Presented by:Megan BeasleyMatt McCullochKathryn 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

•Clearly defined competitors, both with better graphics/processors

•Those video cards came at a price

Price

Wii:$249

Xbox 360: $299 Arcade $349 Premium

$459 Elite

PS3: $399 40 GB

$499 80 GB

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