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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
Competition
• 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

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