Establish a Necessity for Strategic Reorientation

Establish a Necessity for Strategic Reorientation

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Cover Page from Institute Introduction and overview of the current strategy Nintendo is one of three major players in the dynamic gaming sector. In recent years, however, Sony and Microsoft have developed a competitive lead against Nintendo; emerging market developments have prompted Nintendo retroactions to establish the necessity for strategic reorientation. Nintendo founded by Fusaijiro Yamauchi in 1889 and became a famous brand in the country. Various core fundamental factors have supported Nintendo’s previous popularity. The willingness to integrate experience and skills from alliances is a crucial factor for Nintendo’s growth. As the company is moving forward with new plans, there are many questions to the availability and fulfilment of its physical and human resources. This report will focus on the analysis of the case study, “Nintendo WII U: Lessons Learned for New Strategic Directions”. This report starts with the description and evaluation of the business model of the company. The report examines the internal environment followed by the strategic issues. Afterwards, there is a discussion about the alternative options for the company. The report concludes with the description of the proposed recommendations for the organization. Business Model Competitive companies like Nintendo Wii can better forecast developments in the industry, have support for designing goods and services to fit into these trends, combat the risks of their rivals and fulfil the desired value proposition of their consumers. Nintendo illustrated this by the collaborations with Magnavox and Sharp, the consistency of their consoles, and the licensing of common characters like “Mickey Mouse” and “Popeye.” Another main factor behind the performance is the company’s use of technologies and the competitive advantages of a profit leadership approach. Nintendo created “entertaining games that were easy to use. Their architecture and engineering emphasis is a final core factor to help their success. The business was able to execute a blue ocean plan that reached international markets due to Nintendo’s creative orientation and culture. The “Wii Mote” removed “non-gamer issues faced in the conventional controller with multiple sticks and buttons”. Conservative activities were often the subject of the Nintendo business model. The sum of cash deposits in the bank can be used as one such technique. Nintendo has 558,433,000,000 yens in cash and deposits alone, according to the most recent financial estimate, which is over $4.6 billion. The iterative process, combined with knowing corporate network tools, Nintendo’s ability to explore the industry and technology opportunities, and the marketing skills and wider market processes at each of the different levels at which market operations exist, has helped Nintendo build a business model that has redesigned and redefined the gaming market. Interrelations and translations between the business model (as a basis for creating and representing what the enterprise needed and had to do), and the industry practices promoting each stage of the business model are outlined in the Appendix. Internal Analysis Strengths, weaknesses, opportunities & threats are the four main components of a SWOT analysis. Nintendo Wii should use its powers to build business niches, to try and mitigate and remove vulnerabilities so that it can better compete against rivals, take advantage of the opportunities presented by marketplace structures, legislation and another advancement within external environments. Porter Five Forces model is borrowed heavily from the traditional microeconomic sector. The five forces which decide the structure of the industry in case studies are: 1. Threat of new entrants: If new entrants are threatened, existing players will gain less revenue to mitigate threats. 2. Bargaining power of suppliers of Nintendo Wii: If suppliers have a good negotiating capacity, the price from the Nintendo Wii is higher. 3. Rivalry among existing players: If competition is high, then established players like Nintendo Wii will find it difficult to make profitable profits. 4. Bargaining power of buyers of Nintendo Wii: When buyers have good negotiation leverage, they typically lower the price, reducing Nintendo Wii’s ability to make lasting profits. 5. Threat of substitute products and services: When the threat of substitution is high, Nintendo Wii must either constantly spend in R&D or lose out for disturbing in the industries. Key Strategic Issue According to a survey done by Harvard Management Review & worldwide Initiative’s executive report, only 20 per cent of companies’ strategic goals are accomplished. Resting 80 per cent of strategic goals was not accomplished due to inadequate preparation, insufficient distribution of capital and weak execution. There are many strategic issues faced by the company. The main issue is the expenditure on research and development. There is a need to allocate substantial funds to new product development. The field of technology is growing rapidly as it can be seen from the new products in the market every other day. Therefore, there should be an increased focus on the advent of new products in the market. The company has understood the short life cycle of video games. The new strategic decision taken by the management has been evaluated in light different theories and models. It can be seen that expanding into new business areas is accompanied by an increase in budget and restructure of the organizational strategy. The resource incentive console life cycles challenge the decline seen in the industry continuously. The market of the video games and industry-focused on this art has been shaken down since 2006. Every other day, there are new screens and new play items available in the market. The prime distribution channel adopted by the company is mature as they all are composed of traditional retail channels for mass merchandisers. The distribution is mainly via the big stores such as Toys R or Walmart. Now, the addition of Amazon has also been a good change; however, it has also become old. The strategic issue here is the maturity of the distribution channel. As the company does not have any other options, therefore, it is necessary that the retails should re-invent the channel. There is a need to integrate creativity into these channels. The communication between games is becoming very close. The differentiating line is blurring as there is an overlapping of advances. The company has been moving towards merging and acquisition; there should be a limit to this action as it can lead to loss of their own identity. This is also one of the strategic issues. Evaluation of Options As the arrival of blockbuster games increases Wii U sales, emphasis should be given to publishing these releases, as the next-gaming console is being introduced. Another short-term solution suggested by the consulting team is the introduction of a subscription system that would allow users to play classic Nintendo-games from both the Wii U and the Wii from the previous generation of Nintendo computers. Nintendo will extend its activity into other market fields and revitalize existing brands with the launch of smart devices. One product that the consultants have found is the Wii Fit. Developing an app for players to gather input from their mobile devices and improve their experience would not only revitalize the widely popular Wii Fit model but benefit from the emerging theme of the use of technology in line with the practice. This could be argued that characters of Nintendo like Donkey Kong, Mario and Pokémon have succeeded in establishing a worldwide name that can be linked both to youngsters and to nostalgia for older people. Nintendo should exploit this, possibly by widening its character IP lines, which will, to some degree, be known by those associated with the brand as ‘the collector’s piece’. In contrast, Nintendo appears to have little to do with the last two planned tactics to ‘expand into new territories and business regions,’ since their appeal depends heavily upon their character IP, which in new regional located places can’t be leveraged since strongly. The plan “to broaden into other emerging business fields,” such as the “fitness app” market, would nevertheless present a viable prospect, as evidenced by the popularity of the past Wii Fit. Suppose the already planned franchise revitalization is beneficial. In that case, the company should consider merging with a fitness technology supplier, such as Polar or Fitbit, to assure that their next ventures are technologically synergistic, and extend this service to its pending game console. Recommendation The Nintendo CEO is encouraged to make use of the financial value of IP rights in the short term, by growing the promotion and continuing with the Amiibo idea, which will fund R&D through emerging gaming technology (including VR), which can be used on the next console known as Nintendo NX. We propose that the Wii Fit Definition be further extended as the worldwide leading wellness trend in wearable devices is expected in 2016. It also has experience in delivering an exercise game experience and in growing its appeal for parents who can also associate with their proprietary game franchise companies launched in the 1980s and 1990s. To succeed in doing so To combine this technology with the Wii U and even in the future with the NX, Nintendo will have to build the technology on its own or collaborate with established technology suppliers (feasibly Polar Networks, Finland) Another way for management to be more proactive in implementing these tactics is to raise the allowance for having its IP rights. Children’s tv shows and other methods of licenses could be feasible. References 2020. The Five Forces – Institute For Strategy And Competitiveness – Harvard Business School. [online] Available at: [Accessed 29 October 2020]. 2020. Porter’s Five Forces: – Understanding Competitive Forces To Maximize Profitability. [online] Available at: [Accessed 30 October 2020]. 2020. Nintendo Switch™ Family – Official Site. [online] Available at: [Accessed 29 October 2020]. Statista. 2020. Topic: Nintendo. [online] Available at: [Accessed 30 October 2020]. Appendices Appendix 1: Nintendo’s Current Strategy Arena: Where are they active? Geographical presence: Global including America, Asia Pacific, Europe, Middle East and Africa. The company has almost 6000 employees in only 2 retail stores all over the world. Other retailers sell all the products. Offerings: Online market, retail stores and Amazon Customer segments: Mainly children, teenagers, and tees. The target market of the organization are the people between the age of 15 to 30 years; anyone who is interested in playing video games. Technology: There is an application, Nintendo Switch Online, for playing games online. The website also provides customers with shopping options and rentals. The company uses technology in developing video games to a great extent. Staging: Sequence of Economic Logic Vehicles: their moves Source of revenues: Sale of the products Distribution Established in 1889 (digital games)- more than 45% network Introduction of gaming Sale of the software and services- more Distribution is based console than 20% on the region the Evolution of the gaming Sales of the Switch- 20% (hardware) product is provided. console with time Cost structure: The cost structure of the The distribution Introduction of video company is based on publisher, Nintendo, network of the games and unique wholesaler and retail. The publisher is company is solely characters responsible for the development, based on its supply Expansion phase and advertising and margin. At the same time, chain management introduction of new Nintendo takes care of royalty and system. devices and products manufacturing. Differentiation: Winning the market Nintendo is the provider of most of the amazing products such as Switch. The company evolved with the advent of technology. They added 3D platforms with video gaming to enhance the customer experience. In addition to the 3D platformers, the company keep on introducing modern and better consoles for the gaming setups. Technology and innovation have been part of the DNA of the organization. With their latest product Switch and WII console, Nintendo has seen an increase in sales like never. Appendix 2: Nintendo’s Business Model Customer Value Proposition Target customer: Children, teenagers and adolescence (people between 12 to 30 years who are interested in playing video games) Job to be done: It is hard to keep the technology world, especially gaming world, interesting. There are new games every other day. They are offering to satisfy the problem: Unique and easily accessible games to attract customers. Profit formula Revenue model: Subscription, promotions Key resources and capabilities Cost structure: Free shipping and service offers What is needed to deliver a quality product? The company needs human resources to develop, manufacture, sell and deliver the product. Secondly, technology is an essential part of the gaming industry. Without technology, the software or hardware of the organization is not able to be developed. Channels: Online, distribution setups and retail stores are the channels needed by the company to sell deliver the products. Margin model: Brand name Key Processes It includes the list of resources that make it by the company to deliver the customer value proposition. Good website, easily accessible be there in option big secure payment service. Quality products with a promise to deliver better, updated and good products. Process: Product design, development, manufacturing, packaging, marketing, selling, delivering Marketing: Online marketing, customertargeted as well as traditional modes including billboards, sponsored media ads and social media marketing The company follows CRS values. Current business in the gaming market is to expand and innovate with advancing technology. Appendix 3: Industry Analysis Appendix 4: Analysis of The Strategic Alternatives for Company Alternative Capital Required Potential to scale up Speed of expansion Leveraging existing resources and capabilities Increase in It requires a Extend its activity into This can help The company the filing of substantial other market fields and in speeding can easily Intellectual amount of revitalize existing up the leverage the Property capital to get all brands with the launch expansion as existing the inventions of smart devices. One the company resources and patented as it is product that the will own capabilities, a long process consultants have found their and we are and requires a is the Wii Fit. inventions already in the lot of dues to be Developing an app for and can move business of submitted, there players to gather input forward in developing will be a burden from their mobile the industry new games and on the company, devices and improve in a better obtaining their but it will result their experience would way. patents. They in a good not only revitalize the might need outcome. widely popular Wii Fit help or to model but benefit from outsource the emerging theme of these activities the use of technology in to make better line with the practice. decisions. Expansion This will require This could be argued This is The company into other a lot of money. that characters of directly is already markets The company Nintendo like Donkey linked with making these and regions can invest in this Kong, Mario and the expansion decisions to expansion by Pokémon have of the the expansion using the succeeded in company in into new revenues establishing a different markets. obtained from worldwide name that areas of the However, a the sales. can be linked both to world. proper plan is youngsters and to required to nostalgia for older move forward people. Nintendo should with the retail exploit this, possibly by stores. They widening its character can use IP lines, which will, to industry some degree, be known knowledge to by those associated with better expand the brand as ‘the the market. collector’s piece’. Merges and acquisitions can also play an important part in this process. …
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