Gamestop

Topics: Video game, Video game console, Strategic management Pages: 7 (2426 words) Published: October 9, 2013
Introduction
After the acquisition of EB Games, GameStop rose as the leading video game retailer in its industry. In an effort to sustain their position, GameStop will have to tackle several technological and sociocultural issues that have arisen from its competitive environment. The strategic objective we wish to accomplish in this analysis is to formulate a viable strategy that will continue GameStop’s growth in the industry to remain as the go to video gaming store for the video gaming enthusiast. The retail gaming industry is a relatively new industry but GameStop has shown tremendous growth since 2002. An external analysis of GameStop’s general environment will show threats to the industry that include age restrictions for rated games, weak copyright laws in foreign countries, and the emergence of substitute gaming options. An internal analysis of GameStop’s resources capabilities will show GameStop’s marketing and brand capabilities that gives them a sustainable competitive advantage. GameStop’s value creating activities are often superior or equivalent to that of their competitors. Its business strategy of having a wide selection of products allows them to market to a wide range of customers, which positions the firm as a broad differentiator in its industry. GameStop has several problems when trying to obtain their strategic objective. These include the low level of barriers against new competitors and a dependence on supplier’s goods to succeed in the marketplace. I would recommend GameStop to contract with their suppliers to create stronger barriers to limit new entrants into the market and utilize technology by creating online accounts for their customers to track their trade in points, which will increase the switching cost to other companies for these customers.

External Environment
GameStop’s external analysis of its general environment shows a variety of threats as well as opportunities (Exhibit 1). The threats and opportunities that the industry faces include economic, political, technological, sociocultural, and global changes in the industry. With a closer look, we can see that the retail gaming industry is rather unattractive due to the high bargaining power of suppliers and buyers. Technological advances in the industry also increase the amount of competitors in the industry as well as low barriers that will not restrict new entrants from taking a share of the market. (Exhibit 2) The general analysis shows several key problems that the gaming industry faces. Economically, if the standard of living were to decrease, retailers like GameStop will suffer a loss in profits since more people will turn to cheaper methods of gaming, such as online social media games. Additionally, the political and legal aspect of the environment poses as a threat when regulations made to protect the consumers, such as age restrictions for rated mature games in the U.S., limit the reach that GameStop market. When expanding globally, the risk of intellectual property to be stolen is high since many foreign countries do not have strict copyright laws. Technological advances can be seen as both a threat and an opportunity for the industry since advancing technology can open doors to new forms of gaming such as app games and online social media games. This allows for competitors to create alternate methods of gaming that appeal to customers. However, technological advances also allows for suppliers to create new games and consoles, which will benefit GameStop since they experience the highest sales volume during new release periods. Culturally, the numbers of households that have been actively using two or more game consoles have been steadily increasing over the years. This cultural shift from outdoor activity being replaced by indoor entertainment is a tremendous opportunity for the industry. (Exhibit 1) The industry analysis will show how the retail gaming industry in the U.S is unattractive due to the high powers...
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