Presented by: Megan Beasley Matt McCulloch Kathryn Williams Hoyt Dwyer

Company Overview- Past
• • • • • 1889- Japan (Playing Cards) 1951- name change 1974- Exporting 1977- First home gaming system 1981- Donkey Kong

Company Overview
what we remember
• • • • • • • • 1985- NES 1989- Gameboy 1991- Super NES 1996- N-64 1998- Pokemon Mania 2002- Gamecube 2003- Nintendo DS 2006- Wii (most innovative gaming console today)

Things to know….
• • • • • Main Branch- Kyoto, Japan America- Redmond, Washington Japan, US, Europe, and Australia Legal Environment-Anti-Trust Laws Competitors- Sony, Microsoft
– New entrants- weak

• Threats- PC gaming

Immediate Challenges
•Inbound and Outbound Logistics •Competition •Expanding their Market •Increased On-line features •Need to Diversify

Inbound and Outbound Logistics
• The Nintendo Wii is sold out
– The second Christmas in a row – Unpredicted sales and demand have created problems with production – Essentially, Nintendo has not made enough Wiis to meet the demand of customers – Spokesperson for Nintendo defined one problem being a bottleneck in the production facility

• Nintendo Wii vs. Xbox 360 vs. Playstation
Price Wii:$249 Xbox 360: $299 Arcade $349 Premium $459 Elite PS3: $399 40 GB $499 80 GB

Competition

•Clearly defined competitors, both with better graphics/processors •Those video cards came at a price

Expanding The Market
• Rule of 80/20
– A basic assumption of video game sales – 80% Male 20% Female

• E3 2007 Nintendo Press Conference
– Rule of 67/33
• Sales have shifted, with more female customers

• Wii and DS sales are growing in previously untapped markets • This trend should continue to increase sales and broaden the consumer demographic

Increased On-Line Features
• Xbox 360: Xbox Live
– Software that allows Xbox 360 games to be played on-line with other people

• Playstation 3: Home
– Interactive 3D Environment – Also allows games to be played on-line

• Wii: ?
– Surf the web, check the news, see the weather – Only a handful of games can be played on-line – Only wireless internet access of the three

• Nintendo has focused on nothing but the gaming industry for almost 30 years
– Console Design – Video Game Design

Need to diversify

• A need to diversify is important for any business
– Helps reduce risks – Increases revenues

• Baseball??
– Nintendo owns the majority of The Seattle Mariners – Definitely unrelated diversification – Too unrelated

• Related Diversification
– Branching out into other cutting edge and innovative technologies outside of video game design – Using Nintendo’s vast R&D abilities and applying it to related fields

To Recap…
• • • • • Inbound and Outbound Logistics Competition Expanding their Market Increased On-line features Need to Diversify

2 Strategic Imperatives
• Inbound and Outbound Logistics
– Basically, the Wii has been old out since it’s launch last year – Reduces revenues from sales – Frustrates customers and drives to purchase other consoles and residual revenue from games and peripherals – Affects the image and reputation of Nintendo

• Competition
– Coupled with the stock outs, Microsoft and Sony have begun systematically dropping their prices – High competition among these businesses have made generating sales crucial to success – Nintendo is at the forefront of sales, these trends must continue

Recommendations
• Inbound and Outbound Logistics
– Main source of problems:
• Poor forecasting of demand • Problems with production
– Bottlenecks

– Improved Forecasting
• Initial projections of demand for products are crucial for determining levels of productions • Creating a better system for forecasting will help Nintendo stay on top of production to decrease stock outs

– Operations Management (TOC, Six Sigma, Lean Production)
• Spokesperson for Nintendo commented on a bottleneck at the production facility • Implementing Operation Management tactics to identify the bottleneck and to then work around this constraint will help with efficiency of current production
– Reduce inventory costs

• Focusing on this constraint and how to increase its’ production will help increase the overall level of production at the facility

Recommendations
• Competition
– Decrease Stock Outs
• Reduces consumers buying another console

– Increase On-Line Deliverables
• More games with on-line play • Important factor to today’s gamers

– Increase Target Market
• Currently a strategy at Nintendo • Creating a console intended for everyone • Breaking into new markets has amazing potential for increased revenues

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