Nintendo Porter's Five Forces

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Michael Porter’s five industry forces is a framework to analyze level of competition within an industry and business strategy development. It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. This model originated from Michael E. Porter 's 1980 book "Competitive Strategy: Techniques for Analyzing Industries and Competitors." Since then, it has become a frequently used tool for analyzing a company 's industry structure and its corporate strategy. Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation. These includes intensity of competitive rivalry ,threat of new entrants, …show more content…
Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm when there are few substitutes. The ability of suppliers to exercise control over the market participants in an industry defines the supplier power. A strong bargaining power of the suppliers means a negative impact on the profitability in an industry. Foxconn, ASUStek and Flextronics are some of the largest suppliers in the market. Nintendo, Sony and Microsoft rely heavily on these companies. These suppliers are relatively larger than others in the market and supply for the largest companies such as Sony and Apple. They have a high bargaining power, given that most of them are located close to the areas that the Video Game makers are located, including the US and East …show more content…
The sector is booming and prospects have never been better. However, companies live in a state of constant stress. Faced with the extreme volatility of consumer habits, their competition is merciless. To wage these commercial wars, they are developing business strategies that are as inventive as their most popular games ' scenarios. The strategies pose both opportunities and risks to the companies. There are several opportunities associated with the technological dynamic in the industry. Sony and Xbox are at a better position to utilize the dynamic nature of the industry because they involve a focus on the market trends. Nintendo’s Wii, was created, in 2006, its choice wasn’t to up the technological ante nor the ability to host very complex games, but rather to focus on simplicity, explicitly targeting the women’s market and more generally non-specialists. Its simplistic design and the relative ease of its games allowed Nintendo to sell nearly 90 million units. The secret of success, the decisive innovation, consisted in choosing the right battlefield, and not to stay on that of the opponent. They tend to release high tech products at high prices and fetch good profits before alternative or similar products are released to the market. However, they are likely to face reduced profits because the competition from companies that make the IPad and personal computers are increasingly developing better

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