Tuesday, June 26, 2012

Do What You Know Best

By Drew Eisenbeis

            This week in the readings there was an article from the New York Times that discussed G.E. and how it is best to go with what it knows, making stuff. This article reminded me some of the company that I’ve been researching for our group project, Nintendo.
            Nintendo began as a playing card company, and was a successful one for the first 60 years of its life. In the mid 1950’s leadership noticed that in order to grow, the company was going to have to adapt. Management began to try all sorts of new ventures to make money. Management first tried selling instant rice, since in Japan rice is a staple food, it was thought that instant rice would have been a big hit. However, in the late 19050’s the idea did not catch on. Selling instant rice was a complete 180-degree turn from what the company had been making and selling – game cards.
            Nintendo tried again with another idea, a “love hotel” that offered people to rent rooms by the hour. This idea is U-turn from a company selling game cards, and the family entertainment company that it is today. This venture, while it had some success, still proved to not be a market Nintendo wanted to stay in.
            After the “love hotel” Nintendo launched a taxi company, another 180-degree turn. Nintendo adventures with a taxi company found it difficult to negotiate with unions in the taxi business. Nintendo eventually sold off the taxi business as well.
            These failed ventures allowed management to re-evaluate itself and eventually Nintendo realized its assets, a distribution system into department stores. Nintendo then took another try at the market; learning from the past experiments and launched a toy called the Ultra Hand. This new venture in the toy industry proved to be a success and set Nintendo up to evolve into the video game industry.
The management of Nintendo learned the importance of “sticking to what they know best” philosophy. From reading examples in the course packets, and examples discussed in class, it seems that it is essential for management to have a firm understanding of the core competencies of the company. As many companies evolve to keep pace with all the technology changes, it will be interesting to see how strategies adapt.


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