1. Gambling on the edge of china
WYNN Macau
Gambling on the edge of china
Tue Tran Soraya Feizpour Alex Huynh Chris Coloma
Long Hoang Hung Nguyen

2. Background Created in September 2006 600 hotel rooms
205,000 sq. ft. gaming area
26,000 sq. ft. retail
22,000 sq. ft. convention space
Further space expansion in December 2007
Encore at Wynn Macau created in April 2010
414 hotel rooms

3. ____________________
Economic Environment
Tourism dropped during recession
Visitor Volume down 3.7%
Gaming Revenue down 7.7%
____________________
Asia Gambling Market= positive growth
2009 to 2011 increased $20,000+ in GDP per capita

4. GAMBLING MARKET in ASIA

5. ____________________
INTERNAL ANALYSIS
Moderately Strong financial condition
Growing Net Revenue
2006 to 2007 up $1,255,262
____________________
Decreasing Return on Assets
2006 to 2007 down 9.5%

6. Current Price on Hong Kong Stock Exchange: $26.25
5-YEAR STOCK TREND
Current Price on Hong Kong Stock Exchange: $26.25

7. INDUSTRY VIEW PORTER’S 5 FORCES RIVALRY AMONG COMPETITORS - HIGH
Many competitors already established
Rivals offer similar product
High exit cost
THREAT OF ENTRY- LOW
High capital & resources required
License required
PORTER’S 5 FORCES

8. INDUSTRY VIEW PORTER’S 5 FORCES THREAT OF SUBTITUTES- HIGH
Many other casinos
Lottery
Other non-gaming entertainment
BARGAINING POWER OF BUYER- MODERATE
Hotel rooms, food, other entertainment services
BARGAINING POWER OF SUPPLIER- VARIES
Gaming equipment
Services & Employment
PORTER’S 5 FORCES

9. INSTITUTION View THEY HELP…
Institutional forces heavily influence Macau casinos
Beijing gave birth to Macau’s rapid rise
Macau monopoly- gambling illegal in the rest of China
Chinese economy grows fastest in the world  wealthy people w/ money to spare
Informal institution: high demand for gambling

10. INSTITUTION View BUT HURT…
China limits cash takeout per person, per trip
Big gamblers need to borrow money in Macau
Gambling debts not enforceable in mainland China  intermediaries known as junkets

11. INSTITUTION View JUNKET PROBLEMS
Expensive  take up to 75% gambling revenue
Linked to Organized Crimes  occasional battles for territory
Not Transparent  investigated by government for money laundering
Build Relationships w/ Gamblers that Casinos Can’t  may compete w/ casinos later
Casinos Still Need Them for VIP Guests!

12. INSTITUTION View BAD STREAK FOR MACAU Chinese economy slows down
Beijing cracks down on corruption
Long-term reduction in gambling revenue
Macau placed cap on # of gambling tables allowed
Aimed at reducing gambling-based revenue

13. INSTITUTION View WYNN MANEUVERS
Closely watched by US Authorities under Foreign Corrupt Practices Act
Young entrant in the gambling market
More regulatory layers
Hesitant to employ junkets
Now reliant on junkets to pull VIP customers

14. INSTITUTION View CORRUPTION OR “GREASE”
Wynn granted land rights to $4 billion project in Cotai, 2012
Included payment of $50 million to local company co-owned by:
Edmund Ho, close associate of former Macau top official
Prominent family in Beijing
No accusations of wrongdoing from US authorities
Still under investigation by Macau anti- corruption

15. RESOURCE View

16. RESOURCE View VRIO FRAMEWORK Value Imitability Organization
Key Competitive VRIO Advantages
Value
Luxury products & services that come second to none
Imitability
Retention of high-end customers w/ world class service
Organization
Well-established reputable company backed by Steve Wynn

17. INTERNATIONALIZING
Asian culture’s favorable view & Chinese government’s harsh restriction on gambling  huge obstacle for expansion
High demand for sport event outcomes  public attention & government restrains sport gambling market entrance
Expand traditional casino gambling  avoid shortage of labor & competition

18. INTERNATIONALIZING

19. Recommendations Concentrate on developing non-gaming services
Drop in gambling revenue
China track down corruption, decrease in VIP Customers
Establishment of Encore Macau
Marketing Towards Middle-Class Chinese
Chinese has fastest growing middle class

20. Recommendations 3. Training Program for Employees
Macau staff is relatively new & inexperienced
Need proper training
Maintain brand image & top quality
4. Special Training Program for Board Members
Complete reliance on Steve Wynn

21. SUMMARY Background, Economic Environment, & Internal Analysis
Industry-Based View
Institution-Based View
Resource-Based View
Internationalizing
Recommendations