Steve Wynn Essay
Linda Solovjova
Case 2: Wynn Resort
SWOT of Company Strenghts | Weaknesses | * Steve Wynn * experienced management team * premiere spot on Las Vegas strip, and home to the only golf course * strategic development of its product - luxury, high-end product, high brand value | * complete dependance on Steve Wynn * focus on high-end customers | Opportunities | Threats | * legalization of gambling in US and abroad * holder of one of fours licenses in Macau * increased social acceptance of gambling * demographic changes (aging population, who are healty and wealthy) * focus of competitors away from high-end market in US * legal changes around the globe similar to recent changes in Macau * aim to turn Macau …show more content…
into destination of tourists * legal opportunity from concession on Macau * decreased restrictions on travel and currency movement between China and Macau | * Wynn leaves for any reason * differing social norms, social and demographic in US and abroad * expiration of concession in Macau in 2017, and Macau government able to take control over casion at any time * possible more concessions granted to operate in Macau * unfavorable political, regulatory and economic environment development in Macau * emerging market risk * limited freedom of operations and creativity * increased competition locally and abroad (both for customers and for employees) * not able to collect its debts in Macau |
The SWOT above and information from the case study leads to the formulation of the respective problem the Wynn Resort if facing: How to proceed further to maintain the competitive advantage and succes of the company?
The following alternative strategies are available to the company: 1) Do nothing and continue the same - the same product (service), the same markets 2) Focusing on current high-end resorts and markets and expanding its high-end resorts into new markets 3) Expansion into middle-class segment (development of middle class product/service)
Strategy 1
Pros for „Do nothing” strategy are that company does not have to invest additional resources to develop its business and new opportunities. Furthermore, it does not take on extra risk related to developing new products or new markets. However, this strategy involves several cons as well. Firstly, the competition is growing and getting more intensive, and competitors are not sitting still. Although the company is well positioned in high-end market, has gained stable reputation and client base, they still have to keep developing to keep up with competition. Furthermore, the company will not take chance of advantageous external obstacles (such as changing demographic and social trends, legal changes around the world, etc.), while other competitors will do that. And doing nothing might be especiall dangerous while operating in emerging market (Macau), as new competitors will for sure arise to Macau resort, why company has to keep developing to keep up with competitive pressure.
Strategy 2
Pros of this strategy are that company will keep making use of one of their competitive advantages - they are experienced in offering high value service (product) to high-end market, they have established well known brand, and they know how to do it. Now they will simply exnted this know-how to other markets. They will also spread the risk over several geogrpahic regions. Furthermore, the income is growing also abroad, the legal environment is changing, they have already established their presence in Chinese (Asian market) with Macau resort, they are also having first mover advantage in Macau, therefore, from this point of view the external environment presents some good opportunities to the company. However, this strategy also has several drawbacks. Furthermore, as competition is increasing around the world, expanding to new markets will allow to cope with this competition, as well as probably make use of first mover advantage in some of geographic regions. Although, they are succesful with offering their product to high-end market in the US, social and demogrpahic trends might differ around the world (especially in Asia). Therefore, although they are experienced at offering high-value product to high-end market, this might not work in other markets. Secondly, the income might be lower in other parts of the world, therefore, there service and product to middle-class might be more appropriate. Furthermore, the company will face signifcant financial risk with development of operations in new markets, as it will require significant financial investment. External (including policital, legal and economic) enviornment also can be considered as unstable especially in emerging market, increasing the riskiness of this alternative. If expending to emerging markets such as China, the company is highly exposed to legal requirements and decisions of local government, which might negatively affect the operations and freedom of the company.
Strategy 3
Pros of this strategy are that although this is new market segment, the company has already experience and contacts within casion, gambling and hotel business they can make use of. Secondly, they will enter new and potentially large market segment (middle class) both in US and abroad. They can make use of their well established brand name to appeal to middle class. Middle class also offers greater market potential (demand) especially in emerging markets, than high-end. This also means product differentiation to some extent, decreasing the risk on reliance to one product. However, there are also several disadvantages to this strategy. Firstly, they risk loosing current customers, as they enter also middle-class market, as now they are viewed only as luxury product to high-end market. Secondly, they will face stiff competition (at least in US), as there are already many players offering service to middle-class. Furthermore, the company is not experienced in offering service to middle class, and they might not be able to develop appropriate product and price offering, as till now they have been striving for exellence and perfection. This migh also involve sacrificing some of their values (for excellence), and changin corporate mission/vision. This might also affect the performance and excellence of their hihg-end product. This also involve significant financial investment, and therefore, risk.
Recommendation:
In my opinion the most appropriate strategy to the company and external conditions would be Strategy 2 - which involve focusing on current high-end products and markets and expanding their current product to new markets. Firstly, the company will take advantage of their current competitive advantages - their brand name and value, their experience into offering high-value product to high end market, as well they will retain their customer base. The high-income class over the world is growing, therefore, demand for product is growing. They have already established their presence in Asian market with Macau resort, and external enviornment presents some opportunities company can exploit (including their position as having one of four licenses). Developing high-end resort in different geogrpahic regions will also allow to exploit the cross-marketing, as high-end customers in different geogrpahic regions are likely to travel around the globe, therefore, would be willing to stay in other Wynn Resorts (establishing stable customer base around the world). They also do not risk to lose their brand value as in case with entering middle-class segment. Furthermore, they will keep up with increasing competition. Additionally, recent mergers and resulting possible focus away from high-end market gives reason to focus exactly on this market.
Although this is the most appropriate strategy for the company, there are several issues what company must take into account when pursuing it.
Firstly, the company is still very reliant on presence of Steve Wynn in company, as this is drawback no matter which strategy they take on. Although he is not preparing to leave, I think they should start to look for and prepare a new person, which in future might replace Steve Wynn, if he leaves for some reason. He should prove his ability, experience, excellence, before Steve Wynn leaves, in order to prove he would be able to replace him successfully (probably, development of some new resort could be given excatly to this person).Secondly, there are still external envionrment risks related to operating in emerging markets and their government decisions. Although, they cannot be eliminated, the company can try to decrease them to some extent. Some lobbying in respective governments might help. As well positioning themselves as responsible corporate citizien, caring of local people and environment could help to make government making favorable decisions (and e.g. not taking control over their business, or regarding expiration of concession). Furthermore, they should put extra effor to investiage and evaluate demographic and social trends and norms in markets they want to operate, as they might differ significantly from US
market.
Case 2: Wynn Resort
SWOT of Company Strenghts | Weaknesses | * Steve Wynn * experienced management team * premiere spot on Las Vegas strip, and home to the only golf course * strategic development of its product - luxury, high-end product, high brand value | * complete dependance on Steve Wynn * focus on high-end customers | Opportunities | Threats | * legalization of gambling in US and abroad * holder of one of fours licenses in Macau * increased social acceptance of gambling * demographic changes (aging population, who are healty and wealthy) * focus of competitors away from high-end market in US * legal changes around the globe similar to recent changes in Macau * aim to turn Macau …show more content…
into destination of tourists * legal opportunity from concession on Macau * decreased restrictions on travel and currency movement between China and Macau | * Wynn leaves for any reason * differing social norms, social and demographic in US and abroad * expiration of concession in Macau in 2017, and Macau government able to take control over casion at any time * possible more concessions granted to operate in Macau * unfavorable political, regulatory and economic environment development in Macau * emerging market risk * limited freedom of operations and creativity * increased competition locally and abroad (both for customers and for employees) * not able to collect its debts in Macau |
The SWOT above and information from the case study leads to the formulation of the respective problem the Wynn Resort if facing: How to proceed further to maintain the competitive advantage and succes of the company?
The following alternative strategies are available to the company: 1) Do nothing and continue the same - the same product (service), the same markets 2) Focusing on current high-end resorts and markets and expanding its high-end resorts into new markets 3) Expansion into middle-class segment (development of middle class product/service)
Strategy 1
Pros for „Do nothing” strategy are that company does not have to invest additional resources to develop its business and new opportunities. Furthermore, it does not take on extra risk related to developing new products or new markets. However, this strategy involves several cons as well. Firstly, the competition is growing and getting more intensive, and competitors are not sitting still. Although the company is well positioned in high-end market, has gained stable reputation and client base, they still have to keep developing to keep up with competition. Furthermore, the company will not take chance of advantageous external obstacles (such as changing demographic and social trends, legal changes around the world, etc.), while other competitors will do that. And doing nothing might be especiall dangerous while operating in emerging market (Macau), as new competitors will for sure arise to Macau resort, why company has to keep developing to keep up with competitive pressure.
Strategy 2
Pros of this strategy are that company will keep making use of one of their competitive advantages - they are experienced in offering high value service (product) to high-end market, they have established well known brand, and they know how to do it. Now they will simply exnted this know-how to other markets. They will also spread the risk over several geogrpahic regions. Furthermore, the income is growing also abroad, the legal environment is changing, they have already established their presence in Chinese (Asian market) with Macau resort, they are also having first mover advantage in Macau, therefore, from this point of view the external environment presents some good opportunities to the company. However, this strategy also has several drawbacks. Furthermore, as competition is increasing around the world, expanding to new markets will allow to cope with this competition, as well as probably make use of first mover advantage in some of geographic regions. Although, they are succesful with offering their product to high-end market in the US, social and demogrpahic trends might differ around the world (especially in Asia). Therefore, although they are experienced at offering high-value product to high-end market, this might not work in other markets. Secondly, the income might be lower in other parts of the world, therefore, there service and product to middle-class might be more appropriate. Furthermore, the company will face signifcant financial risk with development of operations in new markets, as it will require significant financial investment. External (including policital, legal and economic) enviornment also can be considered as unstable especially in emerging market, increasing the riskiness of this alternative. If expending to emerging markets such as China, the company is highly exposed to legal requirements and decisions of local government, which might negatively affect the operations and freedom of the company.
Strategy 3
Pros of this strategy are that although this is new market segment, the company has already experience and contacts within casion, gambling and hotel business they can make use of. Secondly, they will enter new and potentially large market segment (middle class) both in US and abroad. They can make use of their well established brand name to appeal to middle class. Middle class also offers greater market potential (demand) especially in emerging markets, than high-end. This also means product differentiation to some extent, decreasing the risk on reliance to one product. However, there are also several disadvantages to this strategy. Firstly, they risk loosing current customers, as they enter also middle-class market, as now they are viewed only as luxury product to high-end market. Secondly, they will face stiff competition (at least in US), as there are already many players offering service to middle-class. Furthermore, the company is not experienced in offering service to middle class, and they might not be able to develop appropriate product and price offering, as till now they have been striving for exellence and perfection. This migh also involve sacrificing some of their values (for excellence), and changin corporate mission/vision. This might also affect the performance and excellence of their hihg-end product. This also involve significant financial investment, and therefore, risk.
Recommendation:
In my opinion the most appropriate strategy to the company and external conditions would be Strategy 2 - which involve focusing on current high-end products and markets and expanding their current product to new markets. Firstly, the company will take advantage of their current competitive advantages - their brand name and value, their experience into offering high-value product to high end market, as well they will retain their customer base. The high-income class over the world is growing, therefore, demand for product is growing. They have already established their presence in Asian market with Macau resort, and external enviornment presents some opportunities company can exploit (including their position as having one of four licenses). Developing high-end resort in different geogrpahic regions will also allow to exploit the cross-marketing, as high-end customers in different geogrpahic regions are likely to travel around the globe, therefore, would be willing to stay in other Wynn Resorts (establishing stable customer base around the world). They also do not risk to lose their brand value as in case with entering middle-class segment. Furthermore, they will keep up with increasing competition. Additionally, recent mergers and resulting possible focus away from high-end market gives reason to focus exactly on this market.
Although this is the most appropriate strategy for the company, there are several issues what company must take into account when pursuing it.
Firstly, the company is still very reliant on presence of Steve Wynn in company, as this is drawback no matter which strategy they take on. Although he is not preparing to leave, I think they should start to look for and prepare a new person, which in future might replace Steve Wynn, if he leaves for some reason. He should prove his ability, experience, excellence, before Steve Wynn leaves, in order to prove he would be able to replace him successfully (probably, development of some new resort could be given excatly to this person).Secondly, there are still external envionrment risks related to operating in emerging markets and their government decisions. Although, they cannot be eliminated, the company can try to decrease them to some extent. Some lobbying in respective governments might help. As well positioning themselves as responsible corporate citizien, caring of local people and environment could help to make government making favorable decisions (and e.g. not taking control over their business, or regarding expiration of concession). Furthermore, they should put extra effor to investiage and evaluate demographic and social trends and norms in markets they want to operate, as they might differ significantly from US
market.