Business Policy Development and Implementation MGT 451
October 20, 2012
Case 30: Wynn Resorts, Ltd.
Where does the Wynn on the Cortai Strip fit on the Wynn Resorts Ltd. Growth and Expansion strategy? Is there support to make a significant capital investment in this resort? Why or why not? The Wynn on the Cortai Strip fits well within the Wynn Resort’s growth and expansion strategy due to the significant size of land for expansion (encapsulating 52 acres). As discussed, Wynn Resorts expansion is based on attracting high-end players. With the Chinese government relaxing restrictions, the Chinese citizens have freedom to become those high-end players that Wynn Resorts seeks to attract. Based on the financial statements provided within the case, as of the end of 2007 there was definite support to make a significant capital investment. For example, the resort’s operating income ended at $429,403 (thousands), almost six times greater than the prior year ending at $70,899 (thousands). Total assets at the end of 2007 were significantly higher than the prior year and net cash provided by operating activities was also significantly higher. These numbers provide evidence that currently Wynn Resorts Ltd. can make a significant capital investment. Apply Porter’s Five Forces to assist you in advising Wynn Resorts on whether or not to pursue this expansion at this time. Will building this additional property offer a sustainable competitive advantage for the Wynn Resorts? What is your recommendation?
Companies choosing to expand into new territory must evaluate the industrial competition that may exist within that industry. Wynn Resorts is seriously considering expansion into a new region. In order to advise Wynn Resorts on the expansion, Porter’s Five Forces analysis was conducted to evaluate the competition. Following are the details of the analysis. 1) Threat of new entrants to an industry – Currently there is a...