Strategy Formulation and Its Implementation, Corporate Governance of the Nintendo Corporation - Case Study Example

Introduction Nintendo is a multinational corporation founded in Kyoto Japan in the late 1889. Initially Nintendo produced hand made cards. The company has also tried several other businesses such as Cab Company and a love hotel. The name Nintendo, translated from Japanese to English, means Leave luck to Heaven. Eventually Nintendo has become the most influential industry and the third top listed company in Japan by developing into a video game company. Since 1977, the company has produced several portable consoles such as the Nintendo DSi (2009) Game Boy line (1989), Nintendo DS (2004), Virtual Boy (1995) and Game & Watch line (1980). It has also produced home video game consoles such as the Super Nintendo Entertainment System/Super Famicom (1990), Nintendo Entertainment System/Famicom (1983), Color TV Game (1977), Nintendo 64 (N64, 1996) and Nintendo GameCube (2001) (Takenaka, Para 1-2). Nintendo’s strategy formulation and its implementation The video gaming market is a multibillion dollar business, video consoles with a big chunk of market, which in the year 2006 was dominated by two giant competitors; the Sony with its play station and the Microsoft with its Xbox. Nintendo however, a distance third actor has been raising eyebrows with the introduction of the wii. This is a very interesting strategy point of view as it is an example of the blue ocean strategy. Blue ocean strategy is a way to make competition irrelevant by creating a leap in value for both the company and its customers. The word blue describes the market universe. Blue oceans denote the industries not in existence today but the unknown market space and untainted by competition. This strategy denotes that one creates demand, not fighting over it and that there are many opportunities for profitable and rapid growth. In the blue oceans, competition is not relevant for the rules of a game are not yet set. Therefore, blue oceans is an analogy to describe the wider, deeper potential of market space that is not yet explored and just like a blue ocean it is vast, deep, powerful in terms of profitable growth and infinite (Barczak &Wesley, pg65). According to Kaplan, the vice president of marketing in the Nintendo Company, its new strategy signifies the attempt to create market where initially there was none. Against the initial strategy, Red Ocean signifies the currently established and highly competitive console market. Customers being one component that enhance the implementation of the strategy, they experience market place conversation, social media and demand generation. The Nintendo Company takes advantage of the customer’s experience, produces what the customers in the targeted market space needs, and requires the most. This enhances the implementation of the strategy by fishing for new market that is unexplored by other industries. The company has shifted its focus from competition to value creation, which generates new demand. The Nintendo focuses on core business, technology that leaps when they matter and on product innovation. Jackson a researcher said that Nintendo seem to have stolen the high ground terms of playability and entertainment value. The sail of the company is tipped to the successful implementation of the blue ocean strategy (Bogost, Para 1-5). Nintendo’s Organizational structure Organizational structure specifies the firms formal reporting procedures, relationships, controls and authority and the decision-making processes. Developing an organizational structure that efficiently supports the firm’s strategy is a challenging issue. This is due to the uncertainty of the cause -affect relations in the rapidly changing global economy and the dynamics of the competitive environs. Properly aligned structural elements facilitate effective implementation of the firm’s strategies. Nintendo offers employees various programs and opportunities to help promote healthy lifestyles. These include the free employee assistance program that assists them to deal with their legal and financial matters. In America, Nintendo has also participated in protection of the environment. In their efforts to preserve the environment, they are in the field doing research on ways to make their products, corporate offices and operations environmental friendly. These activities are also put in place as incentives for strategy implementation for the company. Rather than releasing a more technologically innovative video game console with more features as in previous generations, Nintendo released a console with innovative controls made to attract people that usually do not play video games such as females and the elderly. Nintendo’s corporate governance Corporate governance is the set of policies, customs, processes, laws and institutions affecting the manner in which corporations are administered and directed. Corporate governance also includes the goals for which the corporation is governed and the relationships among its stakeholders. The principal stakeholders are the shareholders/members, management and the board of directors. Others include labor employees, suppliers, creditors, customers, regulators and the community. An important theme for corporate governance is to ensure the accountability of certain individuals in the organization through some set mechanisms to eliminate principal agent problem (Akira, Para 1- 7). Nintendo governs its business in order to maximize corporate value continuously over the long term carefully considering the benefits to its stakeholders and those who it affects. These include its customers, employees, shareholders, the local community and business partners. The company strives towards the improvement of corporate ethics and a highly transparent and sound corporate governance structure. Nintendo Company along with its set Compliance Program established a Compliance Committee consisting of the General Managers from each division in order to promote compliance-related policies positively. On January 15, 2003, the company established a Compliance Hotline to facilitate early discovery of unfair practices and report unlawful conducts within the company. Sony and Microsoft are built up brands for servicing the hardcore players of existing genres. This makes these companies be the biggest challenger and competitor for Nintendo. The diversity of the Nintendo Company has made the company affect the bottom line hence able to withstand this stiff competition. Their strategies like leveraging for brand recognition has made them make a lot of money to compensate for the bad times. The ability to allow a product in the market for a short time and thereof produce a new make has assisted them to develop a steady domination in the market though it is not easy. Like other companies, Nintendo business area reports to a board of directors who are selected by the CEO. The composition of the Nintendo’s board reflects the specific requirements of its business activity. In areas where boards of directors are heavily involved in decision-making on practical issues, it is sometimes hectic to reconcile the need for a rapid response the preference for including eternal members. Nintendo is not an exception in these issues but it has not impended the working of the company. The Nintendo not only leads the company but the have owned the company. Dialogue between owners has been the formal procedure during meeting. Division of duties and responsibility has enhanced the well-being of the company in the market. Nintendos Wii video game system designed to attract people regardless of their age or video game experience. They have gone another mile of having system names that gave options of choosing the language one would use. This in return has enhanced new levels of gaming among community. the new online gaming service and wii’s intuitive, wireless and motion sensitive controller make gaming among communities possible. Most companies in the same industry with Nintendo use the red ocean strategy in place of its blue oceans strategy. All industries in existence today are equal to the known market space; their existence defined by the presence of a ready market space. They are in the business of trying to outperform their rivals. In other words, it is a bloody ocean of one company trying to be better than its competitor is. In the red oceans strategy, the market space gets crowded and there is a reduction in prospects for profits and growth. The competition among the companies turns into the red ocean bloody. Conclusion Strategy and structure have reciprocal relationships. The relationship highlights the interconnection between strategy formulation and their implementation. Once the structures are in place, they influence strategic actions as well as the choices about the company’s future strategies. If there are some change in the strategy this automatically calls for a change in the manner which the company completes its work. Adjusting to these changes has been the major challenge to many companies hence not taking up the challenge of moving from the red ocean to the blue ocean strategy to enhance their working and productivity. Works cited Akira S, Natenapha W, Family business in Thailand: its management, governance, and future challenges, (2004). Retrieved on May 10, 2009 from: http://www.accessmylibrary.com/coms2/summary_0286-21441286_ITM Barczak, G; Wesley, D, The Wii: Nintendos Video Game Revolution (2008); Richard Ivey School of Business, U.S. Bogost I, Persuasive Games: Wii’s Revolution is in the Past, (2009). Retrieved on May 10, 2009 from: http://www.seriousgamessource.com/features/feature_112806_wii_1.php Rosmarin R, Nintendos New Look (2006). Retrieved on May 10, 2009 from: http://www.forbes.com/2006/02/07/xbox-ps3-revolution-cx_rr_0207nintendo.html Takenaka K, Update 2-Nintendo sets $85 bln high score, thanks to Wii, DS, (2007). Retrieved on May 10, 2009 from:http://www.reuters.com/article/companyNewsAndPR/idUST30751820071015 Read More