Porters Five Force Model of Australian Gambling Industry - Case Study Example

Table of Contents Introduction 2 Purpose of the report 2 Environmental conditions impacting the gambling industry 2 Porter’s Five Force Model of Gambling Industry 5 Advice to the gambling industry 6 Way to weather global downturn 7 Another industry that has been affected as gambling industry 8 Conclusion 8 References 9 Introduction Australia has a long history for being in the gambling industry and has one of the countries which have a very high per capital income being spent on gambling. The turnover of the gambling industry is more that A$80 billion and is increasing with the passage of time. The industry has been recently affected due to economic recession which has engulfed the country. This has made people stay away from casinos as they fear loss of job. Also changes in the government structure and increasing competition from various internet players is making it difficult for the Australian gambling industry to present similar results. This is making difficult for the government to frame a way that helps to improve the economic conditions of the gambling industry. Purpose of the report To conduct an environmental analysis so that factors which is affecting the gambling industry can be found out To identify the Porter Five Force Model for the gambling industry To provide recommendations to the gambling industry so that ways can be developed to come out of the present situation To identify another industry which is affected similarly to the gambling industry Environmental conditions impacting the gambling industry Analyzing the external environment will help to understand the manner in which the external market is having an impact on the gambling industry. Identifying these factors will help the gambling industry to build a framework which ensures that the industry is able to perform similarly (Kotler, 2001) Political Political factors have an influence on every industry and changes in the rules and laws framed by the government can impact the way business is conducted. Australia is a country which has a high influence on politics and changes in the government brings about a change in legislation which has an effect on an industry strategy (Oppapers, 2010). This is evident in case of the gambling industry in Australia where a change in the government of Victoria brought about new legislation for the gambling industry. This allowed the players to conduct their business without license and increased competition by allowing players to conduct business online. Economic Economic environment shapes the performance of every industry as speedy growth ensures that the industry is able to flourish. Changes in the growth rate and mind set of people has an effect on the performance of organization as industry are driven by people and changes in their perception brings about changes in the working environment (Justin, 2008). This is evident in the gambling industry. The widespread recession has affected Australia and has dented the confidence of people. This has resulted in people postponing their expenditure on casinos for the future. People fear that they might loose their job which has made them take a pessimist approach and has resulted in the revenues for the gambling industry to fall. Social The social environment present in a country helps the industry to grow. Australia is seen to have a social trend towards gambling and it constitutes around 26 percent to the GDP. The manner in which the social environment accepts gambling as considers it a part of human lives has resulted in the gambling industry to flourish. People working in the gambling industry realize that the perception of the people supports gambling which enables the different players to bank on the business opportunity provided and has enabled the industry to grow. Technological Technology has revolved every industry and gambling industry is also a part of it. The development in technology has made it people to conduct business even at the comfort of the house. The continuous development seen on the front of technology has ensured that industry which are adaptable to the changing technology are able to sustain growth (Justin, 2008). This is seen in the gambling industry in Australia where the evolution of technology through the use of internet has enabled the people fond of gambling industry to use it. This has made different players to start online gambling and has affected some of the players present in the country as they were not able to keep with the changes the industry has witnessed. Environmental The environment has a role to support the industry and the gambling industry has been able to ensure that people indulging into gambling don’t harm the environment there. The gambling industry has little relevance for the environment as they are neither in manufacturing nor in any type of business that can have an impact on the environment. Legal The legal laws prevalent in the industry have an effect on the direction the industry will move. This is witnessed in the gambling industry where the Victorian government has allowed new players to enter the market and they need not get a license after 2012. Along with it the new laws prescribed by the government in relation to the freedom for players to operate in the internet gambling industry has increased the level of competiton and brought about widespread changes in the way the gambling industry performs. Porter’s Five Force Model of Gambling Industry The analysis of this model for gambling industry will help to explain how the different factors are exerting pressure on gambling industry and how the different marketing concept like the Porter Five Force Model is helping gambling industry to understand the benefit this model is giving them (Mullins, 2004) Threat of Potential Entrant The gambling industry faces competition from other players who are using technology to ensure that they are able to capture a wide market The gambling industry faces competition from the growing online internet gambling players who provide similar results and environment for the customers Increased competition from development of new casinos at Macao where people visiting from China look to gamble. This has affected the business of Australia gambling industry and has resulted in stiffer competition (Rowley, 2005) Bargaining power of buyers The bargaining power of customers visiting the casinos has increased as with the presence of gambling over the internet provides the customer an opportunity to gamble. Decrease in the customer base visiting the different gambling centres at Australia as people from China limit their playing option to Macau. Decrease in the purchasing power parity of customers has affected the way business is conducted and has thereby affected the bargaining power of customers Availability of Substitutes Increased options for the customers as they can gamble either online or by visiting the casinos. This has made customers to be choosy and provided different options to choose from. Option for the customer to fly to Macau where the gambling industry has developed and provides a hub for gambling Bargaining powers of Suppliers The bargaining power for the gambling industry has decreased as the numbers of players are increasing. The increased options available to the customers through internet has decreased the bargaining power of the suppliers Development of new gambling places at different locations has affected the bargaining power of suppliers and has reduced their capacity to get the best bargain due to increase in options. Rivalry among firms Increasing rivalry among the gambling industry due to increased growth of casinos. The casinos have grown and so has the use of internet as a medium to gamble has increased the level of rivalry among the firms and increased the pressure on all firms. Advice to the gambling industry The gambling industry needs to devise a strategy which will ensure that when the economy recovers the casinos are able to garner similar customer response as it used to. The gambling industry should look towards using the following strategy which will help them to fight the intensifying competition The gambling industry needs to market the casinos aggressively. The increase in internet gambling options has intensified the competition and makes it important that the different casinos market themselves (Cuizon, 2009). The gambling industry should look toward providing something extra so that people visit the casinos instead of playing online. The gambling industry needs to ensure that customers are given some benefits and a halo effect is created which makes people visit the casinos. The gambling industry should look towards certain rules and regulations from the government which supports the growth of the industry. Since, the government industry contributes towards the GDP of Australia so the industry should look towards gaining some support from the government so that they are able to grow The gambling industry should look towards providing certain incentive to the regular visitors by providing some leverage to them. This will help them to create a brand name and will help to fight the increasing competition. The gambling industry needs to adapt to the changing technology and mould the changes in their working scenario. This can be achieved by bringing changes in the casinos and developing it so that it matches the developments of casinos taking at Macau and is a able to face the increasing competition. Way to weather global downturn The gambling industry needs to find out ways to weather the global downturn which has affected the gambling industry. This can be done by the following way The gambling industry can look towards the government to support the gambling industry. Since, the economy is in recession so the role of the government increases. The government needs to use both the monetary and fiscal policy to bring about changes in the way the economy is performing so that the economy is able to come out of downturn The gambling industry needs to protect its player during the downturn as increasing competition from different casinos in Macau will put additional pressure on gambling industry. The industry needs to be protected during this downturn and when the economy revives it can be left to grow. This will help to fight the recession which is engulfing Australia. Another industry that has been affected as gambling industry A majority of the industry has been affected due to the global recession which has also engulfed Australia. All the industries are facing a downturn but certain industry is more adversely affected as the gambling industry. One such industry which has been deeply affected as the gambling industry is the service industry. The service industry has seen deeply affected as there have been job losses and it has dented the confidence of the public. People are of the perception that they can be fired which has resulted in delaying their expenditure which has affected industries like the gambling industry. The way out of this is when the economy recovers and the positive sentiment prevalent among the people comes back. This will make the economy to be back on track and help the economy to post healthy growth rates thereby enabling all industries to grow. Conclusion The paper thus presents the manner in which the external environment is having an effect on the gambling industry. The players in the industry need to find out the way the environment is affecting the business and needs to use the environment to their advantage. The Porter Five Force Model also brings forth similar results and shows the area that the gambling industry needs to work on so that they are able to grow and ensure similar business that they use to have before the recessionary conditions. This will help Australia to ensure that the gambling industry contributes towards the GDP and helps Australia to grow over a period of time. References Cuizon, G. 2009. Audit on Gambling Industry Marketing Strategies. The 4P’s of Marketing, Suite 101.com Justin, A. 2008. Gambling Industry. Service Sector Management. Business Week Kotler, P. 2001. Marketing Management. Page 201, 11th edition, Prentice Publication, Upper saddle River, New Jersey Koranteng, J. 1999. Aristocrat Leisure takes early lead in competition. Advertising Age International, Volume 24, Issue 37, page 63-71 Mullins, K. 2004. Critically examine the main drivers for gambling industry growth. Free Press, New York OPpapers. 2010. PEST Analysis Australia Gambling Industry Sector. Research paper. Retrieved August 31, 2011 from http://www.OPpapers.com Rowley, T. 2005. Porters Five Force Model. Prentice Hall. Pearson, Harlow Read More