Gamestop Overview and Business Strategy - Essay Example

Share prices at present are comparable to levels in 2006 and have been at those levels since 2009, suggesting that prices are stable and that market prospects are stable as well. It is clear from the business overview that its business strategy centres on excellence in distribution, and diversification to include all key segments of the gaming industry, across different hardware and software platforms, and including online. It is a business strategy centred partly on achieving scale economies, and akin to the business model for Amazon and Walmart, catering to the targeted market of gaming (Google; Gamestop).

A PEST analysis reveals that out of these four external environmental factors, the stable political environment in the markets where the company operates means that political factors are not as important as technological factors, owing to the rapid changes in the gaming industry, and in the technology and information technologies industries in general (Google; Gamestop)

Gamestop's competitive position is ok, given its stable prospects as reflected in its share price, but not particularly invulnerable, given large shifts in the gaming industry from new developments in technologies, so that share prices are stagnant even as the company tries to expand its footprint as well as its sales (Google; Gamestop)
Its key strengths include its large store network and online network, its significant gaming properties and its continued drive to expand, which all translate to significant scale economies and good prospects for future profitability as revenues increase(Google; Gamestop).

Its weaknesses include vulnerabilities from changes in technology, as well as its inability to ignite investor confidence about future growth and profitability prospects (Google; Gamestop). There are opportunities to further expand scale and footprint in more markets outside of the core markets, and into other gaming properties and channels, such as mobile (Google; Gamestop) Threats include competitive threats from existing and new retailer firms, such as Google, as well as Amazon (Google; Gamestop).
Porter's Five Forces

The threat of new entrants is low to medium, given that it is difficult to match the scale and the network of Gamestop. Supplier power is medium to high, given that there are alternatives to Gamestop for distribution, and there are emerging mobile and other channels that can be utilized that bypass Gamestop's channels. The threat of substitutes is low to medium, given that Gamestop has traction in different channels, gaming platforms, and online channels of distribution as well. Buyer power is high, given the availability of alternative providers, consisting of Gamestop's key competitors, including Amazon. Rivalry is high. This industry is highly competitive on the whole (Google; Gamestop; QuickMBA.com). As a US-listed company, the company is obliged to follow international and American accounting rules (Google; Gamestop; QuickMBA.com).