Gaming Industry Mini-case homework - Essay Example

_________ Questions about Gaming Industry Read the mini-case about gaming industry. Type your answer for the following questions. You need to turn in the printout of this homework in the class meeting specified by the professor.1. Please identify what factors in the general environment, which comprises political/legal, economic, socio-cultural, technological, demographic, and international elements, pose opportunities or threats to gaming industry. a) Factors that pose opportunities:ProfitabilityTechnologicalSocio-cultural b) Factors that pose threats:International elements such as trade barriers (i.e. Xbox being banned in China before).

Intense competitionAlternative to video games (i.e. online gambling)Diminished financial capacity of target market.2. Complete the information below and identify the intensity of each of the forces of competition:1.) Rivalry among existing firms High Medium Lowa) Define the gaming industryGaming industry is the business that provides gaming entertainment to its customers through the use of video games and similar technology.b) What factors give rise to the rivalry in this industry?

Joint ventures allowing more grand games to develop to capture more gamersSegmentation of target market depending on income capacityProduct differentiation to cater to different sectors of the market.2.) Threat of new entrants High Medium LowWhat are the barriers to entry into this industry? Initial capitalization requirementEstablished players in the industryHigh learning curveBrandingRegulatory requirements that needs to be satisfied by new players3.) Bargaining power of suppliers High Medium Lowa) Who are the suppliers?

The suppliers are those who provide the materials, hardware, software, manpower and resources for the games to become available to the customers.b) Discuss whether they have bargaining power Suppliers have high bargaining power because they could determine the success and failure of a gaming company. For example, the games that needs to be created has to be made by its developers and then materialized by its programmers. Then the necessary hardware must also be created to make such project viable.

It is very hard to find alternatives to these suppliers and they could spell the difference between success and failure making them to have high bargaining power.4.) Bargaining power of buyers High Medium Lowa) Who are the buyers? The buyers are the gamers who purchase the video games as well as the platforms.b) Discuss whether they have bargaining power Customers will always be important to business but these buyers also have other alternatives to entertain themselves such as online casinos, internet, movies etch.

Video games may be more engaging than the alternatives but the low switching cost makes the alternative viable.5.) Threat of substitutes High Medium Low What other substitutes limit the sales and profits for firms in this industry?Online casinoMobile games (apps)Internet surfingThe alternatives to video games may be numerous but they are not as engaging as video games. The alternatives are also full of risk such as online casino whose legality are still doubtful making its potential users to be less attracted to it.6.) Now that you have analyzed each of the forces of competition, discuss the implications of the above levels of intensity.a) Which forces of competition are most threatening now?

Among the forces of competition that are most threatening now is the threat of new entrants. b) As the CEO of a firm in this industry, what actions does this analysis suggest you to implement in order to strengthen your competitiveness? Gaming industry is based on the ingenuity and talent of its game developers, programmers and other talents which is the backbone of the industry. To make sure that my talents are ahead of the game, I would always conduct training and workshops to ensure that they are ahead in the industry.

Of course, it is a given that I should keep them happy for them to stay in the company. This could be done by offering them stocks, handsome pay and interesting work.2. Considering your analysis of the macro- and industry environment, as an advisor to a potential entrant, would you recommend entry? Why?I would not recommend an entry to the gaming industry because it is very risky and volatile. The industry also has very high learning curves that makes it very difficult for new players to catch up with the established players.

The huge capital needed to start is also very discouraging and risky. Suppliers have very high power in the chain making the company vulnerable to suppliers. The existing players may also manipulate the price to become very low for the company not to survive its penetration stage.