Nintendos Disruptive Strategy free essay sample

With the introduction of their Wii console, they successfully disrupted the dominance of their rivals. However, competitors Sony and Microsoft are quickly gaining on Nintendo’s competitive advantage, forcing the company to monitor and reevaluate its strategies. To maintain a competitive advantage, Nintendo must look toward influencing customers of Sony and Microsoft, continue with developing innovative technologies, and also consider the impact of tablets and smartphones on the gaming industry. History of Nintendo In 1889, Nintendo Co. Ltd began its long history as a Japanese manufacturer of playing cards. The company went public in 1963, and by the 1970s Nintendo had begun directing its focus toward electronic toys and video games. Nintendo became a leader in the video game industry in the ‘80s with its home video game consoles and popular game titles. Competitors began to emerge in the ‘90s; the release of Sony’s Playstation platform broadened the video game market, and the rising popularity and improvement of PC technology led to the use of PCs as gaming platforms. We will write a custom essay sample on Nintendos Disruptive Strategy or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page While capitalising on the popularity of PC gaming, Microsoft developed and released its Xbox game console in 2001. While the competition focused on technological advancements to make improvements to existing game console, Nintendo developed its newest console with an ambitious design which uniquely competing in the market – The Wii family. The release of Wii in 2006 propelled Nintendo back to the top of the gaming industry thus secured its competitive advantage. However, since the release of Wii, Sony and Microsoft have been trying to play catch up with Nintendo with both companies releasing their own version of Nintendo’s wireless remote controllers called Playstation’s Move and Xbox Kinect respectively. At that point, they were trying to recoup the casual gamer market that was pioneered by Nintendo by publishing similar simpler games like Brunswick Pro Bowling for Sony’s Playstation or Kinect Sports for Microsoft’s Xbox (The Guardian, 2010). Nintendo’s Recent Products – 2008 to 2013 2008| Nintendo launched its viral fitness video game â€Å"Wii Fit† in the US with its unique peripheral platform Wii Balance Board. In the same year, Nintendo also introduced its successor of DS Lite, Nintendo DSi, a revised handheld console with two cameras and wireless access to its Nintendo DSi shop. 2009| Nintendo DSi XL debuted which features larger screens, and a greater overall size than the original DSi. | 2011| Nintendo launched a new handheld console, the Nintendo 3DS, which allows users to view 3D content without the use of special glasses. | 2012| The highly anticipated successor of the Wii, Wii U is released in the US market. | Table 1 : Nintendo’s Recent Products (Nintendo, 2013) The Wii U, the first entry in the eight generation of video games console, is the first Nintendo console to support high definition graphics which is on par with Playstation 3 and Xbox 360. The Wii U finally has the power that the Wii lacks, they support games like Assassin’s Creed 3, Call of Duty: Black Ops 2, and Ninja Gaiden 3: Razor’s Edge. This is maybe the turning point for Nintendo to finally please the hardcore gamer market and putting them in better position to pull them from Sony and Microsoft. The console was released in two versions; a Basic white set which comes with 8 GB of internal flash storage, and a Deluxe black set with 32 GB of flash storage. The Basic set is initially priced at $299 which comes with the basic stuff; the gamepad, a sensor bar and the necessary power and HDMI cables while the Deluxe set is priced at an additional $50 which includes everything in the Basic set with an additional package of a charging cradle, stands for the gamepad and console, and a copy of Nintendo Land (PC Magazine, 2013). Now, even with the graphic advancements and better features incorporated in the Wii U, the real innovation that Nintendo plans to surprise the market is the gamepad. Featuring a built in touchscreen, the gamepad can either supplement or replicate the gameplay shown on the main display. In another way, the gamepad offers asymmetric competition, where the player using the gamepad has one experience and wins in a certain way, while other competing players have different ways to play and win with the Wiimote. You can also bypass the console and stream games directly to the tablet which is basically called the â€Å"Off TV Play† function (Lynley, 2012). Situational Analysis In this twentieth century, video gaming has become a part of the world’s society and culture. Recent socio-cultural trend has shown that the image of video game consoles had been redefined. Since its first introduction, video game consoles sole purpose was only to play video games. At the beginning of this century, game consoles has gradually transformed into a multimedia stations which can stream music, videos, movies, surfing on the internet and online gaming. Evidence shows how the introduction of the Wii Fit by Nintendo extends its values to the society. Dr. Justin Liu, a chairman of Back and Trauma Rehabilitation at St Mary’s Medical, San Francisco, pioneered a Wii-Habilitation program at the hospital. â€Å"Patients love the therapy of Wii-Hab and enjoy the distraction and fun factor of the game as they retrain their weakened limbs,† Liu said. According to him, more than 200 patients have benefitted from the program which primarily uses the unique Wii Balance Board to carry out numerous exercises (Pang, 2008). In the economics point of view, while many developing countries are experiencing a strong economic recovery, Nintendo recorded a decrease of consoles sales by 52. 2 percent in 2012. This may show that its Wii consoles are nearing its product life cycle while losing its momentum in the period of 2006 to 2010. However, with the introduction of the Wii U, the market analysts predicted the compound annual growth rate of the console market to be at an average of . 3 percent in the period of 2012 to 2017 (Games Consoles in the United States, 2013). Recession may be pointed out as the reason the decrease of console sales. Many consumers were also already beginning to spend less money even before the recession began and this includes the middle to upper middle class consumers. Experts believed this new trend began as more consumers started to become more environmental conscious to excessive waste and consumption. However, many experts believed that a trend of increased spending usually follows at the end of a recession or during the beginning of the recovery (Flatters,2009). Nintendo’s SWOT Analysis Strengths| * Established brands generate customer’s trust * Diversified geographic presence * High quality, cutting edge technology| Weaknesses| * Declining financial performances * Dependence on third party manufacturers| Oppurtunities| * Growing online gaming market * Re-engage with core customers| Threats| * Exchange rate fluctuations * Short product life cycle * Intense competition; consoles and mobile gaming| Table 2: Nintendo’s SWOT Analysis (Nintendo, 2013) Strengths A company who has been in the gaming industry since the early ‘80s, Nintendo is the only company among the â€Å"Big 3† of Sony and Microsoft whose focus is only video games (which this is also a threat). They have the expertise and market awareness to generates brand loyalty among its customers. They have produced many world class products or franchises that have made an impact to the gaming world. Game franchises from its early introduction to the market like the Donkey Kong series, Super Mario Brothers or the Pokemon series which until today are still being reproduced and loved around the world. Although Nintendo’s main production plants are located in Japan, they maintain a presence in the Americas and Europe through its many subsidiaries. Its global presence allows the company to tap the potential market opportunities across the world (Nintendo,2013). The presence of Sotoru Iwata, CEO of Nintendo Co. Ltd, presents significant intangible asset to the company. His view and direction has guided Nintendo to produce constant high quality and cutting edge technology throughout the years. Weaknesses Nintendo witnessed a decline in its financial performance in recent years. Price reductions on its console and poor sales of the 3DS are the prime factors in its decline. Since its introduction in 2006, Wii gained momentum and continued showing success in financial performance in its early years. Up until 2010, the momentum has marginally slowed down and it did not help when Nintendo introduces the 3DS system. The company faces tough competition from Sony’s Playstation Vita and also from new entrants from its substitute markets such as Apple’s Iphone and Ipad (Buerk,2011). The company’s dependence on outside manufacturers, generally suppliers of electronic components, have more bargaining power than the buyer. The company could not control the supply of the component which results in losses of potential profits due to shortage of products. Opportunities The ever growing online gaming market in the middle of the video game consoles cyclical life presents an opportunity to Nintendo. The company has developed Nintendo Wi-Fi Connection and Nintendo Network which provides free online play throughout its compatible devices. With the introduction of the Wii U, Nintendo has a chance to reconnect to the hardcore gamer market with giving them what they want in a high resolution and firepower comparative to the Playstation 3 and Xbox 360. Threats Volatile exchange rates could negatively impact the company’s earnings. Nintendo operates its business in foreign currencies but measures its performance in Japanese currency. In the sense of the entertainment world, Nintendo faces a lot of threats from its traditional competitors, Sony and Microsoft, and also with other providers of different form of entertainment including the mobile phones and tablets. The short product life cycle entails to the whole interactive entertainment software market. In a market with frequent introduction of new products, Nintendo must strive to differentiate their products from the others to gain and improve their market share. Part 2: NINTENDO’ STRATEGIES Nintendo’s strategy of expanding the gaming population worked in 2006 with the release of Wii. They have managed to encourage as many people in the world, regardless of age, gender or gaming experience to embrace and enjoy the fun in gaming which constitutes as the casual gamers. However, this strategy is endangering in singling out and damaging their biggest customer base, the hardcore gamers. Prior to the release of Wii, Nintendo has fallen behind in the competition with Sony and Microsoft. With them being over dependent on their own software franchises and tight control over content of the games, Sony and Microsoft have gained the advantage of appealing to the hardcore gamers with their continued publications of sophisticated and epic storyline game softwares with third party game publishers. In May 2008, in one of its move to regain their biggest customer base, Nintendo loosened its tight content policies and launched WiiWare, an online channel for distributing downloadable games by small independent software developers. This strategic move is for the purpose of adapting to the changes in the environment surrounding the video game market thus increasing new business opportunities where they are giving the chance to the independent developers to find the â€Å"next smash hit† (Mokey, 2007). Witnessing the success its competitors had in reaching the market earlier than its rivals, Nintendo had copied this marketing strategy by releasing the Wii U, first game console in the new business cycle in November 2012. Sony and Microsoft are yet to release their Playstation 4 and Xbox 720 respectively at the time of writing. One can argue whether Nintendo is taking the prescriptive or emergent approach in its strategy development and implementation. According to its mission statement, â€Å"Nintendo are committed to producing and marketing he best products and support services available† (Nintendo Corp, 2012) shows that the company has the direction to define its business as fitted to the definition of a prescriptive management by Andrews (1971). However, taking into account the way Nintendo disrupt the game market with its Wii, by completely ignoring Sony and Microsoft and targeting the hole in the market with a simpler and cheaper system, we can see that there are also an element of emergent in its strategy innovation. According to Nag et al (2007), the field of strategic management deals with the intended and emergent initiatives taken by the managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their external environments. This shows that Nintendo have clear and logical plans in their directions and at the same time, they are also experimenting with other possible strategies. This report can now conclude that Nintendo is adopting prescriptive and emergent processes in its strategy development. Part 3: COMPETITIVE ADVANTAGE To explore Nintendo’s basis and its sustainability of competitive advantage, the report will now use Porter’s Five Forces as an analysis. Nintendo’s Porter’s Five Forces Bargaining Power of Suppliers Suppliers have strong bargaining power because of the dependence of Nintendo in its key parts of electronic components which ensure its console performance and production. They also pose as a threat as they could integrate forward and start producing their own gaming consoles as what Sony and Microsoft did. Bargaining Power of Buyers Buyers have a fair amount of bargaining power against Nintendo because of Nintendo’s lack of other portfolios in sources of revenue. If the customers decided to change preference in other type of entertainment, Nintendo would not have the capacity to retain them. Threat of Potential New Entrants In an oligopolistic structure dominated by three equally sized competitors; Sony, Microsoft and Nintendo trying to outperform their rivals to grab a greater share of the existing market, threats of new entrants is relatively low. High start-up costs and high risks in the industry present the biggest barrier. Threat of Substitutes In an entertainment market, there are strong threats of substitutes. Smart phones, tablets, home computers and online gaming are a few of the many substitute home entertainment products that consumer can use instead. Extent of Competitive Rivalry Sony, Microsoft and Nintendo fighting against each other for market dominance by trying to outperform their rivals with price cuts, marketing strategies and attribute differentiation, the competitive rivalry is very intense. However, in recent years Nintendo has come out on top with a competitive advantage with an innovative technology. Summary The basis of Nintendo’s competitive advantage lies in its management team; the Ramp;D team, marketing team and company’s management, headed by Satoru Iwata. Iwata’s vision and guidance gave rise to Nintendo’s Wii console and Nintendo’s game development house. Nintendo’s economies of scale are produced by the team effort of the company’s Ramp;D capability in innovative technology and its efficient manufacturing processes which enable them to produce the Wii U at a cheaper cost than their competitor’s game systems. Another core competency of Nintendo is its brand. The company has been an image to video gaming which is a very valuable and rare advantage. Part 4: Recommendations and Conclusion This report will now develop several strategic options for Nintendo to consider into the future. 1. Since the release of the Wii U in late 2012, certain features of the game system such as the TVii and the Miiverse, its own online community, has not live up to its potential to challenge its competitors. Nintendo should consider on improving these features to ensure its continued success from its predecessor, Wii. 2. Nintendo should also consider spending more money in aggressive marketing to improve sales while their competitors still yet to release their next game systems. 3. Another way of moving forward is to develop new policies for their game content. With the Wii U, now they have a capable platform to challenge their rivals in producing more mature games software to capture the biggest customer base there is, the hardcore gamer market. Conclusion In this oligopolistic structure, the video game market is growing very slowly and when a company wishes to gain dominance, it must take its sales from its competitors. Nintendo has been successful in identifying new market with its Wii series, but now they must shift their focus from puzzle and exercise games, and broaden their video game genres for more mature audience. However, this could mean breaking their traditional image of family friendly and a probability of backlash from the market. They will also have to shift their in-house game development and improve their relationship with independent game producers. With the Wii U, they now have the platform to gain sustainable competitive advantage over their competitors.

Research Paper

Research Paper Like most Disney material, nature themes were incorporated into the earliest parks, including Adventureland, Frontierland, Natures Wonderland, and the newest, Animal Kingdom. Disney carefully edited these natural settings that show the less wild side of the wilderness. However, how does the tourist comprehend the illusions? How are the plants and animals adapting to reflect the illusion, and how are they accented by the interactions with both human nature and Disneys technological nature? These questions and more will be answered within the following sections: Definitions, Technological Nature, Kilamanjaro Safari, and The Final Answer. The Animal Kingdom is a modern exhibit designed to follow the natural pattern of an African community. The most eye-popping attraction, the Kilamanjaro Safari, is an open-air, nearly barrier-free animal reserve at Floridas Walt Disney World. It was a major shift from a cow playground to a zone of care for other wise caged animals. Here, African animals freely roam through acres of savanna, rivers, and rocky hills. The rider is advised to be aware, You never know what could happen in the wilderness (Tate 1). Before I can begin to consider the nature of the Animal Kingdom, the definitions of nature and technology must be established. Websters American College Dictionary lists nature as the natural world as it exists without human beings or civilization. In the case of the Animal Kingdom, this definition is inappropriate because Disney itself is a man-made civilization, with merchants, restaurants, and restroom facilities. Technology is defined as that branch of knowledge that deals with applied science, engineering and the industrial arts. This definition of technology can be reworked to fit the Disney model of nature. What exactly does Disney do? ...