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)

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? What accounts for the Wii's success?
  2. How would you describe the competitive forces in the video game industry in 2011?
  3. Critique Nintendo's current strategy. What do you see as Nintendo's biggest weakness?
  4. How would you describe the strategies of Apple, Nintendo, Google, Sony, and Microsoft in the video game business? Include analysis of target customers for gaming. What is the impact of mobile on these companies and their strategies?
  5. Compare and contrast Nintendo and Apple with regard to product lines and R&D expenditures.
  6. How can Nintendo turn around its business in the future? What is the timeline, and does Nintendo currently have the resources necessary to achieve their goals?