Case 25-Nintendo (Coursehero) - Teaching Note Case 35...

Teaching Note: Case 35 – Nintendo’s Wii
Case Objectives
1. To examine how external and internal forces affect competitive strategy.
2. To investigate how innovation and entrepreneurial strategies can be assets in a
fast-moving industry.
See the table below to determine where to use this case:
Chapter Use Key Concepts Additional Reading and/or
Exercises
2: External
Environment
Industry competition five forces;
general environmental factors
See Case DVD. NOTE
industry report
3: Internal Analysis Value-chain analysis; resource-
based view of the firm; VRIN
4: Intellectual
Assets
Intellectual and human capital NOTE additional reading,
embedded video
5: Business Level
Strategy
Competitive strategy; generic
strategies
See Case DVD - also NOTE
additional reading, embedded
video
8: Entrepreneurial
Strategies
Opportunity recognition; blue
ocean strategy
12: Managing
Innovation
Innovation; sustaining vs.
disruptive innovation; scope of
innovation
NOTE additional reading
Case Synopsis
In 2006, Nintendo introduced its next generation video game console – the Wii. This new
console introduced an innovative motion sensor game controller that enabled a user to
swing it in the air when playing video games, for example to mimic the motions of a
batter, bowler, tennis player, or boxer. No other gaming console had ever provided the
user this much interaction. The Wii had created a new gaming experience that its rivals
the Microsoft Xbox and Sony Play Station had difficulty competing with.
Nintendo’s commercial and financial success was puzzling, because not only did
Nintendo sit behind Sony and Microsoft in terms of overall sales, but, unlike its rivals, it
also derived most of its revenue from the video game business. Sony had more than
180,500 employees, and its 2008 revenues from multiple product categories were over
$88 billion. Microsoft had more than 81,000 employees, and its 2008 combined revenues
were $60 billion. Nintendo was founded in 1889 but had roughly only 3,000 employees
and 2008 revenues of $16.4 billion. Thus, Nintendo sat in the midst of two potentially
dominating firms.Yet Nintendo was in the lead in video console sales growth and second,
to Microsoft, in overall units sold (Microsoft had shipped its product a year ahead of
Nintendo and Sony). Sales continued to soar, and within two years of its release,
Nintendo Wii became the market leader of the generation. However, some observers

questioned whether Nintendo’s CEO Iwata would manage to keep the Wii momentum
rolling into the next generation of gaming systems. What made the Wii so popular, and
could Nintendo keep finding innovative ways to please its customers?
Teaching Plan
The Nintendo case is a good way to demonstrate how innovation and entrepreneurial
strategies can be essential to sustaining a competitive advantage in a fast-moving
industry. Since this case discussion relies on a good understanding of how internal assets
and the forces in the external environment drive competitive strategy, the instructor