MACRO AND MICRO ENVIRONMENT ANALYSIS FOR NINTENDO
Macro environment is said to be the most general layer of the environment. This consists of broad environmental factors that have an impact on the organisation. The PESTEL framework helps us to identify the future trends which might impinge on Nintendo and therefore identify the key drivers of change. On the other hand the five forces framework helps to understand how the competitive dynamics within and around the video game industry are changing.
The two frameworks are discussed below:
This categorises environmental influences into six main types, namely: political, economic, social, ...view middle of the document...
Nintendo’s action to open the World of Nintendo showrooms was to attract and influence customers and show interest towards fulfilling the customers' needs. Also, games have an influence to the culture of people, bring aggression in children, etc all which have an impact on the industry.
The role of technology is vital in this industry as it focuses on technological efforts for competitive advantage. Every new development uses new technology. Though there are restricted innovations in the gaming industry, the speed of technological transfer is very high. Nintendo’s role from playing cards to toys to video games and then with each console introduced, included many technological changes. Technological upgradation increased hardware costs and discouraged innovation. The online capability of Nintendo Wii was a major change in the technology of the video game industry.
The video game industry uses a lot of plastic resources. Playing games on television or computers does consume a lot of power. Nintendo therefore see to it that their games utilise low power. On the other hand protecting the environment and practicing a “green” lifestyle is a value many of today’s parents are trying to teach their children. Nintendo facilitates in that effort through the creation of “Super Mario Sunshine” and “Chibi-Robo: Park Patrol”, which challenge players to improve the environment around them.
The legal issues faced by the video game industry include trademarks, copyrights, licensing, online ownership, revenue recognition and demands of intellectual property. The other issues that can be considered are product and health safety. It has become an accepted practice for the console manufacturers to lose money on the hardware and to recover the loss by charging high licensing fees to game publishers and developers.
Five forces Framework:
This helps us to identify the sources of competition in the video game industry. The five forces may be interdependent i.e. pressures from one direction can trigger off changes in another in a dynamic process of shifting sources of competition. Industry rivalry here occurs in the strategic alliances i.e. battle to control market. With huge players like Sony, Nintendo and Microsoft there is a tuff battle between companies to dominate the market. The threat of entrants into the industry can be negligible with the existence of players like Sony, Nintendo and Microsoft etc. There can be no substitute to the video games. The Power of Buyers in the video game industry is low as there are very few successful companies in the video game industry, therefore a small variety of video games available to the buyers. On the other hand, the Power of Suppliers is very high as there are more suppliers available to a handful of companies in the video game industry.
Companies being the developers of their own video games become the suppliers themselves. The...