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Transnational Management - Wynn Resort Ltd.

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Rafael Gomez

on 11 May 2014

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Transcript of Transnational Management - Wynn Resort Ltd.

Cologne Business School
EUM: Transnational Management - Course 2014
Case Study Analysis of





by Tayfun van Dijk & Rafael Gomez
Lecturer: Malgorzata Zmuda
Date: 28/04/2014
"The Wynn Resort Ltd."
Structure:
1. Wynn Resort Limited - History & Overview
established in 2002
CEO: Steve Wynn
provides luxury casino resorts in Las Vegas and Macau
casino services, rooms, F&B, entertainment, meetings and even retail stores
The Wynn Empire:
Wynn Las Vegas
Encore Las Vegas
Wynn Macau
1.
Wynn Resort Ltd. - History & Overview

2.
Wynn Resort´s Strategic Leadership

3.
Internal & External Analysis (SWOT)

4.
How does the future look like ? A Scenario Analysis.

5.
Business Strategy - considering their financial
situation

6.
How can they ensure their competitive advantage ?
Improvement Suggestions on hand of PESTLE &
Porter´s 5 Forces

7.
Final discussion & criticism
Steve Wynn
2. Wynn Resort´s Strategic Leadership
S W O T
Strengths:
Weaknesses:
Opportunities:
Threats
:
5. Business Strategy
Improvement Strategies
Further expansion to Asian Market...
opened 2003
located on the Las Vegas Strip
named after developer and CEO Steve Wynn
215 acres & stands 614 feet with 45 floors 6 2716 rooms
convention center, retail stores,
111000 sq ft. Casino

Short insight in their Statement of Financial Position...
Steve Wynn
: Knowledge, Vision, Experience, Name/Brand Recognition
Luxurious
Resorts: 5-Star Awards (more than any other)
Superior Amenities: dining, entertainment, premium retail
Global Expansion
: lower dependence on regional economical situation (- minimizes risks)
One of six concessionaires in Macau
Good functioning HR Strategy
Limited portfolio
in comparison to their Competitors: only high end properties (MPT)
Complete reliance on Steve Wynn
Young Company: 2002 (compared to MGM 1969 Ceasers 1937)
Excessive debt financing
- dependent on on Steve Wynn
global
economical changes
Rapidly growing gambling industry in Latin America or Brasil
Entering Emerging Markets and stabilize Market Power from the beginning
Online Gambling
(political situations - legal restrictions)

Huge Competition
Vulnerable to economic conditions
Government regulations
Steve Wynn is not replaceable
Increasing legalization of
online gambling

opened 2008
adjacent and connected to Wynn Las Vegas
Hotel: 2034 Suites
7600 square feet casino (90 tables, 790 slot machines)
Forbes & AAA - 5 Star
opened 2006 on the Cotai Strip
600 rooms, 390 table games, 1200 slot machines
222,000 square feet Poker area
48, 000 square feet retail area
recreation and leisure facilities
health club, pool and spa
+ Encore Macau since 2010
* born 1942
expansion Las Vegas Strip
participated in the development of Golden Nugget, Bellagio, Treasure Island, Mirage beside the Wynn Empire
CEO of Wynn Resorts Ltd.
491. richest man ($2.8 billion net worth)
holds 35,6% share of the common stock
company´s operations & control
Short Term:

"We promise to provide at any time an elegant environment, high quality amenities, a superior Level of service and distinctive attractions for our customers."
Organizational Structure:
Mission Statement:

Wynn Resorts, Limited strives to be the leading provider and choice of elite, luxurious casino and resort experiences worldwide.
Values & Promises
1. Care about everyone and everybody
2. Show never-ending attention to detail
3. Take responsibility; don´t leave it for others
4. Always strive to better
The 4 Core Values:
The 8 Wynn Promises:
1. Be in the moment
2. Show gratitude
3. Smile and make eye contact
4. Work together
5. Know our resort
6. Take pride in our resort
7. Present yourself best
8. Communicate professionally
3.
Long Term:
4. Scenario Analysis on the Future of the Casino Industry
Actual Situation:
App for iPhone & iPad
online room & dining reservations
electronic game tables
electronic winning redemption
coinless slot machines
Technological: Online - Gambling Theories
Financial Position:
Competitive Advantage:
Revenue on gambling in the Resorts
1. Premium Brand Image


presence in US and Macau,
the two most prominent casino hubs in the world.
How did Wynn react on the technological developement ?
Recent changes in the last years...
2. Geographical diversified operations
internet
social media
"onlinenisation" (e.g. bitcoins)
?
Conclude Facts:
main revenue through gambling
"onlinenisation"
potential and financial possibilities
great marketing
brand image - luxury
Premier "
Wynner
" Program:
possible contracts with Rational Entertainment Enterprises (PokerStars.com)
Winning Premium for VIP Tournament e.g.
ensure/increase gambling earnings
high effective marketing to explicit target group
Corporate - Level
trainee program for board of directors - value & knowledge transfer
restructuring of key positions
split the leadership
reduction of debt financing
innovation in entertainment
connected to luxury brand image
customer service
Business - Level
Short Term
Long term



Economic:
steady economic recovery since crisis
increase in traveling
create work - employment


Sociological:
no demographic comparison
gambling as entertainment form

Legal (the effect of national and world legislation) legalized online gambling

P

Political:
regulations on gambling
regional controlling organizations

Las Vegas - Maturity Phase
Cash Cow
Macau - Growth Phase
Star

• The economic recession of 2008/2009 slowed down the growth of
the Las Vegas gaming industry.

• Other US states like Pennsylvania and Delaware have legalized table games. Similar action by other states could affect the number of tourists visiting Las Vegas. More than 80% of the tourists visiting Las Vegas are domestic.

• The Las Vegas gaming market has reached a saturation state. Casino operators indulge in intense competition to sustain their margins. Intense competition is affecting the industry margins. However, in 2011, it did show signs of improvement.

• Asian tourists prefer Macau to Las Vegas as it offers world class gaming infrastructure at a nearby location. The decrease in number of Asian tourists would also affect the Las Vegas gaming industry.


• Wynn is looking at Macau, the Asian replica of Las Vegas, for
future growth. Wynn is about to start the construction work of another major resort in the Cotai strip area. The new Cotai resort is expected to be completed by 2015.

The following factors strengthen the trends mentioned:
• Macau surpassed the Las Vegas Strip as the world’s biggest gambling hub in 2006, after the government allowed the entry of overseas casino operators.

• According to a study by PwC, growth in Macau will be fueled by new casinos and revenues which is expected to be more than $62.2 billion in the next five years. This would represent 34% of the total global casino revenues in 2015.

• A strong Chinese economy followed by a rising middle class and increasing population of high net worth individuals is helping boost Macau's growing gaming industry.

maintain Las Vegas market share
grab enough as possible on the Macau market
seek source to invest in future developing markets (e.g. Latinamerica)
maintain emphasis on gaming revenues
ensure competitive advantage - Luxury & Brand
capitalize on the Wynn brand
clear profitability (Macau)

BUT Expansion Criteria:
- casino taxes
- established infrastructure
- design
- employment

Wynn Eurovegas ?
The Wynn Dubai ?
What to consider ?
How should we enter the Market ?
diversification
Political legislation ?
The Wynn - Vision
Discuss the following questions...
Do you think that Wynn resorts can establish sucessfull in online gambling?

Assume Wynn Resorts is going through a generational change?
Do you think that without Steve Wynn - Wynn resorts will not be successful?

What kind of problems can occur when Wynn Resorts try to "over-internationalise "?
+
Porter´s 5 Forces:
E
E
1. Bargaining Power of Buyers
consumer driven industry
sensitive to price changes
low switching costs
2. Bargaining Power of Suppliers
high number of suppliers
low differentiation of product
4. Threat of New Entrants
require high capital
regulated industry
significant knowledge
international vs. domestic
5. Threat of substitutes
unlimited entertainment options
3. Rivalry among existing Competitors
slow domestic growth
limited to legal gambling areas
low level of differentiation
mergers create challenges
S
T
L
The Macau government e.g. is reinforcing a series of initiatives in order to drive visitor growth in the region.
The gaming industry is a key contributor to Macau's GDP. The government is investing in new transportation links to ease travel for Chinese visitors.
Environmental:
nature - catastrophes
sustainability "going green"
• The Guangzhou-Zhuhai high-speed railway is expected to improve travel time from Guangzhou to Macau to 40 mins, down from the 2+ hours taken by bus.

• The Macau Light Rapid Transit will link ferry terminals and key locations. It will have 12 stops on the Macau peninsula, 11 stops on Cotai and Taipa and will fully integrate different regions within Macau. It should be completed by 2015.

• The Hong Kong-Zhuhai-Macau bridge will connect Hong Kong to Macau, thereby, reducing car travel time from 4 hours to 40 minutes. It is expected to be completed by 2015-2016.

• The Macau International Airport is presently undergoing capacity upgrades. Its capacity will be increased to handle 12 million people per year, almost double from the current capacity of 6 million people. It is expected to be completed by 2017
Full transcript