Financial Analysis of Nintendo Company - Essay Example

Theory of Economics: An Oligopoly structure is reflected with few sellers capturing a large share of the market. The barrier to entry is observed due to the requirement of a large user base. ii) Demand and Supply Analysis: The lower the price, the higher the demand. The achievement of profit maximization point prevails in the suppliers’ minds. iii) Economies of Scale: Difficult to reap advantages from economies of scale due to the low selling price of consoles and sophisticated technology. iv) Core Competencies: Modernized console and controller design, marketing and attractive game designs lifted Nintendo.
Diagnosis of Environment Strategy Structure
Nintendo is a participant in the oligopoly market and along with a few strong competitors like Sony and Microsoft it occupies around 96% of the market. Its three focal competencies: excellent marketing skills, modernized consoles, and dynamic game designs, provide it with perennial demand by its consumers thereby, placing it much ahead of its competitors in the market. Nintendo’s expertise in attractive consoles, controller designs, handhelds, and games are tools that are precious to the consumer and can neither be imitated nor substituted. On July 7, 2006, Nintendo opened a South Korean subsidiary in Seoul (“Nintendo”, 2006).
Kinds of Performance Measure
Nintendo’s performance has been appropriately measured by depicting the Net Income and Revenue, the Stock Value, the Net Profit Margin, and the Earning per Share. The behavior of the consumer and the industry, the market structure, the extent of competition along with the core competencies like innovativeness, marketing, and attractive game designs provide ample scope for evaluating Nintendo’s performance.
Recommendations
Financial difficulties need to be overcome. Market to a lifetime consumer should be the target. For the Mario game, the aim should be to capture consumers 28 years of age by redesigning it. The Nintendo Revolution is ideal at the moment. The price of the new console should be $ 200 which is much lower than others. This low cost will reap the benefits of market domination thereby increasing a large user base and increased profits. Educational games targeting younger consumers via Leapfrog and women-oriented games aiming at the female sector of the consumers should be planned. Nintendo’s principal area of dominance i.e. console designs should be well maintained to keep its image intact. In Nintendo, DS things should be added to attract the 8-14 age groups. Text messages, free online games, and personalized widgets are required. A Retro Nintendo can be offered to consist of a majority of the popular games reminding the consumers of its original games.
Learning Points
We can therefore conclude that a firm can still reposition itself at the top of the market by making efforts to distinguish itself from its competitors. Nintendo can do this by lowering the cost of consoles, preparing a larger user base, and increasing sales. Read More