Strategic Management

Can Wynn Resort sustain its current success in the future? Can it maintain its competitive advantage in the gaming industry? What strategy should it follow? In order to analyze the competitive advantage and companys ability to maintain it, we should identify first industry it competes in, then if any market segmentation, also external (opportunities, threats) and internal environments (strengths, weaknesses) company have, and then come up with strategy that needs to be implemented in order to leverage its strengths, correct weaknesses and mitigate risk of potential treats, thus maintaining its competitive advantage over the time. Wynn Resorts is company which owns and operates premium-destination world-class casinos and resorts, having two main locations in Las Vegas (US) and Macau (China), including being successful at building and operating a casino resort empire, turned worth in billions of dollars. SWOT analysis would help us to understand companys strengths and weaknesses, opportunities and threat, which is summarized and presented in the following table: Strengths
Founder (Steve Wynn) and management team Innovativeness Luxury product and quality customer service Brand and reputation Land and licenses resources (strategic locations such as premium spot on the Las Vegas strip) Ultimate customer experience

Weaknesses
High R&D investments (building quality resort casinos) Dependence on current CEO and founder (Steve Wynn ) Focus on high-end users High tax brackets (including tax collection procedure)

Opportunities
Expand locally and globally( including middle-end clients) Expand to new markets (horseracing, other related businesses) Further legalization of gambling in US (more socially acceptable) Legal changes and granted concession in Macau (grant sub concession to another gaming operator, develop unlimited number of casinos, loosen travel restrictions between China and Macau ) Graying generation (wealthier, greater spending power)

Threats
Changes in hotel/tourism industry (terrorism, cutbacks in travel spending, visa restrictions, fuel costs) Economy decline (overall income decrease, preference priority change) Few other issues (differences in social norms, demographics and behaviors between US and Macau visitors) Direct competitors (in US Mirage, LV Sands, Venetian, Paris, Bellagio) and New entrants (in China due to concession expiration in 2017 ) Government regulations and limited availability (related to land and licenses, concession due date ) Debt collection

Competitive advantage was gained due to combination of several strengths such as founder with his involvement and management team with tremendous amount of knowledge and experience, high quality resort casinos with strategic location, customer service with outstanding performance, and also its brand and reputation. So, Wynn Resorts was able to gain such competitive advantage due to its greatest operational strength, founder himself, in a face of Steve Wynn, by not only him having tied contacts, alliances, and knowledge, which could not be easily duplicated, but also due his passion and unstopped desire to perfection. In other words, due to companys ability to differentiate their resorts from those in direct competition. Thus, Wynn was able to attract high price customers, who were willing to spend their money in luxury casino resorts. In addition to best quality customer service, excellent performance, ultimate customer experience, brand and reputation, company has been becoming one of most recognized luxury resorts as constantly improving its operations and striving for perfection.

Strategic Management

Main weaknesses are high investments in building quality resort casinos, as accumulating large proportion of revenues, which primarily directed to land, licenses and building of luxury resorts and providing excellent service and outstanding customer experience. Although, Steve Wynn was seen as an operational strength and being like a source of expertise, passion, and governmental ties (concessions and licenses), meaning that it also could be the significant weakness. As losing all of it, might lead to potential sale of company to a competing one MGM. Additionally, by being focused only on high-end clients, company missing a larger customer base of middle-income clients. Additionally, taxes are about 35% on gross gaming revenue regardless of whether revenues were actually collected. Main threats are related to some changes in hotel/tourism industry due to potential threats of terrorism causing cutbacks in consumer spending on travel, threats of decreasing amount of travelers to US (due to visa and passport requirement after 11/09; increasing costs of airfares due to escalating airline fuel costs). Also economy decline, affecting the overall industry, makes customers more oriented on less expensive things, meaning that Wynn Resorts can lost its revenues in this high priced segment, while other competitors in other segments are enjoying increased sales due to wider range of middleclass consumers. So, it is important for company to take into account differences in social norms and behaviors of visitors in US and Macau in order to maintain social status and high brand to attract and retain so called whale. Even Wynn Resorts gained remarkable advantages due to its strategic locations and licenses, which relatively difficult to find and obtain due to government restrictions and limited availability, company should not forget about new potential entrants in China (due to Macau land concession) and existing competitors within US market (due to their spread all over US). In order to avoid negative impact and mitigate the risk of uncollected gaming debts, taking into account tax collection procedure, company should focus and ensure collection of those gaming debts. Additionally applying 5-force model, we could conclude that: existing competition is intensive (among direct competitors in US), low (in Macau due to concessions rights), but could become stiff (after concessions expire in 2017), bringing more competitors in the area. treat of new entrants is low (in Macau due to concessions), also require large capital expenditures. But shouldnt be underestimated taking into account that concessions rights in Macau will expire in 2017. threat of substitutes is low (due to no substitute for casino gaming, only taking online gaming which doesnt bring ultimate experience clients get visiting Las Vegas) bargaining power of customers is moderate (in case of high end-users, some customers might switch to middle class casinos) risk of suppliers is high (in case of land and licenses) and high/moderate (in case of professional and experienced workforce as some petitions about immigrant visa regulations certainly will be needed; will depend on immigration laws)

Main opportunities are related to economy changes and would make Wynn Resorts to look for additional strategic locations by expanding both locally and globally. In addition, company could also explore opportunities in developing additional gaming or related businesses in other markets, or expanding into new markets, for example, such as horseracing. Also changes in legalization moved gambling from negatively tied to addiction and corruption to seen more socially acceptable and fun recreational activity (especially among elderly). Thus, making the graying generation (baby boomers) become potential growing market segment of US customers as they are being wealthier and having greater spending power on leisure and recreation. In China, Wynn Resorts have been granted concessions to operate there (only 3 outside companies), by having one of six gaming licenses and being able to grant sub concessions to another gaming operator, so Macau represents market with restricted competitive environments and gives significant value to Wynn Resorts.

Strategic Management

There are two additional alternatives may be offered to help company to sustain its competitive advantage: 1. Continue current strategy. Focus on differentiating by focusing on the atmosphere and design, by enhancing customer service and luxury. Appeal to the high-end market by targeting highend players. Continue to build world-class operations. Capitalize on brand reputation as being associated with luxury in the casino market as full-service provider. Might cause rates to increase at slower rate. 2. Focus on high-end clients. Expand domestically and globally. Ensure development of casino resorts in Macau. Develop additional gaming or related businesses in other high-end markets. Constantly strive for perfection. Might lead to heavy investments and bring some legal issues in Macau. 3. Extend its customer base beyond high-end clients. Focus on middle-income clients too. Appeal to both middle and high-end markets. Build relatively inexpensive places in same locations for younger people. Creates products and adjust them as necessary to each segment (golf and horseracing for high-end clients, entertainment and less expensive ways of spending money). But might lead to high-end clients to switch to competitors who serve only high-end clients. Might lead to some misunderstanding of product placement and differentiation within both markets. So, I suppose that Wynn Resorts can sustain its success in the future by reshaping its current strategy - continue targeting high-end market by offering luxury service and ultimate customer experience, also extending domestically and internationally by exploring new strategic locations and other extending its luxury service range by creating new related businesses, and constantly striving for perfection and providing excellent experience.