GREE INC. Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Gree Inc.

Introduction

Gree Inc. which was founded in December 2004 was the first social networking service in Japan. The company was founded by Yoshikazu Tanaka. The business model for the company has been quite similar to the United States social networking services. The function of the company is to connect players and bring them together with the universal mission of connecting through the language of fun. Gree Inc. has unleashed the power of gaming by actually promoting it through mobile making it social. Gree Inc. offers games for the iOS and the Android platforms.

The company in 2010, decided to introduce a new system where they opened a platform for external game developers. This was a successful move for the company which increased the revenue by 20 percent for the company. The business model of the company is generated through two major sources of revenue that is paid services and the advertising. Paid services generated a total of 90 percent of the revenues, whereas advertising accounted for the remaining 10 percent. In late 2010, Gree Inc. went global and set up an office in San Francisco. In 2011, the company described its strategy with the unique approach which was that Gree was not only a social game but it also is the platforms.

Problem Statement

The major issue for the company is to decide the international strategy where they have to decide whether to develop in-house games or adopt platforms for the external developers. The company also has to decide the competencies which can make the company the most successful Japanese software house.

Industry Analysis

Porter Five Forces Model

Bargaining Power of Buyer: High

The bargaining0 power of buyer in the industry is high. It is high because the switching cost for the customer is low. Along with this the number of products related to the online gaming, social forums and games are available to choose from for every customer. However, it is important to understand that there are two types of buyers one are the general buyers who go for low prices and look for fair trade products. However, the second class of buyers is the ones who look for quality products and are willing to pay higher prices too.

Bargaining Power of Supplier: Medium

The bargaining power of supplier in the industry is quite low. The reason it is low because the buyers have various options to choose from. Basically a third party developer does not have any suppliers. In the industry the suppliers are people who distribute the game. With the increasing competition in the industry, the competitors offer discounts, promotions and lesser prices attract the customers. This has made the industry highly price sensitive for the suppliers.

Threat of substitutes: Medium

The threat of substitutes in the industry is medium. Along with the online game offerings, there are other games such as video games and outdoor games which attract teenagers. The switching cost of these games is also low which makes the industry is highly competitive.

Competitive Rivalry: High

The competitive rivalry for the mobile social gaming industry is quite high. It is high because of the number of companies operating in the industry. As the case discusses, the direct rivals for Gree are Mixi, DeNa, Zynga, etc. Along with this, other games also post a severe competition to the industry.

Threat of New Entrants: high

The threat of new entrants in the industry is high. It is high because of the attractiveness in the industry, many companies are looking to enter the industry. Along with this, the cost and time required to actually develop a social game is quite low. The games can also be developed through third party developers. The cost of making a game thus gets even lower.

External Analysis

PEST Analysis

Political Factors:

The political situation of the country is quite stable with the growth rate increasing makes the industry players make an investment because of the strong political standing. People in this part of the world are satisfied with the political condition of the country and the citizen is also satisfied. The people of Japan have made the government to move and switch towards liberalization.

Economic Factors:

The Gross Domestic Product of Japanese economy is $4. 902 trillion with the per capita income of $5,000. The domestic retail market shows prosperous growth of 12% per annum as of 2013, and the country also holds a 27.5% share in the global social gaming market. The tariffs in Japan are high but are subject to a declining slope. The social gaming industry is on the verge of growth with more companies setting up their businesses in the fast moving economy. This shows that the economic condition is quite stable, and therefore Gree Inc. should focus on the local market also along with expansion in international markets...................

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