Write about the Media Analysis Techniques.
This report analyses the case study of Nintedo and identifies the factors that contribute to success and failures of firms in the market. The report analyzes the video game industry globally and identifies factors that shape competition in the industry. Nintedo occupies the market leader position in the video game industry. This market leadership position has been earned through continuous research and development to come up with new products that are appealing to customers(Berger,2012). The development of the Pokemon game which has been very popular with consumers has greatly lifted the profile of the company. The company, however, lags behind its peers in the consumer electronic market. The company is at position nine in the global consumer electronic market. This is mainly because the company has decided to focus on designing of software and development of video games. The video game industry is growing at a very high speed and it is therefore expected that Nintedo will perform better in the years to come. The aim of this report is to analyze the importance of strategic management in the industry and to identify various factors affecting the organization in this industry.
The global video game and software industry is very profitable. This is evidenced by the fact that the five biggest companies in the industry made profits exceeding 0million. The dominant market leader in this industry has been Sony closely followed by Microsoft. Nintedo has however recently overcome the two giant companies in terms of a number of consoles sold. The high sales volumes compared to Sony` Playstation and Xbox (Pelletier& Gagnon, 2011) The high sales have also been due to the low price of its products compared to that of its competitors. The industry is expected to grow by 6.7% between 2017 and 2020. It is important to analyze this industry using the five forces of Michael Porter so as to determine how each force shapes strategies of organizations in the industry.
The video game industry has many buyers and sellers. A large number of buyers in the industry mean that one buyer or small group of buyers cannot influence the price of a firm’s products. One or a few buyers cannot have great influence on demand for products since the buyers since buyers are so many such that even if one or few consumer fail to buy the product, the effect won’t be felt(West & Ford, 2015)Buyers in this industry have little bargaining power hence they do not have much influence on strategies.
The nature of the software and video game industry means that the number of suppliers is very few. This, therefore, means that the suppliers have high bargaining power since they can form unions and influence prices of commodities.
The video game industry is easy to enter since the capital requirements are not very high. This, therefore, means that firms in this industry will design strategy that will be aimed at scaring away new entrants. The level of competition in the industry is, however, a discouraging factor for new firms since the existing firms may use the advantages of economies of scale to push them out of the market (Sobh &Elleithy, 2014).
In this industry, there are many close substitutes. This, therefore, means that consumers can shift from consuming companies` X product to consuming company’s Y products while at the same time maintaining the same level of consumer satisfaction (Brandenburger & Nalebuff, 2006). Firms in this industry will, therefore, set strategies bearing in mind that the consumers can easily shift consumption to a rival’s product.
The video game and software industry has experienced very intense rivalry in the recent years. The rivalry between the biggest players in the industry including Sony, Microsoft, and Nintedo has helped in revolutionizing the industry. The rivalry in the industry means that firms in the industry will set strategies while considering the strategies and actions of competitors.
There are more than ten firms in this industry who offer direct competition to Nintedo. Each of these firms has their own market share no matter how small it is. The major competitors of Nintedo are Sony and Microsoft. The companies have huge financial muscle and other resources that help the companies to offer very intense competition to Nintedo. Both companies also have highly qualified and innovative workforce which helps the companies to keep producing new and exciting products. The other strength of Sony and Microsoft is that they both have significant market share in a related industry (Chernev& Kotler, 2014). Sony gets a lot of revenue from the sale of consumer electronics and Microsoft gets a lot of revenue from PC software. This means that the competitors have supporting businesses which can bail out the video game business in case it fails. One of the weaknesses of Nintedo competitors is that their resources are focused on other activities and sectors of the business, unlike Nintedo which focuses all its resources in the video game industry.
Nintedo considers many corporate strategies that will help the company to remain competitive in the industry and to gain extra revenue from other industries. One of the corporate strategies for Nintedo is venturing into mobile phone manufacturing industry. The company started the process of developing its own smart phones in March 2016. The production of Smart phones by Nintedo will help the company to compete effectively with other players in the industry such as Microsoft which has its own Smartphone brand despite being in the video game industry. This move will help in diversification and hence help in securing the future of the company. Nintedo is also planning to refocus on the production of consumer electronic devices whose production has slowed over the years due to focus on video games. The company has also developed a touch screen gamepad hardware which could be a game changer in the video game industry. These strategies will help Nintedo to widen it income channels and help the company support the nonperforming sectors of the business.
Nintedo has very effective business strategies which have helped in overcoming competition in the market. Nintedo has been able to gain a competitive advantage over its rival in the video game industry because the company focuses on video games, unlike its competitors who have many business segments. This helps in ensuring that the company concentrates all resources in the production of video games. This helps in achieving efficiency in production. This helps the company to minimize costs for the company as a result of specialization (Chernev& Kotler, 2014). The reduction in cost is transmitted to the customers through reduced prices as compared to competitors. Nintedo has a competitive advantage in terms of costs. Another business strategy for Nintedo is the great creativity and research work that is done by the companies` employees. This helps in making sure that the company remains in its toes and continuously designs new products to fulfill consumer needs. Having specialized labor helps Nintedo to focus on developing new software and video games applications.
The company has also used the differentiation strategy. This is where a company makes little changes to an existing product to make it unique so as to attract consumers. In the video games industry, this is done by developing a series of games version. For example, Nintedo can develop Pentamon Go 2 with slight variations to the original Pokemon. This is very important in increasing the life cycle of a product.
There us great evidence of strategic leadership. Nintedo has been able to keep growing and expanding over the more than 60 years it has been in operation. The strategic leadership by managers of the organization have helped the company to attain the market leadership position in the video games industry. The development of very popular games such as Pokemon goes, Game boy, Virtual boy and Nintedo 24. Strategic leadership within Nintedo helped in the development of Wii which has been a major breakthrough for the company. The eighth generation of video games consuls was very successful for the company. The advancement of technology to the ninth generation video games poses a challenge for Nintedo and other companies in the industry (Brandenburger & Nalebuff, 2006).The companies need to develop strategies that will help them improve their competitive position in the market. The companies have to be technologically alert otherwise they will find themselves losing their market share in the industry.
The position of the company since the beginning of 2016 has improved. The company’s sales of consoles have increased in the past one year with the sales of Pokemon hitting record high. The company has generated a lot of revenue from the sale of these video games hence making it the current undisputed market leader in the video game industry (Tsiotsou & goldsmith, 2012). The ninth generation of video games is yet to begin and therefore, it is important to predict which company will offer the most exciting products to its customers.
It is important to analyze the company in terms of resources available to the firm. The resources of the company are important in determining the strategies that the company will employ in dealing with competition in the industry (Keonig, 2012). The company has many physical, human and financial resources. These resources are optimized to generate revenue for the company. One of the most important resources for Nintedo is the human resource. This is because the company deals in software and which are developed by employees of the company. Without the highly qualified employees, the company would not have been as successful as it is. It is important for the company to maintain its workforce in order to help the company grow and achieve greater market share. The other important resource for the company includes servers, research center, and physical resources which aid in the manufacturing process. The resources aid in designing and developing new products. Resources are very important in helping a company design strategies. This is because, in order to implement the strategies of the company, it must have resources which will help in facilitating the implementation of the strategies.
Conclusion
The case study of the Nintedo has provided an insight into the video games and software industry. The analysis of the industry shows the dynamics in the industry as well as the projected growth of the industry. The industry has many competitors and its difficult for new firms to enter the industry due to various barriers such as patents and copyrights. The level of competition in this industry is also very high in this industry. This report also contains competitor analysis. This section discusses the strengths and weaknesses of competitors such as lack of focus on a specific business segment. The report also discusses the business and corporate strategies of the organization. The strategies are determined by the interaction of various environmental factors. The business strategies that Nintedo uses includes the cost minimization strategies which ensures that the company offers products at cheap prices. Strategic leadership is very crucial in helping the company achieve both its short term and long term objectives in this very competitive and technologically driven industry (Prescott & Boggs, 2014)
Reference List
Berger, A. A. (2012). Media analysis techniques. Thousand oaks, calif, sage.
Brandenburger, A., & Nalebuff, B. (2006). Co-opetition. New york, doubleday. Http://search.ebscohost.com/login.aspx?Direct=true&scope=site&db=nlebk&db=nlabk&an=722981.
Pelletier-Gagnon, J. (2011). Video games and japaneseness: An analysis of localization and circulation of japanese video games in north america. Montreal, mcgill university libraries. Http://digitool.library.mcgill.ca/r/?Func=dbin-jump-full&object_id=104849.
International conference on knowledge-based intelligent information engineering systems, & koenig, a. (2011). Knowledge-based and intelligent information and engineering systems: 15th international conference, kes 2011, kaiserslautern, germany, september 12-14, 2011. Part iii part iii. Berlin, springer.
Sobh, T. M., & elleithy, K. (2014). Innovations and advances in computing, informatics, systems sciences, networking and engineering. Http://public.eblib.com/choice/publicfullrecord.aspx?P=1968223.
Prescott, J., & boggs, J. (2014). Gender divide and the computer game industry. Http://search.ebscohost.com/login.aspx?Direct=true&scope=site&db=nlebk&db=nlabk&an=675474.
Tsiotsou, R. H., & goldsmith, R. E. (2012). Strategic marketing in tourism services. Bingley, uk, emerald group pub. Ltd.
Chernev, A., & kotler, p. (2014). Strategic marketing management.
West, D., ford, J. B., & Ibrahim, E. (2015). Strategic marketing: Creating competitive advantage. Oxford, oxford university press.
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