Blog entry by Sarah rogerson
0.1 Apply Porters Five Forces Model to the Gaming scenario.
Porter’s five force model given in this assignment help online is exclusively used to study the market inorder to come up with an analysis that helps us understand the strategy or the conditions of the the market. It helps us show the 5 basic elements that make a market and can control the competitiveness of it. Below is the analysis on the basis of the case study that throws light on the Gambling scenario in China and the challenges Wynn Resorts faces, Wynn Resorts is a Las Vegas based gaming brand that managed to enter the markets of Macau (Lenssen et al. 2018).
Entry of new firms that may be a threat- Macau has provided concession contracts as well as Gambling licenses for the operation of its casinos. Wynn Resorts is one of the few that have signed it. They are deals which range for about 20 years and can be renewed or may be given to a new casino operator as per the government’s wishes, that case when it comes to Wynn is not until 2026 as they signed a contract of sub concession with Melco in 2016. Thus entry of new entrants in the market is highly less anticipated for a few years considering even the renewable contracts of the rival firm. But in the long run if the concession/ Licenses are to go into the hands of the other, it still wont be considered as a problem for the already established casino’s because this industry needs a very high cost to start up (Aithal 2016).
Bargaining power of the Gamblers: Macau is the only place within China’s jurisdiction that have casino’s that are legal. Hence, taking into consideration the humongous population and only around 20 places that legally lets them game does not mainly give them any power. Though competition may arise inbetween the first but the constant demand from gamblers will easily let the firms chose their own customers one reason Specially being the Chinese’s admiration when it comes game of fortunes. Since the government even lifted the law where it did not allow Mainland Chinese citizens without a business or group tour visa, there has been a tourism boost and thus a gambling one too (Burns et al. 2016).
Bargaining power of the suppliers- One of the main limiting factors when it comes to casinos is their gambling tables, though there has been a noticeable increase in them, the Macau government had set a tap on around 5500 tables up till 2013 and annual increase in them which ranged from 3 to 5%. This is problematic as most of the gaming revenues are the ways of casino tables, especially the VIP tables. This might seem to be a problem for Wynn as it owns only 13% of VIP tables when compared to its rivals, which would be SJM (28%) also, Venetian and Melco (17% each) (Wu et al. 2015).
Rivalry in the Gambling business- When it comes to already established casinos they are general and easily available to the masses hence a customer can easily switch without incurring any cost for switching if they don’t stay on their toes by providing services of a certain caliber. As Wynn is Las Vegas based, it is mentioned in this assignment help online that it becomes comparatively more attractive to the masses as Las Vegas is basically the capital when it comes to the gaming industry. If they are to make proper use of the name, then it would definitely win over the others or the regional ones (Wu & J. 2017).
Threats when it comes to substitutes- As mentioned earlier it is easier for customers to switch between places that provide better facilities as there as innumerable choices and the most attractive ones win, this means there is relatively very high rivalry when it come to this particular industry. If the prices of one is too high for the service provide the customer can always find alternatives in this market. (Wang et al. 2016).
0.2 Institution Based View
On the basis of performance given in this assignment help online, as well as taking into consideration the productiveness as well as profit of any casino sectors which are single property players one has to note that Wynn sits at the top. Even though non gaming might not be a favorable expenditure for the Chinese it is know that the results that Wynn generates is a yield higher when it comes to mass, non gaming as well as VIP business. This is surprising taking into consideration that it has a low number of gaming tables as well as hotel rooms. It also seems low on the retail space when compared to that of Venetian (Rosenbaum et al. 2015). The competition in Macau though is always on a high considering rivals but an attitude like having patience to slowly wait and watch the victory Is the only way for Wynn as it seeks the approval of the government on the Cotai Land Applications. Cotai land area has a dominant presence of Venetian as they have promised to develop Cotai and convert it into on of Asia’s premier destination in gaming as well as Leisure. But uptil 2011 atleast Wynn owned only one casino in Macau which is very only 19 less than SJM who was leading with a 20 chain casino family. Though certain Wynn resorts might be attempting to build and have more phases, it is clear that Chinese government has a strict policy when it comes to using help of foreign construction workers on any site on macau, which in a way slows down the entire process of construction as the local set of skills is not enough to main a caliber they want to breach (Hancock, et al. 2016).
0.3 Resource based view
One of Wynn Resorts leader firms are in Macao. Wynn has also made a donation of around 25M to the foundation of university of Macau development, with commitments around 10M every year until 2022 (Lam & D. 2017).
When it comes to the customers of Macao it is to be noted that they prefer gaming and shopping over other non gaming in house services provided like shows in the arena or restaurants which lead to limiting the costs that are usually incurred by making use of the non core business options. Hence the total revenue of Wynn Macau that belongs to its non gaming sector is just 10% of its over all revenue. As most of the developments that are focused in Macau are at a major level this revenue being so small does not help with the resources. Along with that even though there is a huge casino market when it comes to China, the government is trying their best to take down all Chinese wealthy associations which means reduction in the VIP tables and other high level services that they invest in thus lowering the profit as well (Chui et al. 2018).
It was also said in this assignment help online that when Wynn entered the casino business in Macau, the timing was perfect and along with it they also had around almost 3 quarters already paid for. The average price of property development in macau that it faced while building their first phase was around 1.1Billions US$, which paid for around 380 tables for gaming, around 46thousand retail space, not to forget the 1270 slot machines which rained over their 205,000 sq ft of casino space. This put them in position to easily attend to the upper end market. (Luo et al. 2016)
0.4 What has changed since the case study
One of the most noticeable changes in the gambling market in Macau would be the shift on the reliance of the VIP tables due to the corruption scene related to Xi. Major of the casino revenue now relies on mass market entertainment. The government at the same time is trying to increase its reach by considering enlarging business prospects by diversification and trying to go beyond just the casino’s being used for gaming rooms, they are trying to encourage events and exhibitions to be held there too. The main problem in the scenario is the anti-corruption campaign which has forced most of the Chinese gamblers to find other alternative destinations with casino, usually Philippines, Singapore and Manila. It still does not change the fact that Macau is China’s answer to Las Vegas. Seeing for a fact that China has not lost its admiration when it comes to games of fortunes especially when it comes to their middle class and the continuous growth of the class is enough guarantee for a steady supply (Luo et al. 2016).
However, when it comes to Wynn Resorts Macau, amidst the resignation of their Chairman due to the sexual assault allegations against him, it was expected for the firm to close down, However, it is noted in this assignment help online that the business is still seeing positive in its fundamentals and boasts of the team which has a sound business outlook thus remaining untroubled and winning (Chan et al. 2019).