Question 4: Currently, Nintendo is able to pass on some of the costs of the faster shipments to the retailers. In the long term, what do you think will happen?
The current practice of Nintendo is to charge 2% on sales in delivering goods directly to stores. The company is able to pass along these costs to retailers without any problems as it is the pioneer in direct shipment to store strategy but other manufacturers have also started providing similar services to retailers without any extra costs. As competition increases Nintendo will eventually have to cut down these costs and bear the total costs otherwise the company will lose valuable customers to competitors who are selling parallel products and providing similar direct to store shipments without any extra costs (Bozarth, 2006).
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