Nintendo: Game On Case AnalysisCommerce 4PA3- C06Azaan Dewji- 001323848November 22, 2016
001323848Section C06Tool S1- RoleNintendo is a Japanese gaming company that has been in the gaming industry since the 19th century. Through innovative electronic gaming products the company positioned itself as a leaderin the video game industry from the 1970’s to the early 2000’s. During the 1990’s the company owned 90% of the video game market share. However in recent years due to the emergence of competitors Sony and Microsoft, as well as mobile gaming apps serving as substitutes to traditional video games the company has been in decline. In 2015, Nintendo registered annual revenue similar to its 2002 revenue, thus resulting in a lack of growth in the organization. Lastly, the global console revenue is projected to be in a slow but steady decline in future years. Tool S2- Organizational Performance During the past seven years (2009 to 2015), Nintendo’s has not produced any growth (Refer to figure A-1). The company has been in decline since 2009 and has been trying to recover in later years. Gross profit margin slightly improved in 2010, increasing by 0.76%, however in later years it would fluctuate up and down, yet never reaching the 15.94% of 2010. Operating profit margin, return on total assets and return on equity experienced similar fluctuations, similarly never reaching the success of 2009. Here, one can see that the company has been in decline since2009 regarding assets, income and sales. This is dangerous as it means the company has been in a downfall, one can equate this drop as a result of favorable market share growth by its competitors. A positive from the company financials is the increase in more recent years from 2014 to 2015. 2015 provided the company with improvements from its 2014 financials in gross profit margin, operating profit margin, return on total assets. Return on equity and debt to assets. This is significant because it means that Nintendo has improved from its decline and it may be able to capitalize on its 2015 success. However, it must be noted that over the past seven years Nintendohas seen fluctuations in these ratios from year to year and 2015 may just be another example of this. The sales of the company have been in a steady decline since 2009, while assets have also steadily declined. The decrease in sales may be a result of the rise in the Asian gaming market. Nintendo’s competitors have adapted to this market through their ability to fight piracy while Nintendo has lacked the capacity to fight piracy. As a result, Nintendo has not been able to capitalize on the Asian market, resulting in a loss of sales over the past seven years. Tool S3- Organizational Health On a scale of 1 to 10, Nintendo is a 6/10. This is because the company has shown to be in a significant decline in its operation performance over the past seven years. However, the companyhas goodwill with consumers as it a leader for several years. Nintendo owns characters that have 1
001323848Section C06become synonymous with gaming. These intangible assets provide the company with loyalty not exhibited by its competitors.
You've reached the end of your free preview.
Want to read all 8 pages?
- Spring '14