Mgm Case

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TRM 472- BUSINESS STRATEGY|
MGM MIRAGE CASE ANALYSIS
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MERVE BUBLİŞ - 2007103241|

22.03.2012
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I. INTRODUCTION
MGM Mirage is one of the largest gaming industries in the United States and mainly located in Las Vegas, Nevada.  The first MGM Grand was established in Las Vegas, Nevada in 1973. After investing in land on the strip the company followed with Treasure Island and the Bellagio.  The MGM Mirage was created during the merger in 2000.  Since this merger, MGM Mirage has grown and acquired numerous other properties.  Currently MGM Mirage acts as a holding company and peruses operation through its wholly owned subsidiaries.  The MGM Mirage owns many of the large hotels and casinos on the Las Vegas strip, all which provide restaurants and some the largest entertainment in the world.  In 2006 MGM Mirage had $7 Billion in revenues and $600 Million net profits.

II. SITUATION ANALYSIS

EXTERNAL ENVIRONMENT
MGM Mirage’s mission statement that is posted on their website is “Our mission is to deliver our winning combination of quality entertainment, luxurious facilities and exceptional customer service to every corner of the world in order to enhance shareholder value and to sustain employee, customer and community relationships.” In this way, it is easy to say that MGM Mirage continues to do its core businesses because revenues mostly come from gambling, and the company organizes a forcible growth strategy to compete with powerful rivals and to be the best one among them. In competition part, the industry is definitely heavy competition because it involves entertainment, hotels, restaurants, gaming and casinos.  It is an industry that is growing at a constant rate in different cities, states and even around the world.  MGM Mirage has top competitors include Harrah’s Entertainment Inc., Caesars Entertainment Inc., Mandalay Resorts Group and the Las Vegas Sands Corp. The switching costs for this industry are high because it is based on how well a guest views the customer service, such as comps to upgraded rooms, free meals, and other included amenities. The resorts and casinos of MGM Mirage are some of the most famous in the world, but some companies are very large and have powerful brand names that allow them to control their name and talents to other businesses for a fee, one of them is Harrah. Apart from that, internet gambling is a serious external factor for MGM Mirage and other companies in this sector because gambling via internet becomes more popular and it is starting to decrease the interest of casinos. Also, as the number of retirees increases the demand for older aged activities and products. Mobile vehicles which are popular amongst retirees should see a gradual increase over time. Moreover airlines cut down on services to Las Vegas and other vacation destinations if the economy doesn't recover quickly. This would hurt tourism and revenues on the Las Vegas Strip.  With less people traveling it becomes more expensive for airlines to fly back and forth to destinations. Furthermore this gambling industry is price sensitivity and this is going to be based solely on the prices of the hotels, not the casino, since the actual casino is not competing on price. The sensitivity of price to the buyer will be determined by the wealth and personal taste of the customer. A wealthy customer will often choose an expensive hotel when luxury and customer service are of high importance.

INTERNAL ANALYSIS
MGM Mirage brand name helps to increase margins with premium prices for goods, because customers perceive a higher standard of quality from companies with strong brands. In financial aspect, MGM Mirage is strong company with $7 Billion in revenues and $600 Million net profits, the three most profitable categories are Casino ($3,130,438), Rooms (1,991,477), Food and Beverage (1,483,914). It is also noticed that the great changes in the balance sheet from prior years, this was due to...
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