What Makes Wynn Resorts Competitive Business in the Gambling Industry - Research Paper Example

Analysis of Strategies Wynn Resorts located in Macau and Las Vegas has vibrant strategic plans aimed at enabling the resort to remain competitive in the gambling industry. The resort started in 2002 with a primary aim of providing the casino, as well as, non-casino services (Wynn Resorts). The company has generated many revenues from offering the Macau properties and comfortable casino services. Similarly, meetings, entertainments, and retail services supplement the annual income that the Wynn Resorts generates from the aforementioned services. Despite the threat of competitors such as MGM Resorts International and Las Vegas Sands Corp, the Wynn Resorts is pursuing three notable strategies. The strategies include product differentiation, cross marketing, and expansion plan. Strategy and Company’s Accomplishment Product Differentiation Wynn Resorts pursue a product differentiation strategy to carve a niche in the competitive gambling and non-casino market. The strategy is aimed at distinguishing its services from the primary competitors such as Las Vegas Sands Corp and MGM Resorts. Essentially, Wynn Resorts is hoping to continue pursuing the differentiation strategy through continuous improvement of the service delivery by making the product unique with the intent of gaining high profit margins in the target market. The designing of the Wynn Resorts properties and superior casinos provides unique and premium experience that appeal to a wide variety of customers. Wynn Resorts Limited has endeavored to offer a luxurious destination experience that leaves the customers satisfied and valued through excellent customer service, as well as, state-of-the-heart amenities (Wynn Resorts Limited). The sumptuous experience has enabled the clients to spend hugely on gambling, shopping, dining, and drinking at the Wynn Resorts. Hence, Wynn Resorts targets to utilize the product differentiation strategy to attract as well as maintain customers. In essence, the product differentiation strategy will popularize Wynn Resorts’ brand. Cross-platform Marketing Strategy The cross-platform marketing strategy entails presenting critical information about products and services to the target market. The strategy requires firms to utilize various platforms to engage potential clients with their products (Hill 25). The advancement in technology has facilitated harmonious and smooth communication among different players in a particular industry. Wynn Resorts aspires to utilize the cross-platform marketing strategy to penetrate deep in the casino, as well as, non-casino services. The Wynn Resorts will utilize both the traditional and digital marketing platforms to engage a focused communication with the potential clients. In the past, the firms have created awareness of its services mainstream media such as newspapers, television, billboards, direct mails, magazines, and radio. The cross-marketing strategy targets to complement the database marketing methods, reward systems, loyalty program, and conventional initiatives the firm has employed from the time it started. The international, as well as, domestic marketing executives will facilitate the actualization of the cross-platform marketing strategy. Business Expansion Strategy Firms pursue a business expansion strategy through acquisition, market penetration, diversification, and mergers (Hill 35). Largely, the business expansion strategy depends on government regulation, financial position, and market competition. Wynn Resorts has been pursuing the business expansion strategy at the domestic, as well as, international arenas. The firm utilizes the acquisition and merger to realize the expansion strategy. Wynn Resorts has continually sought to acquire new gaming and non-casino establishment in the United States and the international arenas. Notably, the firm intended to acquire licenses to provide casino services in Massachusetts. In effect, the firm has spent a lot of finances to acquire the permit. Wynn Resorts received the license in September 2014 to build a casino estimated to cost approximately $1.6 billion (Zacks Equity Research). The acquired land belonged to the Monsanto chemical plant, and Wynn Resorts has put in place a design of the casino that will be complete by 2017. Wynn Resorts has indicated that it will use the vibrant business expansion strategy to extend its services to the international jurisdictions. Type of Strategy The product differentiation that Wynn Resorts pursues fits in the category of product development. The intent of the strategy is to modify and create unique services to differentiate the firm from the competitors in the gambling and non-casino market. Typically, the product differentiation strategy demands that firms keep updated with the customer needs, as well as, market dynamics (Kazmi 155). The cross-platform marketing strategy features in market penetration strategies. In market penetration strategy, firms utilize viable methods to get access to the new market. Wynn Resorts aspires to enter the international markets. Thus, the cross-platform marketing is a combination of the traditional and digital marketing strategies to create awareness about the services and attract potential customers. Similarly, the acquisition and merger, which the Wynn Resorts uses is a horizontal integration strategy. The typical horizontal integration strategy involves companies acquiring other business through mergers of other firms that operate in the same industry. Significance of the Strategies The product differentiation, cross-field marketing, and business expansion are a continuation of the existing strategies. Wynn Resorts has been pursuing the strategies since the inception of the firm in 2002. The three strategies seek to create a competitive advantage in the local and international markets. Notably, the business expansion strategy endeavors to strengthen Wynn Resorts position in the gambling and non-casino markets. By actualizing the horizontal integration strategy, the gambling firm can achieve the product differentiation plan, reduce competition in the existing and new markets, as well as attain economies of scale. Similarly, the product differentiation and cross-marketing strategies can facilitate the increment of the number of consumers who enjoy the distinct services offered by the business enterprise (Dyck and Neubert 267). The Wynn Resorts seeks to present the firm as exceptional by focusing on the primary elements that center on outstanding design, ample atmosphere, and excellent customer service. Opinion on the Strategies I feel that the strategies the Wynn Resorts is pursuing are not unique, and big competitors such as MGM Resorts International and Las Vegas Sands Corp can replicate them. Companies have continually pursued the horizontal integration, market penetration, product differentiation, and vertical integration strategies to carve a niche in the ever-competitive markets. The firms in the gambling industry have always attempted to modify their services to fit with the consumer demands. Notably, the increase in the number of firms that provide the gambling, as well as, entertainment services has resulted in stiff competition. Consequently, the firms have devised and implemented strategies similar to what Wynn Resorts is pursuing to remain competitive in the industry. Although Wynn Resorts strategies have enabled the firm to remain strong in the market, the increased competition calls for the formulation of distinct strategies that other firms cannot copy and implement. Continuous research on unique strategies is paramount to facilitate the actualization of the Wynn Resorts plans to expand domestically and internationally. In my opinion, Wynn Resorts strategies are viable, but not distinct enough to enable the firm to remain competitive. Measuring the Success of Strategies Wynn Resorts will utilize a number of audits, growth of customer base and satisfaction rates to evaluate the success of product differentiation, business expansion, and cross-platform strategies. The audit will center on the financial element in order to determine whether the strategies have yielded well. Specifically, the audits will measure the growth of net sales, gross profit margins, pretax earnings, and total equity dollars. Similarly, the audit reports will examine operating expenses expressed as percentage of the total sales, receivables and inventory turnover, debt-to-equity ratios, and the operating, as well as, investing cash flows (Wynn Resorts). Likewise, Wynn Resorts plans to utilize the customer base to measure the success of the business expansion strategy. The growing base of customer is an important indicator that a business enterprise has reached the target market. In effect, the gambling firm will evaluate the number of retained and new customers, percentage of market share, statistics that reflect customer complaints, revenues generated from customers, and average sales per client. In addition, the resort will employ transaction per unit time, ratio of existing to new customers, percentages of satisfied clients, and amount of time spent on each customer (Wynn Resorts). Wynn Resorts believes that the methods of measuring the success of the strategies will facilitate the improvement or modification of the plans and firm’s reputation. Success of the Strategies The strategies promise to succeed to a large extent. The prime locations of the casinos as well as the increasing culture for people to gamble make the strategies workable. People are willing to spend their funds on quality services. Wynn Resorts product differentiation strategy promises to yield well as customers demand services that offer the unique experience. Similarly, the acquisition of the Massachusetts location to construct a casino is a positive indication of the success of the business expansion strategy. People have been waiting for construction of the state-of-the-heart casino in that area, and hence Wynn Resorts can carve a niche by pursuing the strategy. However, the firm will face stiff competition from other established competitors such as MGM Resorts International and Las Vegas Sands Corp. The aforementioned firms have offered a challenge to the Wynn Resorts. The cross-platform marketing strategy might not yield good results because many firms employ the same strategy to create awareness of the services. Nonetheless, the strategy is significant in complementing the loyalty programs and integrated database the firm has employed to popularize its services. Works Cited Dyck, Bruno, and Neubert, Mitchell. Management: Current Practices and New Directions. Boston, MA: Houghton Mifflin, 2010. Print. 269 Hill, John. Theory of Strategic Management with cases. 9th ed. New York: Cengage Learning, 2008. Print. Kazmi, Azhar. Strategic Management and Business Policy. New Delhi: Tata McGraw Hill Education, 2008. Print. 155 Wynn Resorts Limited. United States Securities and Exchange Commission: Form 10-K 2014. Web. 3 Apr 2015 < http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjMyMTUyfENoaWxkSUQ9LTF8VHlwZT0z&t=1> Wynn Resorts. Our Strategy: Wynn Resorts 10-K 2010. Web. 3 Apr 2015 < http://www.wikinvest.com/stock/Wynn_Resorts_%28WYNN%29/Filing/10-K/2010/F46621289> Zacks Equity Research. Wynn Resorts’ Everett Plan Progresses; Presents Redesign. Web. 3 Apr 2015 < http://www.zacks.com/stock/news/161671/wynn-resorts-everett-plan-progresses-presents-redesign> Appendices Appendix 1 WYNN RESORTS, LIMITED (Parent Company Only) CONDENSED STATEMENTS OF CASH FLOWS (in thousands)   Years Ended December 31,   2014   2013   2012 Cash flows from operating activities:           Net income $ 962,644   $ 1,004,157   $ 728,699 Adjustments to reconcile net income to net cash provided by operating activities:           Depreciation and amortization 447   423   421 Deferred income taxes (9,192 )   (19,826 )   (3,655 ) Stock-based compensation 21,888   26,964   11,894 Amortization of discount on investment securities and other 4,059   3,338   3,762 Dividends received from subsidiary 887,613   840,914   700,025 Equity in income of subsidiaries (864,156 )   (882,760 )   (665,127 ) Increase (decrease) in cash from changes in:           Receivables 68   (476 )   823 Prepaid expenses 1,185   (467 )   (1,695 ) Accounts payable, accrued expenses and other 21,540   1,515   38,337 Due from affiliates (26,900 )   (23,721 )   (22,318 ) Net cash provided by operating activities 999,196   950,061   791,166 Cash flows from investing activities:           Purchase of investment securities (200,258 )   (222,856 )   (183,484 ) Proceeds from sales or maturities of investment securities 195,164   95,771   202,406 Purchase of other assets (28,476 )   (105 )   (33,682 ) Due (from) to subsidiaries (307,525 )   4,623   (34,132 ) Net cash used in investing activities (341,095 )   (122,567 )   (48,892 ) Cash flows from financing activities:           Cash distributions (632,503 )   (712,681 )   (955,493 ) Exercise of stock options 11,859   20,436   15,583 Repurchase of common stock (2,062 )   (15,472 )   (911 ) Net cash used in financing activities (622,706 )   (707,717 )   (940,821 ) Cash and cash equivalents:           Increase (decrease) in cash and cash equivalents 35,395   119,777   (198,547 ) Balance, beginning of year 299,716   179,939   378,486 Balance, end of year $ 335,111   $ 299,716   $ 179,939 Web: http://www.wikinvest.com/stock/Wynn_Resorts_%28WYNN%29/Filing/10-K/2015/F122591293 Appendix 2 Web: http://image.slidesharecdn.com/teamsilverpartipresentation1-140310161735-phpapp02/95/wynn-resorts-5-638.jpg?cb=1394486302 Appendix 3 Web: http://image.slidesharecdn.com/teamsilverpartipresentation1-140310161735-phpapp02/95/wynn-resorts-9-638.jpg?cb=1394486302 Read More