Nintendo’s Strategy in 2009: The Ongoing Battle with Microsoft and Sony
Nintendo, which is one of the video game industry competitors, have been the worldwide leader in creating the entertainment games. Nintendo’s video games have been sold everywhere in the world and they became in the list of the worlds best selling. The latest gaming console system, which is considered as a revolutionary video game console, was the Wii. It attracted a large number of people from different ages, which resulted in a large number of sales and profit. Unfortunately, nowadays the demand of the video games slightly decreased because of the new games and devices introduced recently. This internal analysis of Nintendo conducts its competitive strength assessment versus its competitors and analyzes the firm using the value chain analysis tool and the VRIO framework.
Nintendo’s Value Chain Analysis (Primary Activities & Support Activities)
Supply Chain Management
Nintendo, which is one of the largest video game companies, follows several steps and goes through different stages to create a value for its customers. To produce a video game controller, Nintendo outsourced the key components, which are needed for the production such as controller chips, from a number of different manufacturers. Nintendo formed partnerships with those manufacturers to supply them with the required components. The process of outsourcing the components from different manufacturers is considered as a good practice and cost effective because it reduces the production costs that Nintendo might have if they produced the components by themselves. As it is mentioned in the case, “Nintendo is not a technology company – it is a toy company” so, by outsourcing Nintendo also ensures the quality of the product that are going to be produced.
Designing and Developing Software
Nintendo designs and develops its own video games software. Designers and developers of Nintendo are required to develop unique software by themselves and not to source the software from other suppliers, and then transfer the software for assembling and manufacturing to make the video game console ready to be used. In comparing Nintendo with its competitors, it is assumed that Nintendo’s practice of designing and developing its own software is cost effective because outsourcing the software might cost Nintendo a lot.
Assembling and Manufacturing
Nintendo gathers its outsourced components, and assembles them with its own designed and developed software to manufacture the video games consoles. In this stage, the video games consoles are produced and available for using. Based on the comparison between the cost of Nintendo and its main competitors, Nintendo has the lowest production cost which results in the lowest price of its video game consoles between its rivals.
After manufacturing the video games consoles, Nintendo deals with several retailers all over the world to distribute its...