Management Processes of Nintendo Co. Ltd.
Contemporary Trends and Developing and Organizing Management Assignment MANAGEMENT PROCESSES OF NINTENDO CO.LTD.[pic] TABLE OF CONTENTS 1.
History of management and achivements3 1. 1Introduction3 1. 2History of management and achivements3 2. Corporate culture and social responsobility programs8 2. 1Corporate culture8 2. 2Social responsobility programs8 3. External and internal environment of organization9 3. 1External environment9 3. 2Internal environment9 4. Strategic planning and competetive advantages10 4. 1Strategic planning10 4. 2Competetive advantages12 5.
Organizational structure and design 12 6. Motivation and HR principles12 6. 1Motivation12 6. 2HR principles12 7. Control process and quality management 13 8. Communications and decision making 13 9. Conclusion 13 10. References 16 History of management and achievements 1. Introduction The history of Nintendo is a way of little firm seeking its niche on service and entertainments market who became a giant corporation, affected and affects on life of few generations and determinant of modern fashion on virtual scene. The history of Nintendo it’s a well learned lessons of market and talented employees.
The history of Nintendo it’s a history of Mario, Pokemons, Donkey Kong, Zelda, Metroid, Star Fox, Kid Icarus and many other personages who transforms into popular trade marks. 1. 2 History of management and achievements It is funny, but Nintendo Koppai primordial works in entertainment field. The corporation was founded in 1889 by manufacturer Fusajiro Yamauchi and foundation of business for long years was production of playing cards. Singular popularity was had the Hanafuda card game, which is a distance relative of Chinese mahjong game.
The deck consists from hieroglyphs, images and symbols and the principles of the game were to find the second pair of cards. From competitors production the products of Nintendo was different by its quality – all gaming cards was hand made painted and covered with varnish. In recognition of card-playing roots, the name “Nintendo” (Nin ten do means “leave luck to heaven”). In 1902 Nintendo became very lucky – Fusajiro Yamauchi was the first in Japan who receive a license to produce playing cards in western style. It brings very successful business for that time.
The company swiftly grows, builds new manufacturers, creates its own distribution net using tobacco shops and salt benches and strictly watched over quality. Until 1949 the name of company changed twice: in 1933 – to Yamauchi Nintendo & Company and in 1949 – to Nintendo Playing Card Company. In 1953, Nintendo became the first company in Japan who produce playing cards from plastic. This was a huge hit and allowed Nintendo to dominate the card market. Starting point of formation the main philosophy of now days “big N” was 1956.
Exactly then 3rd president of Nintendo and grandson of Nintendo founder Hiroshi Yamauchi arrived to USA to establish business relations with Southern America’s first-rate playing cards firm – United States Playing Card Company. Japanese was amazed not by business acumen, not by swing of enterprise and not by perspective for his own business, but by little office which has lower than a dozen employees. This was a turning point for Yamauchi, who then realized the limitations of the playing card business. In 1959, Nintendo struck a deal with Disney to have them allow Nintendo to use Disney’s characters on Nintendo’s playing cards.
By tying playing cards to Disney and selling books explaining the different games one could play with the cards, Nintendo could sell the product to Japanese households. The tie-in was a success and the company sold at least 600,000 card packs in a single year. Due to this success, in 1962, Yamauchi took Nintendo public, listing the company in Osaka Stock Exchange Second division. A little state of managers and an army of heroes, representing the market, was the main strategy of Nintendo over the years. Following the aforementioned success, in 1963 Nintendo Playing Card Company Limited was renamed to Nintendo Company, Limited by Hiroshi.
Nintendo now began to experiment in other areas of business using the newly injected capital. During the period of time between 1963 and 1968, Nintendo set up a taxi company, a “love hotel” chain, a food company (trying to sell instant rice, similar to instant noodles), and several other things. All these ventures failed, except toy making, where they had some earlier experience from selling playing cards. Then the bottom dropped out. In 1964, while Japan was experiencing an economic boom due to the Tokyo Olympics, the playing card business reached its saturation point.
Japanese households stopped buying playing cards, and the price of Nintendo stock fell down. All undertaking awaits shameful bankruptcy and company predicted the final devastation. The rescue came from little experimental division – Nintendo Games. Modest engineer Gunpei Yokoi offers to sale some of his inventions as baby toys. Along with experimental models were the future bestsellers – mechanic hand The Ultra Hand (one of Nintendo’s earliest toy blockbusters, selling over a million units), electronic toy for sweethearts The Love Tester and a slot-machine for baseball balls Ultra Machine.
Yokoi was soon moved from maintenance duty to product development. Toys rescued the company from bankruptcy but don’t make bygone profits. Per se every season customers wait from Nintendo something new, no ordinary. Jointly with Sharp, Nintendo Games develops successful enough light shooting-range – Beam Gun and undertake development of high growth sector of entertainment – electronic games. This was the beginning of a major new era for Nintendo. In 1977, Nintendo saw the hiring of Shigeru Miyamoto, the man who (along with Yokoi) become a living legend in the world of gaming, the father of hundreds ersonages, genius of virtual worlds and the secret to Nintendo’s longevity; his creative vision was instrumental in determining the path Nintendo’s future (and indeed, the industry’s as a whole) would follow. Yokoi began to mentor Miyamoto during this period of time in R&D, teaching him all that he knew. The company cope the new market in Japan. Approach on customers guides by three directions: arcade automatic machines, home and pocket game systems. In 1977 Nintendo released its first “Color TV Game 6″ and “Color TV Game 15” (6 and 15 indicates the number of games) which offers a few games: tennis, rally and arcanoid.
One year later in western markets announced Computer Othello (analogue of reversi game). First releases doesn’t has a big success, unless the console sold by million copies. In 1980 Gunpei Yokoi releases the real bomb of free time annihilation – pocket game platform Game & Watch. Each console came with one game with two different level difficulties. Simple game mechanic changes lightly: the gamer must press the right button on the right time. Environment and decoration of games were different: that were Mickey Mouse who catches the eggs, was firemen who catches the survivors from houses and so on.
Copies of those games were released even in Soviet “Electronica” pocket games were not Mickey Mouse, but the Wolf and the Hare became main heroes. 59 games of Nintendo sold all over the world more than 10 million copies. In 1981 along with Shigeru Miyamoto Nintendo launched Radar Scope – modest and plain scroll shooter, which dedicated to be a star within arcade automated machines but it fails. Thanks to Shigeru Miyamoto, who completely change the game and automated machines hardware to work with new game, the Radar Scope launched with different name and game – under the name of Donkey Kong.
The game has fantastic success and it became one of the most popular games of all time. In 1981 along with giant monkey, in Donkey Kong game, first time debut two small pieces of red and pink pixels, which soon find their names – Mario and princess Pitch. Total sales of games with little sanitary technician Mario on cover, step the barrier over 250 million copies in 2008. After great success of Donkey Kong, Shigeru Miyamoto begins his tight collaboration with Gunpei Yokoi.
This friendship helps to born almost all future hits of Nintendo: from Super Mario to Metroid. The success of arcade slot machines with games from Shigeru Miyamoto allows engineer Masayuki Uemura to finish his development of second gaming system from Nintendo: in 1983 in Japan launched Famicom (Family Computer), which has selling over 500,000 units within two months. The console was also a technical insulation and inexpensive when compared to its competitors, priced at about 100 dollars. By 1985, the Famicom had proven to be a huge continued success in Japan.
However, Nintendo also encountered a problem with the sudden popularity of the Famicom — they did not have the resources to manufacture games at the same pace they were selling them. To combat this, Yamauchi decided to divide his employees into three groups, the groups being Research & Development 1 (R&D 1), Research & Development 2 (R&D 2) and Research & Development 3 (R&D 3). R&D 1 was headed by Gunpei Yokoi, R&D 2 was headed by Masayuki Uemura, and R&D 3 was headed by Genyo Takeda. Using these groups, Yamauchi hoped Nintendo would produce a small number of high quality games rather than a large number of average quality games.
During this period of time, Nintendo rekindled their desire to release the Famicom in the USA. But the launch slows down. The reason was not in production and not in localization – but the company seeks reliable partner in USA. Since the company had very little experience with the United States market, they had previously attempted to contract with Atari for the system’s distribution in 1983. However, a fiasco involving Coleco and Donkey Kong soured the relationship between the two during the negotiations, and Atari refused to back Nintendo’s console.
The video game crash of 1983 soon took out not only Atari, but the vast majority of the American market itself. Nintendo was on its own. Nintendo was determined not to make the same mistakes in the US that Atari had. Because of massive influxes of games that were regarded as some of the worst ever created, gaming had almost completely died out in America. Nintendo decided that to avoid facing the same problems, they would only allow games that received their “Seal of Quality” to be sold for the Famicom, using a chip called 10NES to “lockout” or prevent unlicensed games from working.
In 1985, Nintendo announced that they were releasing the Famicom worldwide — except under a different name — the Nintendo Entertainment System (NES) — and with a different design. It is one of the most popular consoles of all time. In Japan the NES console sold by 100 dollars without additional accessories. From US market the price was expensive almost twice – for 199 dollars the gamers receive the console and the new megahit – Super Mario Bros. Total sales from Japan and US was approximately the same – in Japan – a little more than 32 million, and in US – almost 30 million.
There are a few reasons of popularity. First, both for Japanese and US gamers, games from new producer was a draught of fresh air, which forever changes conceptions about genres and games. Second, the lucky concatenation of circumstances – the only competitor was distressed Atari and that fact allows Nintendo to control over 90% of console market. Third, the cheaper prime cost of console – for self-repayment and profit earning it is enough to sell the console for silly 75 dollars.
Not the last role keeps the cartridge – holder of information, which works up a market with its simplicity and reliability. Interval of three years, during which the company seeks for reliable partner in USA to launch NES, allows developing percussive army of hits. On console scrapes first melodies of Mario (1983, 1985, 1988, 1990, Link twice goes to his mystic adventures (The Legend of Zelda – 1986 and Zelda II: The Adventure of Link – 1988) and Samus Aran goes for her first mission given by Galactic Federation (1986). Final Fantasy (1987) and Metal Gear (1988) achieves phenomenal success.
The family of Belmonts three times goes to quilt Dracula by family whip in Castelvania (Castelvania – 1986, Castelvania II: Simon’s Quest – 1987, Castelvania III: Dracula’s Curse – 1989). The ninja Ru also three times goes versus demons and monsters (Ninja Gaiden – 1989; Ninja Gaiden II: The Dark Sword of Chaos – 1990; Ninja Gaiden III: The Ancient Ship of Doom – 1991). Almost all games sold with fantastic numbers of copies. Absolute record has Mario (recognized as one of the best games in all times) – trilogy Super Mario Bros sold over 68 million copies (total Mario series sales from 1983 up to 2008 are over 250 million copies).
Next came The Legend of Zelda (the 5th series, The Legend of Zelda: Ocarina of Time, released in 1998, recognized as the best game ever created in gaming industry) – 20 million copies (total sales of The Legend of Zelda (12 series) from 1986 up to 2008 are over 220 million copies). Rest of Nintendo games against a background of such achievement achieves only “modest” few million copies. The last major blockbuster game for the NES, Super Mario Bros. 3, was released in early 1990. The game went on to sell over 18 million units.
In 1988, Nintendo of America unveiled Nintendo Power, a monthly news and strategy magazine from Nintendo that served to advertise new games. The first issue published was the July/August edition, which spotlighted the NES game Super Mario Bros. 2. Nintendo Power is still published today with its two hundredth issue released in February 2006. Phenomenal success of its ancestors repeats the new pocket console. In 1989 Nintendo launched Game Boy (created by Gunpei Yokoi), which easily sends to nowhere the last argument from Atari – the Lynx console with color screen.
Twice, in 1998 and 2001, Nintendo launched new modifications of Game Boy and confidently defends its niche from any invaders. Sales of 200 million Game Boy consoles – and superiority of big N in 21st century is inaccessible to competitors. It eventually became the best selling portable game system of all time. Later, Super Mario Land was also released for the Game Boy, which sold 14 million copies worldwide. The games don’t remain behind as well. Very successfully was vested interests on Tetris – the Russian casual game of all times and nations easy sold over 33 million copies.
However, soon the tastes of auditorium changed – the tamagochies and pokemons gather fantastic popularity, but Nintendo was on time to buy license from owners. Games with silly small animals-gladiators easy beats Tetris sales – over 35 million copies sold on the first two models of Game Boy and another 32 millions – on Game Boy Advance (GBA). Since then Mario and The Legend of Zelda was created, the Pokemon trademark was 3rd amazing success of Nintendo Corporation. Total sales of game exceeded the barrier of 180 million copies (up to 2008).
Even the legendary The Legend of Zelda 2 was unable to beat Pokemons with its “only” 17 million copies. The Super Famicom was released in Japan on November 21, 1990. The system’s launch was widely successful, and the Super Famicom was sold out across Japan within three days. In August 1991, the Super Famicom was launched in the US under the name “Super Nintendo Entertainment System” (SNES). The SNES was released in Europe in 1992. In Japan, the Super Famicom easily took control of the gaming market. In the US, due to a late start and an aggressive marketing campaign by Sega.
Nintendo has serious competitor as Sega Mega Drive and Sega Genesis which pass ahead Nintendo by 3 years, when Nintendo seeks for a partner in US, and have time to take lead position in 16 bit systems market. Nintendo saw its market share take a precipitous plunge from 90-95% with the NES to a low of approximately 35% against the Sega Genesis. Over the course of several years, the SNES in North America eventually overtook the Sega Genesis, thanks to franchise titles such as Super Mario World, The Legend of Zelda: A Link to the Past, Street Fighter II, and the Final Fantasy series.
Total worldwide sales of the SNES were higher than the Genesis. With essential loses the combat wins the big N – over 60 million sales against 29 from Sega. In 1992 Gunpei Yokoi and the rest of R 1 began planning on a new virtual reality console to be called the Virtual Boy. Hiroshi Yamauchi also bought majority shares of the Seattle Mariners in 1992. Alas, but Virtual Boy with helmet instead of screen had a fiasco in 1995. Also in 1995, Nintendo again found themselves in a competitive situation. Competitor Sega introduced their 32-bit Saturn, while newcomer Sony introduced the 32-bit PlayStation.
Sony’s fierce marketing campaigns ensued, and it started to cut into Nintendo and Sega’s market share. On June 23 1996, the Nintendo 64 (N64) was released in Japan and became a huge hit, selling over 500,000 units on the first day of its release. On September 29 1996, Nintendo released the Nintendo 64 in North America, and it too was a success. Many feel that the advertising onslaught by Sony at this time did not truly begin to take effect until many of the consumers who held out for the N64 became frustrated at the lack of software following the first few months after the system’s release.
What also greatly contributed to the extremely competitive climate that Nintendo was entrenched in was the fact that many third-party companies immediately began developing and releasing many of their leading games for Nintendo’s competing consoles. Many of those third party companies cited cheaper development and manufacturing costs for the CD format, versus the cartridge format. In 1996, Pocket Monsters (known internationally as “Pokemon”) was released in Japan to a huge following.
The Pokemon franchise, created by Satoshi Tajiri, was proving so popular in America, Europe, and Japan, that for a brief time, Nintendo took back their place as the supreme power in the games industry. In 1997, Gunpei Yokoi died in a car accident at the age of 57. On October 13 1998, the Game Boy Color was released in Japan, with releases in North America and Europe a month later. Nintendo released the Game Boy Advance in Japan on March 21 2001. This was followed by the North American launch on June 11 and the European launch on June 22.
Nintendo released the GameCube home video game console on September 14 2001 in Japan. It was released in North America on November 18 2001, Europe on May 3 2002 and Australia on May 17 2002. In 2002, Hiroshi Yamauchi stepped down as the president of Nintendo and named Satoru Iwata his successor. Nintendo and Chinese-American scientist Dr Wei Yen co-founded iQue to manufacture and distribute official Nintendo consoles and games for the mainland Chinese market under the iQue brand. During the same year, Nintendo’s aggressive business tactics in Europe would catch up to them.
The European Commission determined that Nintendo had engaged in anticompetitive price-fixing business practices dating at least as far back as the early 90s. This resulted in a heavy fine being laid against the company- €149 million, one of the largest antitrust fines applied in the history of the commission. In May 2004, Nintendo announced plans to release a new brand of handheld, unrelated to the Game Boy, featuring two screens, one of which was touch-sensitive. The Nintendo DS, released on November 21 2004, received over three million pre-orders.
In addition to the touch screen, the DS can also create three-dimensional graphics, similar to those of the Nintendo 64, although its lack of hardware support for texture filtering results in more pixilated graphics than on the Nintendo 64. At E3 in May 2005, Nintendo displayed the first prototype for their “next-generation” system, codenamed the Nintendo Revolution (now known as the Wii), its controller revealed at the Tokyo Game Show later that year. On January 26 2006, Nintendo announced a new version of their Nintendo DS handheld, the Nintendo DS Lite, designed to be smaller and lighter, with a brighter screen.
It was launched in Japan on March 2 2006. On June 11 2006, Nintendo released their update to the Nintendo DS, the Nintendo DS Lite, in North America, also on this day Nintendo opened its official US press site to the public which continued until June 17 2006. On June 23 2006, Nintendo released the Nintendo DS Lite in Europe. On July 7 2006, Nintendo officially established a South Korean subsidiary, Nintendo Korea, in the country’s capital, Seoul, which replaced Daewon Media as the official distributor of Nintendo products in South Korea.
In early August 2006, it was revealed that the Nintendo corporation (along with Microsoft) was the target of a patent-infringement lawsuit. Leveled by the Anascape Corporation, the suit claims that Nintendo’s use of analog technology in their remote game controllers constitutes a violation of their patents. Microsoft is also named in the lawsuit, for the same reasons. The lawsuit seeks to bring damages to both corporations and possibly force them to stop selling controllers with the violating technology. Corporate culture and social responsobility programs 2. 1 Corporate culture Men/ Women
There is a majority of women in the many headquarters. An estimated 70% of the employees are women. However, the top positions in the company, for example management positions, are still mainly occupied by men. This might have something to do with the fact that the Japanese headquarters are in charge and that they much rather work with men than women. Nationalities There are about 25 different nationalities working in each Nintendo branch. They come from all different branches all over the world. This causes little difficulties. Of course there are always some minor issues but nothing really worth mentioning.
The biggest problems occur when doing business with the Japanese because their culture is so very different. Due to all these different nationalities the company language is English. Innovation What is a huge and important part of Nintendo culture is innovation. They have always done this and they always will. They realize that innovation piques the human intellect and allows them to develop a constant stream of new entertainment ideas. Heroes and beliefs There are heroes and beliefs in Nintendo Corporation. One of the heroes is Gunpei Yokoi, which has incredible creativity, talent and modesty. He is a bright example to imitate and follow.
Another one is Shigeru Miyamoto. With his name concerned a belief that brilliant creations can be easy as technician Mario and that the excellent things is a simple things. Events They took on an American habit called “Casual Friday”. This means that on Friday no one wears ties or suits, everyone comes to work in a casual, comfortable outfit. As there are a lot of young people in the company this initiative is very appreciated among the employees. Team building events are organized every now and then to strengthen the bond between the employees. There are several parties during the year, they have a Christmas party and a summer party.
They are very important for the staff and whenever the management tries to move one of these to a later date the employees are not very happy. Events like these are very important to maintain a positive atmosphere within the company. 2. 2 Social responsibility programs One of the Nintendo Wii’s social responsibilities: We see a responsibility to have our players up and moving around, because sitting in place can cause health problems – every body needs to move to be healthy. That’s how Wii Sports was born, and the next idea in pushing that forward is Wii Fit.
It even more than a game – creating an experience that gives back to the player in ways that are physically beneficial and emotionally beneficial. It’s something that Nintendo is passionate about as a company. External and internal environment of organization 3. 1 External environment Competitors Nintendo has some competitors, these are: ? Playstation, Playstation2, Playstation3 “Sony computer entertainment Inc. “ ? XBox “Microsoft Corporation” Market share Nintendo is a Japan’s third most valuable listed company with a market value of more than 85 billion US dollars.
Company earnings in 2007 year is 966,5 billion yen ($8,19 billion), net profit — 174,3 billion yen ($1,48 billion). According to NPD data, Nintendo was responsible for 69% of US game industry growth in the first five months of 2007. In Wii households 66% of those aged 25 – 49 play the console regularly. And about 50% of men 50 or older have tried the Wii. 70% of US spending on video games in 2002 were for console hardware and games, 30% for portables. In 2006, it was a 50/50 split. Traditionally a bastion for young gamers, sales for Nintendo products in North and South America in 2005 was 28% by those 25 or older.
In 2007, it increased to 32%. For those 18 – 24, the share increased from 15 to 21 % over the same period. The DS passed 40 mln sold worldwide in the first half of 2007. In the US currently, there are 60 Wii games and 300 DS games available. By the end of 2007, there will be 100 Wii titles and 140 more DS titles. 3. 2 Internal environment Number of headquarters employees: 3,768 Board of directors Satoru Iwata: President & CEO Reggie Fils-Aime: President & COO of NOA Conrad Abbott: President of NOC Rose Lappin: President of Nintendo Australia Hiroshi Yamauchi: Former President & Chairman
Minoru Arakawa & Howard Lincoln: Former heads of NOA Satoru Shibata: President of NOE Masaharu Matsumoto:Managing Director and Director Eiichi Suzuki:Managing Director and Director– Yoshihiro Mori: Senior Managing Director, General Manager – Corporate Analysis & Administration Division and Representative Director Shinji Hatano: Senior Managing Director – Licensing Division, General Manager – Licensing Division and Representative Director Shigeru Miyamoto: Senior Managing Director – Entertainment Analysis & Development Division, General Manager – Entertainment Analysis & Development Division and
Representative Director Nobuo Nagai: Senior Managing Director and Representative Director Genyo Takeda: Senior Managing Director of Integrated Research & Development Division, General Manager – Integrated Research & Development Division and Representative Director Strategic planning and competetive advanteges Much of Nintendo’s success can likely be attributed to their focus on younger and casual gamers that have not recently been the focus of Microsoft and Sony. Nintendo’s main strategy is to peoduce less games qith superiour quality than to produce more games but without superiour quality. 4. Strategic planning Corporate mission and philosophy At Nintendo we are proud to be working for the leading company in our industry. We are strongly committed to producing and marketing the best products and support services available. We believe it is essential not only to provide products of the highest quality, but to treat every customer with attention, consideration and respect. By listening closely to our customers, we constantly improve our products and services. We feel an equal commitment toward our employees. We want to maintain an atmosphere in which talented individuals can work together as a team.
Commitment and enthusiasm are crucial to the high quality of our products and support services. We believe in treating our employees with the same consideration and respect that we, as a company, show our customers. SWOT analysis Strengths: Nintendo has four main strengths: a strong brand name, high returns, high employee efficiency, and debt free status. Nintendo’s strong brand name comes from about twenty-five years experience in the video gaming business. Not only do they have a strong presence in the console market but they are the leader in the handheld console market.
They pioneered this market in 1989 with the original Game Boy. Since then, they have upgraded to create Game Boy Advanced and Nintendo DS, which sold 79. 5 million units and 40. 3 million units, respectively, in fiscal 2007. The Nintendo Wii, which is their most updated console, sold 5. 84 million units in the first five months in its launch alone. This system consists of motion sensors attached to the end of the controllers as well as the console, which makes the games more interactive. A high percentage of the people that play video games in today’s day are college students.
Being part of that percentage, I know that I think highly of Nintendo based mainly on the fact that they created regular Nintendo. If I could choose today between playing the most technologically advanced gaming console and the original Legend of Zelda, I would play Legend of Zelda for hours. Nintendo has also been very successful in investing their resources in profitable companies and ideas. This would include their ownership in the Seattle Mariners and the Atlanta Hawks. It also refers to their high return on assets and equity when compared with other companies in the same industry. Nintendo also has high employee efficiency.
According to Datamonitor, “revenue per employee was about $206,960 in fiscal year 2007, significantly higher compared to the industry average of about $3,684 during the same period. ” Nintendo’s biggest strength in my opinion is their ability to stay debt free. Their most recent debt to equity ratio was zero compared to the industry’s average of 11. 9%. This not only shows that they are able to efficiently finance its’ operations but also enjoys a lot of financial flexibility. Weaknesses: Nintendo’s two biggest weaknesses are having a dependence on contract manufacturers as well as having low earnings per share.
In regards to the dependence on contract manufacturers, Nintendo reaches out to companies to produce the key components of their consoles as well as assembling the finished products. The problem is, the new Nintendo Wii console is under such high demand that the manufacturers are not able to supply the key components or assemble the products fast enough creating a lack of finished products to be sold. It is assumed that this shortage will have a sizeable affect on the company’s overall revenue. Low earnings per share is calculated by dividing profit by the weighted average common shares. Nintendo recorded a 12. 6% decline in its earnings per share for five year period, from 2003 to 2007, significantly lower compared to the corresponding industry average of 43. 9%. ” This is important to note because it may affect the investors in the company negatively by lowering their confidence. A third weakness is the lack of games produced for Nintendo consoles. In my personal opinion, I have steered away from recent Nintendo products such as Gamecube and Wii because of the lack of games so far. Regular Nintendo, Super Nintendo, Gameboy, and Nintendo 64 all had a wide variety of games.
Gamecube and Wii, however, have been overshadowed by other systems with many more games such as Playstation 2, Xbox, and Xbox360. It seems as if Nintendo is always so anxious to get their gaming systems out that they never wait to have enough games to satisfy their customers. Opportunities: Nintendo has a few different opportunities. For starters, the United States game software market is soaring right now. Video games and consoles are some of the most sold items, especially during the holiday season. Because of their reasonable prices, games can be given as gifts by pretty much anyone.
The video game market is also soaring as is evident by the $8 billion dollars in revenues in 2006 in addition to the consoles market generating $6. 6 billion dollars in revenues during the same year. These figures are expected to increase as well over the next couple years to reach up to $10. 3 billion dollars at the end of 2011. Another grand opportunity that Nintendo is planning on attacking is the Indian console market. Although the revenues are not nearly as much as the American market, the Indian market for consoles is expected to skyrocket to $120 million by 2010 from just $13. 3 million in 2006.
Because of Nintendo’s great brand image, as discussed under strengths, Nintendo will succeed in these new markets. The greatest opportunity, however, is in the online gaming market. The world is continuing to become more computer oriented in such that computers are now about as normal household item as a television set. Because of this, and the generation of children growing up in this kind of environment, the market of online gaming is become increasingly large. In 2006, only 46 million people were using broadband connections to play video games online. That number is expected to jump up to 413 million users by the year 2010.
Nintendo has taken steps to attract this audience by setting up their Wii system to be internet accessible and have the ability to update content, including up to date weather services and news feeds. Threats: There are a handful of threats that go along with all of these opportunities and strengths, however. For one, Nintendo products are often very pricey. This allows other products with similar or slightly lesser quality to steal customers by pricing their respective consoles and games to make them more affordable. Another knock on the Nintendo products is their short lifecycle.
In the video game industry, products “lose their flavor” after approximately nine months, at which point a different product will come out that seems to be more updated and technologically advanced. Because of this, Nintendo will have to make sure to release all products on time and be able to meet the demand of their products with their supply. Leaving stores sold out of products will result in loss of sales in the long run due to the short lifecycle that each product will enjoy. The last threat to Nintendo products is their poor durability. The Nintendo Wii controllers have had the most significant problems when it comes to this.
In many circumstances, the Wii controllers have not been properly designed resulting in the controller flying from the user’s hands and into televisions sets. Having problems such as these results in recalls, which is a very lengthy and expensive process. To prevent this, Nintendo must confirm that all products are being properly designed and manufactured prior to release. 4. 2 Competitive advantages The advantages to Nintendo are firstly that it makes their console cheaper to manufacture. This means that they can sell the base console at a profit whilst their competitors have to subsidise the retail price.
It also gives Nintendo far more room to manoevre when it comes to using the price mechanism to take on that competition. The second advantage is that games are a lot easier, quicker and cheaper to develop. In fact they are more comparable with PS2 games in this area. This, obviously, has a massive effect on what appears on the game shop shelf and when it appears. Quite simply, it should be far easier for a publisher to make a profit on Wii, which explains why so much development resource has been directed at it. Organizational structure and design Branches Nintendo has branches all over the world: America, Asia, Europe and Africa.
Their headquarters are located in Japan and the European headquarters “Nintendo of Europe GmbH“is located in Germany, Gro? ostheim. Hierarchy The headquarters in Japan are at the top of the hierarchy, they give direct orders to Nintendono of Europe GmbH, which is under the supervision of a president. The company in Germany consists of many different parts: Legal services, administration and marketing and sales. In charge of those are senior managers who report directly to the president. Those senior managers are in charge of a team of directors, to whom the employees must report to. Motivation and HR principles 6. 1 Motivation High salaries and great bonuses. – Health and other insurances. – Creative multinational environment. – Career grows opportunities. 6. 2 HR principles Trainings and seminars Nintendo organize English classes for their employees, as well as seminars in order to educate their employees on different subjects so that they can function better within the company. Recruitment Nintendo is constantly recruiting people. There are different possibilities to recruit employees, depending on the position. For important positions such as management, they tend to use headhunters. There is also an online application form, where people can apply for a job.
Quite often they put advertisements in newspapers and magazines. Another common way of filling in vacancies is recruiting within the company or you can find the person you need through connections such as friends or former colleagues etc. Requirements The requirements are very different, depending on the job. When it comes to finding warehouse workers training is of course the most important. In higher positions however, a good combination of training and social skills is inevitable. Naturally, the importance of the latter is higher in positions where there is a lot of interaction with other people, for example customer services and sales.
When it comes to appearances we could say that there is no real formal dress code, mainly because there are a lot of young people in the company. Controll porcess and quality management Nintendo has it own quality standards: Nintendo Seal of Quality. Originally, for NTSC countries, the seal was a large, black and gold circular starburst. The seal read as follows: “This seal is your assurance that NINTENDO has approved and guaranteed the quality of this product. ” This seal was later altered in 1988; “approved and guaranteed” was changed to “evaluated and approved”.
In 1989, the seal became gold and white, like it currently appears, with a shortened phrase, “Official NINTENDO Seal of Quality”. The symbol remained unchanged until 2003 when “of Quality” was removed. 1. Communications and decision making Nintendo of Europe GmbH does not experience many problems within Europe or with the USA, but due to enormous cultural differences there are quite a few problems when it comes to dealing with Japan. The Japanese headquarters want to be in control at all times. They are not trusting towards the Europeans and want them to do everything like it is done in Japan. Their way of doing business is very dominating.
For instance in Japan the Human Resource department is situated above the company entrance, so they can check the exact times when the employees arrive and leave again. They try to make the Europeans do the same and of course this is not possible because in most companies we fill in our timesheets manually and in general, bosses and employees are happy with that way of working, which is very hard to understand for the Japanese. When it comes to dealing with problem situations, and there are meetings with Europeans and Japanese, everyone can sense that the Japanese are not really taking the European opinions into account.
At the end of the day, they feel it is their decision and they solve the problems their way. Conclusion In conclusion, Nintendo has done a great job at creating a good brand image within the video game industry. With the disappointing failure of the Playstation 3, a console expected to rival the Nintendo Wii, Nintendo has been able to enjoy much success with their Wii. Interesting enough, the high prices did not steer consumers away from the console. Instead, during the holiday season, many retail stores were sold out. For the time being it seems as if the Wii will continue to enjoy success by introducing new games to the system.
Having a unique system with controls that actually have sensors in which you have to move around to control game has captured everyone’s interest. For the future, I would like to say that Nintendo should begin the planning and preparing process for the release of systems and games sooner so that there is not a higher demand than the supply. However, for some reason or another, Nintendo has done this with most of their products, and with the word-of-mouth marketing, and high product quality, Nintendo has been able to keep their “flavor of the month” status for longer than most other companies.
It can be comparable to the Tickle-Me-Elmo dolls. When they were hard to get, everyone wanted one and would pay thousands of dollars on Ebay just to get one. As soon as they filled the stores though, nobody had any interest anymore. The main managerial issue of the company is that Japanese wants to control all the processes whole time and they never taking into consideration opinion and ideas of them colleagues, which reduced brand loyalty and trust and makes efficiency and effectiveness go down. And if there no trust, there is no wiliness to work effectively and the motivation can decrease dramatically.
Japanese must understand, that controlling over the quality doesn’t mean to control over all processes and it doesn’t mean, that they must not taking into consideration their colleagues ideas and opinion. They even don’t want to understand that there are many factors, such as local culture, which they can force to follow by their culture. Moreover it makes limitation to other headquarters managers and top managers’ ideas and decisions, which can be very creative and useful and can solve many problems and make new ideas.
And the fact that Japanese don’t take into consideration of their foreign colleague’s opinion is decreasing overall management process of whole company. Japanese needs to change their point of views, otherwise they company will lose their position in the market. This managerial issue is a part of internal environment as well, so it is important to change managerial style and give some creative and decision making freedom to the rest of colleagues. The situation in external environment of organization is much better, than internal. There are not many comments to say, because company’s business is great in the market.
For statistic it will be useful to bring the following information: As December 2008 came to a close, one thing was very clear. Nintendo was blowing away the competition in console sales. The company sold 485,000 DS units and 335,000 Wii consoles for the month. During the same period Microsoft’s Xbox360 sold 228,000 units and Sony’s PlayStation 3 lagged behind with 127,000 units sold. By using some simple math, we can see that Nintendo’s latest console, the Wii, almost outsold it main competitors’ combined sales for the month. Why are the Nintendo consoles selling so well?
We can give a simple answer: “Keeping it simple, stupid, is winning… Both Wii and the DS don’t require big instruction books and that’s expanded the audience… Sony and Microsoft took a different path, producing consoles of stunning power and complexity … and price. ” “They’ve gotten complicated and both companies are following a core gamer audience … whereas Wii and DS are working for both young and old (newcomers to gaming)… the DS has games that go down to pre-school level and the Wii has games where you don’t even need to crack the instruction manual at all to play. As future strategic plan, I strongly recommend Nintendo to think about realising gaming mobile phone that will be able to play high quality games as well. Today mobile communications market is one of the biggest in the world and now it is more than communication – it is global thing, combining with internet technologies, photo and video cameras, games, complex programs and much more – it’s a new communication of 21st century. And Nintendo can easily and profitable combine one product to do all that thinks perfect.
Practice shows that Game Boy was the best pocket gaming console in the world. And if they combine Game Boy with mobile device, it will be amazing and it will be a new super hit of the market. And if they combine their new technologies in a mobile device, like movement sensor in Wii, it will beat the market for sure and will be even successful than the iPhone. But they must be hurry until their main competitors – Microsoft or Sony hit upon it. In that case, they will have competitors in mobile market as well. Along with that, Nintendo must think about on-line internet gaming.
Not enhancing a Wii, but making new servers, in which players for example, can directly play with each other by Wii or by PC. In case of PC they can produce additional hardware that will works fine with internet gaming by Nintendo. Using that strategy, Nintendo can create the new virtual gaming world in internet and it will work excellent. Now days fashion in game world is a virtual on-line gaming. And if Nintendo implements new ideas and creates new on-line games using both new and old characters, it will be great advantage in this sphere and will attract more and more gamers to buy Nintendo products.
The next steep of strategy is strong advertising. Many peoples, especially the old generation, doesn’t even know that Nintendo exist now days and that it’s as before is a leader of gaming industry. Strong advertising will remind those people, that Nintendo exist and will be attract more and more customers. People, especially children like advertising. They like to watch advertising and say to each other “See, I already have this device that is on TV – it is great!! ” Strong advertising will bring more potential customers. The next major steep will be promotions nd enhancements of social responsibility. It means to actively collaborate in sponsorship programs, like education, social aid, be a sponsor of some huge TV projects, make promotions and seminars for students, who can be potential employee tomorrow. The next would be producing more games. There are not many games on Nintendo, but competitors have a lot of games. Of course, it is not necessary to make 10000 games to get against Nintendo’s main strategy, but they just can make 50 more quality games and it will works. And it’s time for thinking about new megahit personages.
There is already many games and ideas, but they are not mega popular – they need to think about popular ones. Of course, it is interesting to play Castelvania or The Legend of Zelda, but the fans, who played Castelvania 25 years ago are now a little old for that and the new generation doesn’t appreciate so much old personages, because they not grow in that period and they are not fans and they will never buy Wii only for Castelvania like fans. I think Nintendo can easily generate new ideas and new personages, whose can be the next generation’s new mega hits and the new words in fashion.
I believe Nintendo will succeed in the new digital media environment because they seem to be a company that can adjust to the market. Thus, for example, analytics consider that Nintendo can control a piece of 85 billion dollars on the entertainment market! Really, it’s not bad for the company who started with two little shops, is it not? References 1. David Sheff “Game Over: How Nintendo Conquered The World“, 1993 2. www. nintendo. com 3. http://en. wikipedia. org/wiki/Nintendo 4. http://boomson. blogspot. com/2008/02/nintendo-swot-analysis. html