, its mission is to develop video games and consoles that offer the best price quality ratio.

Stakeholders

Mendelow’s Power-Interest Grid was used to conduct stakeholder’s analysis of this company. This method shows stakeholders’ ability to influence the policies of the company and their interest in influencing the strategy (Angwin et al, p 39). Certainly, the key stakeholders of Nintendo are the purchasers of video games and consoles. Given the intensity of competition in this market and a large variety of products, we can say that customers can influence both pricing and production strategies of Nintendo. They have the highest power and interest to shape the policies of this corporation. Another group of stakeholders whose power should not be underestimated is mass media. The thing is that the outcomes of Nintendo marketing campaigns can be shaped by the attitude of mass media toward the company. However, their interest to shape company’s policies is relatively low.

Internal Growth Strategies

The study of internal growth strategies was based on the use of such tool as Porter’s Value Chain analysis. These took help us understand how the company conducts its internal operations and where their key strengths of Nintendo lie. For instance, by using Porter’s Value chain, we managed to single out those processes which are most important for the process of value creation, they are as follows: design of products, manufacturing, and marketing. The first two processes (design and manufacturing) aim to insure that Nintendo’s products meet such requirements as: 1) uniqueness; 2) reliability; 3) user-friendliness. In turn, marketing policies attract people’s awareness to the company’s products and form favorable about them. Thus, we may argue that the core competencies of Nintendo are connected mostly with inbound operations of this firm.

External Growth Strategies

In order to study external growth strategies of Nintendo, we applied such tool as Bowman’s Strategy Clock and Porter’s Model of Five Forces. These tools are particularly suitable for investigating the inner structure of the company and its operations.

In turn, with the help of Porter’s Model of Five Forces, we can point out to such difficulties, faced by this company:

1. threat of substitute products (emulators) that considerably decrease the revenues of Nintendo;
2. intense competition from Sony, Apple, Sega, and Nokia ⁴;
3. enormous bargaining power of the customers who can choose among a great number of video game developers.

These are the key issues, confronted by the management of Nintendo. The company prevents emulations of their video games and makes everything possible in order to create products that would be perceived as unique.

In turn, Bowman’s Strategy Clock⁵ has enabled us to gain insights into the company’s competitive position. On the whole, it can be called as a differentiation without premium prices, which means that Nintendo tries to add extra value to their products and make them original or unique on the one hand, without raising prices for them. As a matter of fact, only very few companies are able to do that. This competitive strength of Nintendo can be explained by the fact that this organization has vast experience in this field and can accurately forecast customers’ expectations. Moreover, this company targets a very vast audience: the purchasers of their products belong to different age groups: children, adolescents, and even adults. Furthermore, the percentage of adults, who buy Nintendo video games and games consoles, is continuously rising (Vorder & Brient, 205).

Conclusion

These findings indicate that at the moment, Nintendo can successfully withstand competition of their rivals mostly due to the efficient product design and effective marketing campaigns. The company’s financial success can also be explained by the fact that it pays special attention to the customer needs and expectation. This increases the perceived value of their products and enhances customer’s loyalty.

Bibliography

Angwin. Duncan. Cummings Stephen. & Smith C. The strategy pathfinder: core concepts and micro-cases. Wiley-Blackwell. NY. 2006.

Bowman, Cliff. and Faulkner, David. Competitive and Corporate Strategy. Irwin, 1996.

Nintendo. Co. Consolidated Financial Highlights. 2009. Web.

Nintendo. Co. Corporate Website. 2010. Nintendo. Co. Web.

Porter Michael. Competitive advantage: creating and sustaining superior performance : with a new introduction. Simon and Schuster. NY. 1998.

Reuters. “UPDATE 2-Nintendo sets $85 bln high score, thanks to Wii, DS”. 2007. Reuters. Web.

Vorderer. Peter & Bryant Jennings. Playing video games: motives, responses, and consequences. Routledge. London, 2006.

Footnotes

1. Nintendo. Co. Corporate Website. 2010 unpaged.
2. Reuters. UPDATE 2-Nintendo sets $85 bln high score, thanks to Wii, DS.
3. Nintendo. Co. Consolidated Financial Highlights.
4. Vorderer. Peter & Bryant Jennings. Playing video games: motives, responses, and consequences, p 217.
5. Bowman, Cliff. and Faulkner, David. Competitive and Corporate Strategy.