gambling on the edge of china wynn macau tue tran soraya feizpour alex huynh chris coloma long hoang...
TRANSCRIPT
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GAMBLING ON THE EDGE OF CHINA
WYNN MACAU
Tue Tran Soraya Feizpour Alex Huynh Chris Coloma Long Hoang Hung Nguyen
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BACKGROUND Created in September
2006
600 hotel rooms
205,000 sq. ft. gaming
area
26,000 sq. ft. retail
22,000 sq. ft.
convention space
Further space expansion
in December 2007
Encore at Wynn Macau
created in April 2010
414 hotel rooms
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Tourism dropped during recession
Visitor Volume down 3.7%
Gaming Revenue down 7.7%
____________________
Asia Gambling Market= positive growth
2009 to 2011 increased $20,000+ in GDP per capita
ECONOMIC ENVIRONMENT
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GAMBLING MARKET IN ASIA
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Moderately Strong financial condition
Growing Net Revenue
2006 to 2007 up $1,255,262
____________________
Decreasing Return on Assets
2006 to 2007 down 9.5%
INTERNAL ANALYSIS
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5-YEAR STOCK TRENDCurrent Price on Hong Kong Stock
Exchange: $26.25
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INDUSTRY VIEW
RIVALRY AMONG COMPETITORS - HIGH
Many competitors already established
Rivals offer similar product High exit cost
THREAT OF ENTRY- LOW
High capital & resources required License required
PORTER’S
5 FORCES
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INDUSTRY VIEWTHREAT OF SUBTITUTES- HIGH
Many other casinos Lottery Other non-gaming entertainment
BARGAINING POWER OF BUYER- MODERATE
Hotel rooms, food, other entertainment services
BARGAINING POWER OF SUPPLIER- VARIES
Gaming equipment Services & Employment
PORTER’S
5 FORCES
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INSTITUTION VIEWTHEY HELP…
Institutional forces heavily
influence Macau casinos
Beijing gave birth to
Macau’s rapid rise
Macau monopoly-
gambling illegal in the
rest of China
Chinese economy grows
fastest in the world
wealthy people w/
money to spare
Informal institution:
high demand for
gambling
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INSTITUTION VIEWBUT HURT…
China limits cash takeout per person, per trip
Big gamblers need to borrow money in Macau
Gambling debts not enforceable in mainland China
intermediaries known as junkets
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INSTITUTION VIEWJUNKET PROBLEMS
Expensive take up
to 75% gambling
revenue
Linked to Organized
Crimes occasional
battles for territory
Not Transparent
investigated by
government for
money laundering
Build Relationships w/ Gamblers
that Casinos Can’t may compete
w/ casinos later
Casinos Still Need Them for VIP
Guests!
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INSTITUTION VIEW
BAD STREAK FOR MACAU
Chinese economy slows down
Beijing cracks down on corruption
Long-term reduction in gambling revenue
Macau placed cap on # of gambling tables
allowed
Aimed at reducing gambling-based revenue
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INSTITUTION VIEW
WYNN
MANEUVERS Young entrant in the
gambling market
Hesitant to employ
junkets
Now reliant on junkets to
pull VIP customers
Closely watched by US
Authorities under Foreign
Corrupt Practices Act
More regulatory layers
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INSTITUTION VIEWCORRUPTION OR “GREASE”
Wynn granted land rights to $4 billion
project in Cotai, 2012
Included payment of $50 million to local
company co-owned by:
Edmund Ho, close associate of former Macau
top official
Prominent family in Beijing
No accusations of wrongdoing from US
authorities
Still under investigation by Macau anti-
corruption
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RESOURCE VIEW
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RESOURCE VIEWVRIO FRAMEWORK
Key Competitive VRIO Advantages
Value Luxury products & services that come second to none
Imitability Retention of high-end customers w/ world class service
Organization Well-established reputable company backed by Steve
Wynn
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INTERNATIONALIZING Asian culture’s
favorable view &
Chinese government’s
harsh restriction on
gambling huge
obstacle for expansion
High demand for sport
event outcomes
public attention &
government restrains
sport gambling market
entrance
Expand traditional casino
gambling avoid shortage of
labor & competition
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INTERNATIONALIZING
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RECOMMENDATIONS1. Concentrate on developing non-gaming
services
Drop in gambling revenue
China track down corruption, decrease in
VIP Customers
Establishment of Encore Macau
2. Marketing Towards Middle-Class Chinese
Chinese has fastest growing middle class
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RECOMMENDATIONS3. Training Program for Employees
Macau staff is relatively new &
inexperienced
Need proper training
Maintain brand image & top quality
4. Special Training Program for Board
Members
Complete reliance on Steve Wynn
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SUMMARY Background, Economic
Environment, &
Internal Analysis
Industry-Based View
Institution-Based View
Resource-Based View
Internationalizing
Recommendations