Blog #3

by carre107

I have found another article from businessweek.com (http://www.businessweek.com/ap/2013-02-12/cheap-yen-a-boon-and-a-risk-for-japan-companies). This site has been really good to me thus far. The article basically talks about the decrease in the value of the yen overtime and how it will help and hurt Japanese companies, including Nintendo, of course. The cheap Yen is boosting these companies by getting a favorable exchange rate. Since Nintendo’s sales in America are in American currency (obviously), when they sell the Wii U and other products to Americans they are converting that money to a whole hell of a lot of Yen, and in the past they wouldn’t have gotten as much Yen per American dollar. While this doesn’t help them the other way around, it is helping them at home. If they hire Japanese people to make their games and systems, they can pay them the same amount or even more money and still have extra Yen leftover.

However, the article warns that for these companies that aren’t doing so hot, there is danger that the boost will be “insulating some companies from pressure to overhaul their businesses”. In other words, the fact that they are making more money from currency exchange, might prevent them from thinking about ways to change their company for the better. If Nintendo doesn’t assume the Yen will eventually become stronger again, they may not look ahead and prepare their companies for future issues. The currency exchange is helping them temporarily, but also giving them false hope in a sense. The second page of the article gets a little more specific about Nintendo. “Its currency gains for the nine months to December totaled 22 billion yen ($242 million)”.

So, referring to lessons learned in class, this is an opportunity, and if not careful, a threat to Nintendo, especially if they start spending some of this ‘extra’ money and find out it was a bad move down the road. Also, this is clearly a Macroeconomic force.

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