Porters Five Force Analysis, Industry: Casinos
The purpose of this analysis is to determine the attractiveness of the Casino industry by investigating five specific forces that have the potential to drive down profitability. The Casino industry is composed of firms operating primarily in providing gambling activities and games to consumers while also supplying hotel services and other commodities. Firms that exclusively operate non gambling resorts were not directly included in this profitability and market attractiveness analysis.
According to the Five Forces model exhibit provided, the Casino Industry is a rather unattractive industry. Although only “Rivalry,” “Threat of Substitutes,” and “Buyers” were identified as unfavorable categories out of the 5, the influence of each category on profits is so significant that the industry should be considered unattractive. Rivalry between casinos is very high, where even well-established casinos such as the Venetian will compete not just with other major casinos such as the Wynn, but also with localized indian casinos that have a wider geographic dispersion. Buyers have little bargaining power, but they command significant power due to their nonexistent switching costs. The threat of substitutes is high not just in game selection, but also in casino selection. The only threat of entrants would be from resort companies that operate exclusively hotel chains and not gambling services, but they would not enter as to not change their reputation. An independent startup would be unlikely due to the intense capital requirements and government regulations.
The firm that I have investigated thoroughly, Las Vegas Sands is in a somewhat unfavorable industry. Although LVS is considered one of the top resort casino companies, it only holds minimal market share primarily in Las Vegas and Macau, while still competing on an equal level with WYNN, MGM, and BYD who they themselves commend considerable market share. Also,...
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