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SWOT Analysis

Strengths

Nintendo has various strengths that enable it to command a considerable market share in the video gaming industry. First, Nintendo’s video game devices and games are innovative and simple to use and are therefore attractive to the targeted market. Secondly, the company has a variety of video gaming products that are tailored to the gaming needs of people from diverse backgrounds and age groups. Most of the video gaming products are affordable. They thus can be purchased by people from different economic classes, and this has enabled the company to make huge profits even in times of financial hardships.

Weakness

Nintendo’s major weakness is the over-reliance on third-party providers.

Another weakness is the development of low-quality products. The Wii was installed with a 64MB DDR3 graphics card, which was way too low compared to the Sony Playstation 3’s 256 MB DDR3.

Opportunities

The company has an opportunity to penetrate the casual video gamers segment with its innovative technologies and the pricing strategy.

Threats

A major threat to Nintendo comes from within the industry and notable from the other two major players, Sony and Microsoft. Additionally, the world economy has remained unbalanced due to several contributing factors, such as rising oil prices. The rising cost of fuel means that it will be more expensive to transport video game devices to retail outlets across the globe.

Already the company has registered a decline in sales volumes that can be linked to the recession, increased fuel costs, and competitors.

Value chain analysis

Nintendo uses successful primary and secondary activities to stay ahead of the competition. The company manufactures quality products that are marketed effectively, for instance, by giving free games for every console purchased. The company also develops leading technological innovations that it protects for its benefit.