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Examples of external factors in the competitive environment are new monitors, merger activity, globalization, governmental policies, governmental regulations, and basic economic model decisions. Businesses first look at the competition within their industry. The resort gaming industry is the competitive environment analyzed in the central business gaming corridor in Lass Vegas for MGM Resorts International. MGM Resorts International enjoys a dominant place in the central business gaming corridor In Lass Vegas.
The central gaming corridor (LB Strip) consists of the destination resort and casinos along Lass Vegas Boulevard running from Winchester, Nevada in the north to Paradise, Nevada in the south (“Nevada Gaming Abstract”, 2013). The Nevada Gaming Control Board created this as a reporting area. The Strip earns over fifty percent of all gaming revenue from all sources In the state of Nevada (“Nevada Gaming Abstract”, 2013). The primary competition comes from Caesar Entertainment Corporation formerly Hurrah’s.
The limited properties available and the enormous cost of entering the market prevent easy entry for new competitors. The barriers do not deter every potential competitor. The Gentling Group is entering the market by building a 3500 room Chinese themed resort with a 175,000 square foot casino (Valetta, 2013). The initial investment is over two billion dollars and will be constructed at the old Stardust property. The Gentling Group Is a large multinational corporation with gaming resort properties in Salsa and Interests In Financial and Cruise Industries.
The Gentling Group will have a foothold but is no position to challenge the dominance of MGM Resorts International in Lass Vegas. The enormous costs and spirited competition in the gaming resorts industry in Lass Vegas makes even a well-financed competitor unable to guarantee success. The traditional method of dealing with competition in Lass Vegas is the corporate roger. MGM Resorts International has strongly believed in corporate mergers to gain market share.
MGM Resorts International acquired Steve Yawn’s Mirage Resorts reassure Island, and Bellagio casinos on the Strip (“NULL Gaming Research”, 2013). Reese properties ran the spectrum from the economic to the destination resort market. MGM Resorts International then acquires Mandalay Bay Resort Group and expands the properties it owns on the central business gaming corridor. Hurrah’s merged with Caesar Entertainment in response to MGM Resorts International and became the largest gaming corporation at the time. These mergers have divided most of the Strip between the two corporations.
Large mergers seem a thing of the past but specific partnership agreements between corporations such as, MGM Resorts International and Marietta with regards to strategic marketing seem to be the future (“NULL Gaming Research,” 2013). Globalization is the next battleground. MGM Resorts International and its major competitors have embraced globalization. Ere Asian market is playing a greater role in keeping the corporation profitable. MGM Resorts International is enjoying double-digit profit margins from operations overseas.
The overseas operations are used to offset bad economic periods domestically (Valetta, 2013). The Asian market is seen as a highly profitable and undeserved market. The Gentling Group entry into the Lass Vegas market shows the reverse of globalization. The Gentling Group operates primarily in Asia. The Gentling Group is making a statement by seeking a foothold in the domestic market of so many of the gaming corporations trying to exploit the Asian market. The only serious threat would be an aggressive horizontal merger. Horizontal mergers are mergers of companies in the same business.
A horizontal merger is a consolidation that occurs between firms who operate in the same space, often as competitors offering the same goods or services. MGM Resorts International horizontally merged with Mirage Resorts and Mandalay Resort Group to control over fifty percent of the Lass Vegas Strip resort properties. Hurrah’s used the same strategy to horizontally merge with Caesar Entertainment to counter MGM Resorts and stay viable in the central business corridor. These have effectively claimed all the available properties making any large horizontal mergers a thing of the past.
With Gentling acquisition of the old Stardust property that Sam Boyd Gaming abandoned construction on in august of 2008, Southeast Ass’s largest casino operator is expected to spend a whopping 4 billion to complete the resort and casino . The biggest obstacle right now is the Nevada Gaming Board, which is one of the strictest government agencies known. The Nevada Gaming board is doing regulatory investigations into Gentling finances and investment. Gentling said in an official statement by Gentling owner Limit Kook That ‘were at the moment in the planning stage….
I’m quite confident we’ll obtain this science and only with that we’ll commence construction”(Bloomberg, 2013) With Lass Vegas’ infamous history of its funding through organized crime, the Nevada Gaming award (ENG) and the Nevada Gaming Commission (NC) has the task of investigating the financial and accounting of companies for as far back as they can conceivable go, to ensure that all investments into a gaming resort or casino are being funded with legally recorded and regulated funds, this regulatory machine has stopped and stymied operations in Lass Vegas and Nevada due to funding from illicitly gotten gains.
It’s because of the ENG and NC that so many regulations and procedures go Into setting up a casino or resort in Nevada. This process of forced transparency has questionable past have been denied permits and licensing. This regulating committee has been said by many to be the biggest road block for new companies or competition to enter the market of resort and gaming properties in Nevada and Lass Vegas. The state of Nevada is continually attempting to expand the Gaming market as it is the largest sources of income for the state.
There is no state tax in Nevada and the state has seen a boom in business and residents mainly from California due o this fact. Many casinos use interesting accounting techniques to hide or displace their earnings, that is one of the reasons Nevada has many fees as well like the regulation that any casino with over 1 5 slot machines pays a yearly $250 fee per machine, and with Lass Vegas’ 197,144 slot machines and counting the fees for slot machines alone is 50 million. Many other taxes and fees abound within the state as well.
It is because of these fees and taxes along with the incredible premium on real estate on the “strip” that deters many investors from building new casinos in the area or entering the market as a shareholder. Nevada is on the recovery from the recession that decimated its economy in 2007-mm and has been attempting to expand its constituency past the grasp of the gaming industry; on DCE 30th of 2013 it was announced that Nevada was chosen for a drone development site which could bring thousands of high income Jobs and 125 million in tax revenue to the state.
Although MGM Resorts international and Careers Entertainment Corporation control of the market share of resorts and casinos in Lass Vegas, the real question on everyone minds is weather virtual gaming will take off and possibly derail the very inundation of the gaming industry in Lass Vegas. Many Lass Vegas companies including large corporations like MGM Resorts and Chasers are against the virtual trend because of the possible negative effects of visitors gambling remotely and outside of the “strip” and its tourist trap environment.