A++paper - GameStop Expanding Across the Globe Chris...

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GameStop Expanding Across the Globe… Chris Jardieu Christopher Barnes Robert Netterville Lindsay Kapin Scott Phillips November 24, 2008
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Executive Summary GameStop is a rapidly expanding corporation with 5,100 stores in 15 countries around the globe. It has a history of continual growth and is now an umbrella corporation for GameStop.com, EB games, Game Informer Magazine, and Rhino Video Games. Our group was tasked with determining whether or not the decision to acquire Micromania, a French video game retailer, was a wise decision, or if it would have been more sensible to open new stores organically in France. We concluded that GameStop made a smart decision when it acquired this twenty-five year old French video game retailer. Micromania is based in France, which has the second largest market for video games in Europe, and is the leading video game retailer in France. GameStop has stores all over Europe, but have yet to infiltrate this valuable market. According to Godinez, acquiring Micromania would cost $700 million and would bring the number of GameStop locations to nearly 5,900, not to mention the expected EPS would increase 25% or more. This would produce increased market share, avoid many entry barriers, aid in consumer awareness, increase speed to market, and would involve less risk than expanding by opening stores from the ground up. Some disadvantages of acquiring this firm included integration difficulties, difficulty in achieving synergy, language barriers, and accounting/financial difficulties due to differing government standards. We decided that despite these disadvantages, it would be a more prudent decision to acquire Micromania. GameStop is no novice when it comes to working on foreign markets, especially when it comes to Europe. It would be less difficult to continue expanding across Europe than to attempt entering into a market where they currently have no market share like Asia, for example. In the future, we suggested that GameStop might want to consider expanding their business model to include services such as a rent-by-mail system, or acquire more domestic firms. 2
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Business Background and Environment GameStop is the world’s largest international video game and entertainment software retailer. The company has over 5,100 stores world wide, with its head of corporation and home base in Grapevine, Texas. Under the GameStop umbrella is also GameStop.com and EB Games, a video game leader in Canada and the northern United States. GameStop also owns and controls Game Informer magazine, a leading multi-platform video game publication. In 2007, GameStop purchased Rhino Video Games from Blockbuster, giving them a commanding market share in the United States, according to Businesswire.com. GameStop opened as a small video game retailer in Dallas, Texas called Babbage’s.
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A++paper - GameStop Expanding Across the Globe Chris...

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