Introduction
SEGA is one of the most notable companies in the highly competitive gaming industry, and it is currently at a critical strategic point that will determine the development of the organization in the 2020s. After a crisis in 2000, the company recovered and achieved significant profits in 2020. Nevertheless, a large number of relevant competitors and a notable setback by COVID-19 have significantly obstructed SEGA’s progress. Based on the mentioned scenario and the analysis in Q1, the current report proposes a detailed outline of strategic options that can help SEGA strive in the video game industry.
Strategy Statement
The challenge we face is the increasing technological demand and the number of competitors in the video game industry. Our strategy will be delivered through a combined approach that emphasizes technological innovations and human resources development, which will allow us to improve customer satisfaction ratings and obtain a competitive edge over our rivals. We will develop our strengths, such as a unique view on video games, to continue providing a customer experience of excellent quality. Following these principles, we will achieve rapid growth in the 2020s, restoring the dominant position in the video game industry.
Core Strategy Statement Elements
First, the company will focus on the growth element to achieve higher levels of profitability. In addition, the sub-element of consolidation is present in the business plan due to short-term financial losses, which are inevitable in technologically innovative research. Nevertheless, the initial investments in hardware/software and HR development are critical to the overall growth of SEGA. Consequently, the company’s tactic focuses on product development and diversification. Sega adheres to these principles, promising to create a “super game” by 2026 (SEGA, 2022). ). Haruki Satomi highlights that this game will be “so revolutionary that it attracts far more active users than any of the Group’s games to date” (SEGA, 2022, p. 9). Hence, the approach focuses primarily on product development to gain a competitive advantage.
In addition, the international direction of development will help SEGA expand its scope of influence globally. It is particularly noticeable in the HR development practices that should emphasize diversity, multicultural teams, and workplace equity (Dirani et al., 2020). This issue is significant because of the company’s notable influence in the U.S. market that actively promotes social sustainability. As a result, multiple risk hiring policies that work in Japan might not be applicable in the United States, and SEGA should carefully consider the threats in HR development.
The primary method to achieve established goals is the combination of organic growth and cooperation. The former is supported by the company’s internal strengths, such as financial reserves and a healthy organizational culture. Moreover, the analysis in Q1 demonstrated immensely high parameters of the VRIN model. Hence, according to the resource-based theory, the company should prioritize its strengths to achieve long-term advantages (Hitt et al., 2020). In addition, the Q1 analysis demonstrated SEGA’s willingness to cooperate with Microsoft. This partnership can enable a large number of opportunities for SEGA, such as expansion on the PC video game market.
As a result, the competitive stance is differentiation, and this approach is the most effective method to separate the company from a large number of competitors. The strategic group will remain current with the addition of a relatively small number of competent professionals acquired via new HR development programs. Ultimately, the mentioned core elements of the strategic statement will allow SEGA to achieve greater profitability and influence in the video game industry in the 2030s.
A3S Framework
The two proposed recommendations for strategic development are upgrading the hardware/software capabilities (resource-based approach) and focusing on HR development. Both suggestions are appropriate, achievable, astute, and sustainable as per the A3S framework. The first option focuses on technological upgrades and innovations, and it addresses most of SEGA’s threats simultaneously. It is appropriate because the competitive edge will lead to improved customer satisfaction and product advantage to differentiate the company from its rivals. It is achievable due to the company’s extensive financial reserves and healthy organizational culture. It is relatively astute, but it might also cause elevated expectations among customers (Alvarez-Milan et al., 2018). After all, if the company fails to deliver products of the highest quality, such as the “super game” by 2026, it might face another backlash from the video gaming community (SEGA, 2022). Lastly, it is sustainable due to immense levels of long-term profitability and competitiveness.
The second option follows the principles of the A3S framework as well. It focuses on HR development, inclusion, diversity, and talent training. It is appropriate due to SEGA’s objectives to expand globally and the need to adjust hiring practices according to the region (Dirani et al., 2020). It is easily achievable and astute since most regions where SEGA operations acknowledge the importance of diversity efforts. Lastly, it is sustainable and creates positive social change in the workplace, improving organizational culture.
Execution Issues
The company faces a large number of internal threats due to corporate restructurings and prior crises. However, at present, the organizational culture is healthy and only requires slight changes to HR development (Q1 analysis). In the annual report, CEO Haruki Satomi highlights the importance of social sustainability, accountable management, and organized structure to succeed in the market (SEGA, 2022). According to the model of Bernard Burnes, the company is undergoing a relatively slow cultural change that happens simultaneously in various departments. At present, SEGA needs stability and employee support to mitigate the consequences of restructurings and ensure workers are protected. Moreover, the change occurs due to a clear vision/mission statement, focus on transparent goals, such as a “super game by 2026,” and continuous strategic development (SEGA, 2022). It is an appropriate choice for SEGA, which focuses on the company’s strengths and mitigates numerous execution issues.
Conclusion
Lastly, transformational leadership plays a significantly more significant role in SEGA’s management. It promotes a slow but healthy cultural change, emphasizing sustainability principles. Moreover, it is another driver of customer satisfaction and loyalty, similar to gender equality and green energy, in the United States, which is one of the two central markets for SEGA (SEGA, 2022). This approach ensures that the positive change stays long-term and facilitates further improvements in organizational culture.
Measures of Success
References
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Dirani, K. M., Abadi, M., Alizadeh, A., Barhate, B., Garza, R. C., Gunasekara, N.,… & Majzun, Z. (2020). Leadership competencies and the essential role of human resource development in times of crisis: A response to Covid-19 pandemic. Human Resource Development International, 23(4), 380-394. Web.
Hitt, M. A., Arregle, J. L., & Holmes Jr, R. M. (2021). Strategic management theory in a post‐pandemic and non‐ergodic world. Journal of Management Studies, 58(1), 259. Web.
SEGA. (2022). Integrated report 2022. Web.