SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis is an analytical instrument used to evaluate the strategic position of the company. SWOT analysis underlines that the strategy should as best as possible combine the internal possibilities of the company, i.e. the strong and weak aspects of the company, with the external environment, which is partially reflected through the opportunities and threats. In that regard, this paper provides a SWOT analysis of Nintendo Co., Ltd, a multinational corporation with its main headquarters located in Japan, which is specialized in home entertainment, specifically video gaming industry, for the last thirty years (Nintendo “Company History”).
The Nintendo Company has been experiencing a large success, which was started with the sales of their latest portable and home consoles, Nintendo DS and Nintendo Wii respectively. Being a specialized in software as well as hardware, the company’s sales reached high numbers outselling their nearest competitors, Sony and Microsoft, where as of 2008, Nintendo sold 24.5 million hardware units of Wii, with corresponding 148.4 software units, and 70 million hardware units of Nintendo DS, with corresponding 369.6 software units (Nintendo “Annual Report 2008”). The need for assessment and evaluation of the company’s position can b caused by the recent decline in sales, where as of July 2009, the net profit of the company fell by 60%, a high percentage, considering the company released several strong titles for both consoles in 2009 (Lugmayr).
| || |
| || |
Recommendations for Strategies
The recommendations for business strategy can be seen through using the company’s existent strengths to take advantage of the possible opportunities of the company. The first and the logical strategy can be seen through entering the Chinese market. The company is present there through a joint venture with a Chinese company; however, the presence is weak considering the capabilities of the market and the fact that only a portion of the company’s product is available for sale, e.g. Nintendo Wii is not officially distributed in China. The same can be stated regarding the Indian market. In that regard, considering the investment capabilities of Nintendo, and the fact that their latest products are present in the global market for a period over 3 years, entering the market seems logical.
Another logical approach can be seen through taking advantage of the existent high end brands of the company, releasing such products more frequently. In that regard, the company should develop their brands in a way that takes full capabilities of their innovative technology, so that new audience will attracted, as well as keeping the usual appeal of the brand and introducing online capabilities, so that hardcore audience will not switch to other products that have such elements.
Recommendations for Changes
The recommendations for change can be seen through the way weaknesses are minimized and threats are avoided. The main recommendation can be seen through establishing new relations with third party developers, where convincing the developers to develop specific products for their consoles will be an appropriate solution, taking advantage of the specifics of the hardware, rather than providing versions with limited capabilities, considering the capabilities of the hardware. In that regard, providing cuts in licensing fees for development can encourage developers to devote additional efforts to develop for Nintendo.
With the next generation of consoles to be released the company should take advantage of the position of the competition, while focusing to end the lifecycle of their current product on a high note by taking advantage of the recently released accessories, while cutting price at the same time. It can be assumed that the innovations of the competitors will be offered at a higher price at the time of the launch, which with Nintendo cutting price can be seen as an advantage, considering that Nintendo is offering their product for three years.
It can be seen that the decline in the company’s sales is an opportunity for the company to reconsider its strategy, considering that competition is getting stronger and offers stronger products. In that regard, it can b stated that the main approaches can summarized as entering new markets, increasing first-party titles, new relations with third-party developers, expanding online capabilities and reducing the price.
“Identifying Strengths, Weaknesses, Opportunities and Threats – SWOT”. 2009. Value Based Management.
Lugmayr, Luigi. “Nintendo’s Net Profit Falls by 60% as Wii Sales Decline”. 2009. I4U. Web.
Nintendo. “Annual Report 2008”. 2009. Nintendo.
—. “Company History”. 2009. Nintendo.