0
MBA 2013-2014
Strategic Management
AGENDA

• Key business issues
• Company overview
• External analysis
• Internal analysis
• New strategy
Key Business Issues

• A Blue Ocean was created by launching the Wii.
- Target casual gamers (children, women, senior, fam...
INTERNAL OVERVIEW
Finance Overview
Nintendo’s History & Background
Fusajiro Yamauchi

• Historically the best known console manufacturer
• Longest running co...
Mission, Vision, Values and Behaviour
VALUES & BEHAVIOUR
•  Equal commitment toward all
employees treating them the
same w...
Business Model
CONSUMER

•  High quality interactive games only
available for Nintendo’s HW.
•  Games and HW system at a m...
Historic Strategy
1980-1994:
Customer value: High quality certified software
Key Resources in technology and brand
1994-20...
EXTERNAL ANALYSIS
Industry characteristics
Video Game Revenue Forecast ($ billion)
120.0
111.1
101.6
93.3
100.0
78.8
80.0

• Total Market Va...
Competition

60%
50%

49%

37%

40%
30%
20%

Market Shares

31%

32%
31%

21%

40%
33%
27%

10%
0%

2010

2011

2012
Competitive 6 Forces
BUYERS
•  Retailer bargaining
power
•  Consumers’ demand
and high expectations

SUPPLIERS

•  Medium ...
INTERNAL ANALYSIS
Competencies & Competitive Advantage
Core competencies

Competitive Advantage

Innovation
through
strong R&D

Simplicity a...
SWOT ANALYSIS
OPPORTUNITIES

THREATS

•  Increased market demand for
education and medical devices
due to lifestyle change...
NEW STRATEGY?
Strategic Options
SHORT TERM – address threats from competition
1.  Develop a console for online gaming and develop online...
Value Chain Model
Short Term: Develop a console that suits online gaming for target audience
(children, women, seniors, fa...
Value Chain Model
Short Term: Develop a console that suits online gaming for target audience
(children, women, seniors, fa...
Value Chain Model
Short Term: Develop a console that suits online gaming for target audience
(children, women, seniors, fa...
Value Chain Model
Long Term: diversify to interactive learning and health content
Develop new competence:
Create links wit...
Value Chain Model
Long Term: diversify to interactive learning and health content

Build on existing competence:
Utilise s...
Value Chain Model
Long Term: diversify to interactive learning and health content

Build on existing competence:
Build on ...
Value Chain Model
Long Term: diversify to interactive learning and health content

Build on existing competence:
Refocus m...
Our Recommendation
SHORT TERM – address threats from competition
• 

Develop a console that suits online gaming and develo...
Performance Measures
DEVELOP A CONSOLE FOR ONLINE GAMING AND
DEVELOP ONLINE GAMING FOR TARGET AUDIENCE
•  Console designin...
Conclusion
To recapture market leader
position Nintendo should:

Build on its existing target audience and
its core compet...
THANK YOU
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Transcript of "Strategy nintendo uebs"

  1. 1. MBA 2013-2014 Strategic Management
  2. 2. AGENDA • Key business issues • Company overview • External analysis • Internal analysis • New strategy
  3. 3. Key Business Issues • A Blue Ocean was created by launching the Wii. - Target casual gamers (children, women, senior, families). - It changed the way people played. • They tried to sustain their increased market share by creating Wii U. - Target both hardcore and casual gamers. - However, it hasn’t achieved sales expectation. • Another challenge is that there is an increasing current trend in online and mobile gaming. NOW WHAT?
  4. 4. INTERNAL OVERVIEW
  5. 5. Finance Overview
  6. 6. Nintendo’s History & Background Fusajiro Yamauchi • Historically the best known console manufacturer • Longest running company in the market • Long-time market leader of hand-held consoles 1889 Hanahuda (1889) 1970 Color TV Game 15 (1977) 1980 NES (1983) Game Boy (1989) 1990 SNES (1990) Nintendo 64 (1996) 2000 Game Cube (2001) Wii (2006) Nintendo DS (2004) 2010 Nintendo 3DS (2011) Wii U (2012)
  7. 7. Mission, Vision, Values and Behaviour VALUES & BEHAVIOUR •  Equal commitment toward all employees treating them the same way as customers. MISSION “Providing customers with a ‘world of fun’, which is both innovative and entertaining with creative elements that have never been experienced.” •  Create teamwork atmosphere •  High quality through commitment and enthusiasm. VISION Expansion of the gaming audience, taking risks and encouraging employees to make creative decisions to challenge the notion of what a video game is capable of being. Source: Nintendo corporation, 2013
  8. 8. Business Model CONSUMER •  High quality interactive games only available for Nintendo’s HW. •  Games and HW system at a much lower price than the competition COMPANY •  Strong R&D: Innovation •  Strong game franchises •  Strong Branding •  Efficient manufacturing CONTEXT •  Fast changing industry •  Lifestyle change •  Non-users emerging
  9. 9. Historic Strategy 1980-1994: Customer value: High quality certified software Key Resources in technology and brand 1994-2006: Focus on technology: CPU performance and loading time Cassette/CD as media 2006-2010: VALUE INNOVATION: blue ocean + low cost Target non-users (casual gamers) with Nintendo DS & Wii 2011-2013: Entertainment system instead of just a gaming system Target both, hardcore and casual gamers Developing games that can only be used with NINTENDO HW
  10. 10. EXTERNAL ANALYSIS
  11. 11. Industry characteristics Video Game Revenue Forecast ($ billion) 120.0 111.1 101.6 93.3 100.0 78.8 80.0 • Total Market Value of $79 bn in 2012 • 4 Key Market Segments: •  Video Game Consoles 60.0 •  Handheld Video Games 40.0 •  Mobile Games 20.0 •  PC Games 0.0 2012 2013 • Consoles segment dominates the market. Market Structure (2012) 18.3% 11.8% 2014 2015 Source: Gartner (Oct.13) • Mobile games: the fastest-growing segment • 3 Major Players : Sony , Microsoft, Nintendo 47.4% • Short product life cycle 22.6% • Rapid rise in consumers’ demand Source: Gartner (Oct.13)
  12. 12. Competition 60% 50% 49% 37% 40% 30% 20% Market Shares 31% 32% 31% 21% 40% 33% 27% 10% 0% 2010 2011 2012
  13. 13. Competitive 6 Forces BUYERS •  Retailer bargaining power •  Consumers’ demand and high expectations SUPPLIERS •  Medium bargaining power •  Game suppliers (in-house mostly but powerful external third parties) •  Raw materials INDUSTRY RIVALRY COMPLEMENTS •  DVD & blu-ray •  Online gaming community •  Online marketplace •  Entertainment hub (streaming, live action TV) • PlayStation 4 • Xbox One ENTRY BARRIERS •  High Barriers for new entrants in the hardware console market •  •  •  SUBSTITUTES PCs Smartphones Tablets
  14. 14. INTERNAL ANALYSIS
  15. 15. Competencies & Competitive Advantage Core competencies Competitive Advantage Innovation through strong R&D Simplicity as disruptive innovation to target non-consumers by creating blue oceans. Efficient manufacturing and distribution Economies of scale enables them to sell the base console at a higher profit than competitors and with a fast time-to-market. Developing exclusive and simple games Strong Unique Selling Proposition (USP) – Nintendo games can only be played with Nintendo’s consoles.
  16. 16. SWOT ANALYSIS OPPORTUNITIES THREATS •  Increased market demand for education and medical devices due to lifestyle change (concern for fitness & health) •  Online purchasing/e-marketing STRENGTHS •  •  •  •  Innovative mindset In-house talent Strong brand name Expertise in video games development WEAKNESSES •  Technological disadvantage (power of console) •  Lack of new blockbusters •  Third party relationships •  Increase of Smartphone and tablet games •  Increase in online gaming •  Competitors also targeting casual gamers •  Refining their products to take advantage of lifestyle change(ex. medical and education products) •  Use in-house talent and strong brand name to develop online and mobile device applications •  Align new console launch with new blockbuster game launch •  Build third party relationships •  Utilise open innovation to to develop exclusive games for keep technological the Nintendo experience advantage and develop new innovations •  Enhance the console’s ability to purchase games online •  Improve relationships with third parties •  Create strong online gaming community
  17. 17. NEW STRATEGY?
  18. 18. Strategic Options SHORT TERM – address threats from competition 1.  Develop a console for online gaming and develop online gaming for target audience. 2.  Build partnerships with third party developers 3.  Develop new games for smartphones/tablets LONG TERM – develop differentiated products 4.  Build on success of Wii fit and Brain Train to create innovative games for a new target audience – educators and medical professionals
  19. 19. Value Chain Model Short Term: Develop a console that suits online gaming for target audience (children, women, seniors, families). Develop new competence: Build third party relationships to develop exclusive games
  20. 20. Value Chain Model Short Term: Develop a console that suits online gaming for target audience (children, women, seniors, families). Build on existing competence: Foster internal talent, recruit new talent
  21. 21. Value Chain Model Short Term: Develop a console that suits online gaming for target audience (children, women, seniors, families). Develop new competence: Use open innovation to develop online gaming
  22. 22. Value Chain Model Long Term: diversify to interactive learning and health content Develop new competence: Create links with health and education professionals, and incorporate specialists into current product development structure
  23. 23. Value Chain Model Long Term: diversify to interactive learning and health content Build on existing competence: Utilise strong R&D, internal talent and open innovation to adapt consoles and products
  24. 24. Value Chain Model Long Term: diversify to interactive learning and health content Build on existing competence: Build on current distribution network to develop medical distribution network
  25. 25. Value Chain Model Long Term: diversify to interactive learning and health content Build on existing competence: Refocus marketing campaign to educate new target group
  26. 26. Our Recommendation SHORT TERM – address threats from competition •  Develop a console that suits online gaming and develop online gaming for target audience (kids, families, women, seniors) •  Build partnerships with third party developers LONG TERM – diversify to interactive learning and health content •  Build on success of Wii fit and Brain Train to create innovative games for a new use (physiotherapy , interactive learning)
  27. 27. Performance Measures DEVELOP A CONSOLE FOR ONLINE GAMING AND DEVELOP ONLINE GAMING FOR TARGET AUDIENCE •  Console designing team assembled within 1 month. •  Console designed within 6 months. •  Team assembled to build partnerships with third party developers within 1 month. •  Market share increased to 41% 1 year following product release DIVERSIFY TO INTERACTIVE LEARNING AND HEALTH CONTENT •  •  •  •  Team assembled to liaise with medical and education professionals within 3 months Developer team assembled to create new games within 6 months New games developed in 3 years Reach 30 million new users within 3 years following product release
  28. 28. Conclusion To recapture market leader position Nintendo should: Build on its existing target audience and its core competences to create a new blue ocean strategy to move gaming into interactive learning and health content.
  29. 29. THANK YOU
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