Case 14 - MGMT4000-003 - MGMT4000-003 Assignment Questions...

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MGMT4000-003 Assignment Questions 1. What are the strategy-shaping business and economic characteristics of the console segment of the video game industry? What is the industry like? The video game industry consists of three main competitors; Sony, Microsoft, and Nintendo. All three competitors are constantly striving to improve the capabilities of game consoles. The economic characteristics that shape the video game industry are high sales; in 2005 more than $35 billion was spent on video games. Each company has a selection of video game consoles, game software, handheld game devices, mobile games, and online games that contribute to this number. Strategy-shaping business characteristics are technological advances in computing power and graphics. Each company is rushing to launch the next game console or hit game in order to gain a larger portion of the market share. 2. What is competition like in the video game system industry? Which of the five competitive forces is strongest? Which is weakest? Which competitive forces are having the greatest effect on industry attractiveness and the potential profitability of new entrants? Competition is fierce in the video game industry. On top of competing to have newest technology when it comes to computing power and graphics, not a single one of the companies can produce all parts of the console themselves. They each have to partner with other companies such as IBM to develop parts of the consoles such as the microprocessor. Relationships are extremely important to competition not just with other producers but also with retail channels. When it comes to retail channels the competition stems from ample shelf space and promotion. Here the strongest competitive force is competitive pressures associated among rival sellers. Each company is constantly trying to come out with the most advanced technology or offer the most intriguing game.
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