OB project 1 - LopezB

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1 OB Project Part 1: GameStop’s companies Texas A&M University – Central Texas MGMT 3350 Benjamin G. Lopez

2 Organization Background GameStop is an American retailer in the entertainment and video game industry that was established in 1984 and adopted its name “GameStop” in 1999 (GameStop Corp. History, n.d.). The company initially began as a video game retailer under the name “Babbage’s”, their focus is selling used and new video games, accessories, gaming consoles, and game-related collectibles. The company is headquartered in Grapevine, Texas, the company expanded rapidly and went through different leadership, management, and acquisitions in the early 2000s (GameStop Corp. History, n.d.). The company had a unique business model that involved retail stores making it a popular destination for gamers. The company has multiple stores located in a variety of locations within the nation such as high-traffic shopping malls, strip centers, pedestrian areas, and metropolitan areas. GameStop corporation was the top five largest retail sector specializing in PC entertainment and video games. There are approximately 1,750 retail stores operated by GameStop that are located in 49 states of the U.S. while two-thirds of the stores are located in strip malls which were considered more convenient to most consumers (GameStop Corp. History, n.d.). The company was at its peak in 2003 in profit and sales with a record of $1.58 billion in sales and $63.5 million in profits (GameStop Corp. History, n.d.). Although GameStop was one of the top five gaming retailers, the stock price and profits of GameStop corporation started to decline in the mid to late 2010s. The decline in profits brought discussions and concerns within the company. CEO John Cohen took over from former CEO Mathew Furlong and assumed the role in September 2023. Cohen is brought in as the new CEO to revitalize the company from its declining profits and sales. GameStop is struggling with declining profitability due to a variety of causes such as the game industry shifting to online downloads rather than physical discs, poor customer service, poor management, and shifting away from its culture & values. Organization Culture Observable Artifacts Many of the observable artifacts of GameStop are their customer services, the name of the company, the amount & diversity of games on the wall inside of their stores, their gaming environment, intrinsic motivation from employees, and customer engagement (Stieg, 2021). The name itself “GameStop” already attracted individuals and groups who are interested in gaming. The employee’s customer service exemplifies their enthusiasm and intrinsic motivation to help the customers’ needs while also engaging with customers by conversing about the games they are interested in (Stieg, 2021). The amount of games inside the retail stores exemplifies the company’s passion for providing the most quality and diverse games as well as providing other game-related merchandise. GameStop was also known for buying and selling used games at reasonable prices, this symbolizes their customer service. GameStop’s customer service representatives, games & game-related merchandise, and gaming environment were undoubtedly their overall observable artifacts. Espoused Values GameStop’s corporation website states that their mission statement is to deliver customer satisfaction while their espoused values are to create great customer experiences while having fun, give back to the community, do whatever it takes to meet the customer's needs and build collaboration with customers (GameStop Culture, 2022). The company expresses these values by

3 being passionate, responsible, empowered, diverse, and inclusive. Espoused values are stated qualities preferred by the organization (Kinicki, 2021). The company’s vision statement is to commit to the gaming industry, hold a passion for gaming, and hold a disciplined perspective to drive value with employees and customers (GameStop Culture, 2022). GameStop believes that many of their employees want to build their careers at GameStop due to the company being responsive, innovative, and focused on bringing out the best in their employees and customers. Basic Underlying Assumptions Basic underlying assumptions are what employees truly believe, guiding to their organizational behavior (Kinicki, 2021). Although the company has set its values and mission statement, the management and employees seem to have different assumptions. The management and leadership have eventually treated the employees differently after the first two decades of GameStop. Although the values were to provide high-quality customer service, the employees’ assumptions on accomplishing their mission statement were different, which hindered customer satisfaction. The employees of GameStop believed that they could benefit the company if they encouraged customers to choose in-store credit rather than cash when turning in used games. Encouraging the customers to choose in-store credit affected customer satisfaction along with employees pressuring unwanted sales such as ‘protection plans’ or ‘add-ons’ (Zambonin, 2023). The employees assumed that applying these behaviors would help or satisfy the customers while benefiting the company, but it was only causing the customers to be dissatisfied with their services. Dominant Culture GameStop undoubtedly relies on an adhocracy culture, which is having a strategy of creating new products and services by being creative, adaptable, and able to respond to changes in the market. As the company’s culture is to serve customers with games and other gaming merchandise, they rely heavily on being flexible to market changes to satisfy customers. The adhocracy culture empowers and encourages employees to experiment with new ways to complete tasks and get things done (Kinicki, 2021). One of GameStop’s values which is to do whatever it takes to meet the customers’ needs is an example of why the company is an adhocracy culture. Problem GameStop is experiencing declining profits and sales. There have been a variety of studies and cases that have examined various causes. The game industry is shifting towards digital games rather than physical discs, this is hindering GameStop’s profits as they are known for selling physical products (Green, 2023). Another cause for the declining profits is the changes in the company’s culture and values. One of the values of the company was to create a greater gaming experience with the games and game-related products, the company is now selling more unrelated game merchandise and toys, which is not giving the same experience that customers used to enjoy. A customer claimed that there was a game store where half of the products were not video games (Green, 2023). The company’s pricing policy in purchasing used games has significantly reduced the customer satisfaction rate by almost 20% which led to the company’s profits decreasing by 48% during the mid-2010s (Green, 2023). Numerous customers were highly dissatisfied with the amount of money that was offered for their used games, this led customers to sell their games to companies like Amazon, Facebook Market, eBay, Craigslist, etc.

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4 reducing GameStop's dominance in market share (Green, 2023). The lower buy back pricing is indicative of the company's cultural shift from an adhocracy focused on customer experience to a more formal, profit-driven hierarchy. However, GameStop’s profits began declining at roughly the same time when changes in their values and culture were made during the mid-2010s (Green, 2023). Many Researchers claimed that one of the causes for GameStop’s declining profits and sales was due to customers claiming that their experiences were not the same as they used to be, which was when the employees used to make sales by showing interesting and fun games while engaging with customers. Approximately 24% of GameStop’s decreasing profit is due to the change of values & culture claimed by customers while 12% was due to poor management (Green, 2023). CEO John Cohen needs to develop a plan of action to revitalize the company’s profits and sales of how they were in the early 2000s by bringing back the culture and values that existed between the corporate and the retail stores.

5 References GameStop Corp. History . FundingUniverse. (n.d.). http://www.fundinguniverse.com/company- histories/gamestop-corp-history/ Green, T. (2023, March 31). These 2 charts show GameStop’s biggest problems . The Motley Fool. https://www.fool.com/investing/2022/03/31/these-2-charts-show-gamestops-biggest- problem/#:~:text=Key%20Points,as%20it%20attempts%20a%20turnaround. Kinicki, A. (2021). Organizational behavior . McGraw-Hill US Higher Ed USE. Our culture: Gamestop careers . GameStop. (2022, June 10). https://careers.gamestop.com/us/en/culture#:~:text=CORE%20VALUES,- PASSIONATE&text=We%20all%20make%20a%20difference,our%20long%2Dterm %20financial%20success. Stieg, C. (2021, January 30). The psychology of the gamestop phenomenon, explained . CNBC. https://www.cnbc.com/2021/01/30/psychology-of-gamestop-stock-phenomenon.html Zambonin, B. (2023, October 6). Why is gamestop stock trading near its 52-week low? . TheStreet. https://www.thestreet.com/memestocks/gme/why-is-gamestop-stock-trading- near-its-52-week-low

OB project 1 - LopezB

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