EE204: Business Management for
Electrical Engineers and Computer Scientists

The Five Competitive Forces

Read

  1. The Five Competitive Forces That Shape Strategy (HBS course materials)
  2. Product Lifecycle
  3. Nintendo: Disruptor Being Disrupted (HBS course materials)
  4. These supplementary articles:
    1. Forbes: Nintendo Announces Massive 45% Increase in 3DS Sales in 2013
    2. NPR: Game Over for Nintendo? Not if Mario and Zelda Fans Keep Playing
    3. Nintendo Financials

Case Summary

In February 2011, Nintendo released the next evolution of the DS line of handheld gaming devices in Japan: the Nintendo 3DS. Despite initial rave reviews of the new device, sales figures were much lower than expected. In July 2011, Nintendo announced that it would reduce the price of 3DS by 30% to boost sales. At the same time, Nintendo president Satoru Iwata declared salary reductions for all of Nintendo's directors, starting with a 50% cut of his own salary. In October 2011, Nintendo predicted that the net loss for the year ending in March 2012 would be US$264 million, a first in the company's 30-year history. Back in 2006, the Nintendo Wii disrupted the video game industry, and in the following years, Nintendo was disrupted by Microsoft with Kinect and by Sony with PlayStation Move as well as by Apple and Google with their game-changing products targeting the mobile industry. It remained unclear how Nintendo could turn around and reclaim the few glorious years after the release of the Nintendo Wii game console and the Nintendo DS handheld game device.

Discussion Questions

  1. What were the competitive forces at the time of the Wii's introduction?
  2. What accounts for the Wii's success?
  3. How would you describe the competitive forces in the video game industry in 2011?
  4. Where is the video game console business in it'sproduct lifecycle?
  5. How would you compare the strategies of Apple, Nintendo, Google, Sony, and Microsoft in the video game business?
  6. Which company is in the strongest competitive position and which is in the weakest.
  7. What is the impact of mobile on these companies and their strategies?
  8. What changes has Nintendo implemented since the case was released (see article links)? Has it changed its strategy?
  9. Has Nintendo turned around its business and successfuly delt with the changing competitive forces? Are there any new strategic directions and actions you would recommend?

 

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