Game console industry Essay Example for Free

Game console industry Essay Provide an overview of the company. Include any information you think is pertinent to this company (5 points) Nintendo is a company that creates video games and game consoles. Nintendo is the creator of the Game Boy, Super Nintendo, Nintendo DS, Nintendo 64, Nintendo GameCube and of course the Wii. Nintendo is only one of the few companies that create gaming systems, and is in constant competition with Sony (PlayStation) and Microsoft (Xbox). Nintendo’s revenues in 2009 were $19,308. 1 million, with a net income of ,930. 8 million. 1. What are the defining business and economic characteristics of the video game console industry? What is the industry like? (10 points) Sales of video game consoles, software, and accessories reached a record high of $23. 1 billion in 2008. Despite the increasing intensity of competition, the video gaming industry as a whole had continued to grow through the end of 2008 in the face of the downturn in the general world economy. 2. What is competition like in the video game console industry? Do a five-forces analysis to support your answer. Complete the following as part of your answer. Make sure to explain the reasons for your answers. (10 points) a. The bargaining power and leverage of buyers is a low competitive force b. The bargaining power and leverage of suppliers is a low competitive force. c. Competition from substitutes is a high competitive force. d. Threat of entry is a low competitive force. e. Rivalry among competing video game console producers is a high competitive force. Overall assessment: 3. What forces are driving changes in the video game console industry? Are these driving forces acting to make the industry more or less competitively intense? Are the driving forces acting to make the industry more or less profitable in future years? (10 points) 4. What is Nintendo’s strategy? Which of the five generic strategies discussed is Nintendo using? What are some of the recent offensive and/or defensive strategies that Nintendo has employed? Have these tactics been successful? (10 points) 5. How well is Nintendo’s strategy working in terms of the financial performance it is delivering? Should shareholders be pleased? Why or why not? What 2-3 weaknesses do you see in Nintendo’s financial performance? (15 points) |Performance Ratio |2009 |2008 |2007 |2006 |2005 | |Revenue Growth |16. 61% |73% |89. 79% |-1. 11% |n/a | |Gross Profit Margin |. 43 |. 42 |. 41 |. 42 |. 42 | |Operating Profit Margin |. 30 |. 29 |. 23 |. 18 |. 22 | |Return on Assets |25% |24% |18% |14% |13% | |Return on Equity |. 13 |. 14 |. 18 |. 24 |. 25 | 6. What does a SWOT analysis reveal about the attractiveness of Nintendo’s overall situation? Is the company’s competitive position as solid as top management seems to believe? Does the company have a competitive advantage? If so, what is the basis for this competitive advantage and is the advantage sustainable? (10 points) Nintendo’s Resource Strengths and Competitive Capabilities Nintendo’s Internal Resource Weaknesses and Competitive Liabilities Nintendo’s External Opportunities Nintendo’s External Threats 7. What does a competitive strength assessment reveal about whether Nintendo has a competitive edge? Complete the chart as part of your answer. You are to determine the success factors you deem most important. (20 points) |Key Success Factors |Importance Weight | Nintendo | Sony | Microsoft | | | |Rating Score |Rating Score |Rating Score8. What recommendations would you make to Nintendo to improve its competitiveness in the video game console industry and to maintain its favorable positioning vis-a-vis Microsoft and Sony? (10 points).