MGM Resorts International is a reputable hospitality firm with diverse networks and investment portfolio in major parts of the globe. The gaming industry is one dynamic sector and viable corporate are thus advisable. This fact has been the informative factor for MGM Resorts International has been merger and commercial acquisition of casino and other firms in the industry. This strategy has seen the Resort increase its asset portfolio and assets base in different parts of the globe where the acquisitions lay. As much as MGM Resort International has strived to give the bet in terms of customer services, improving the asset portfolio is the most notable strategy.
This strategy has come with its fair share of challenges. For instance, when MGM Resort International acquired the other companies in terms of hotels and casinos, it also acquired their profits and losses. The fact that the firm has diversified to other countries has not matters any better for the business. The inherited debt in the domestic font has been a blow. In the international scene, the firm is battling with the realities of a weak dollar in investments, in Vietnam and China. The larger than life image of MGM Resort International has exposed it to domestic competition where the other firms challenge the MGM brand with “frequency and ease.”
I believe MGM ought to seek ways to cut the huge debt by offsetting some of the investments and assets so that it could service the debt. This move would give MGM, the impetus to concentrate the attention on a manageable asset portfolio and thus, improve the company’s brand.
MGM diversifies and ventures into real estate business and after successive growth and relative prosperity, acquired Golden Nugget Monte Carlo, Mirage and Bellagio. Later on the MGM Resort International acquired another lucrative asset, in the name of Mandalay Resort Group. On the face value, it is a show of success for the company to diversify and acquire the huge assets. However, ensuing colossal or huge amount of debt that came with the acquisitions cancelled the gains made. For example, the firm inherited a debt of $ 2 billion when it acquired Mirage in the period of 2000. To date the firm has not been able to service the inherited debt.
I would recommend alternative strategies to help revamp the firm. Firstly, would be to offset some of the assets, either through selling them to help cover the debt deficit. Secondly, would be to offset the human resources, so that the company would not continue to pay the wages and accrued benefits. Lastly, would be to focus energy and attention in tourism and hospitality and not gaming. Gaming is a social luxury which changes with changes in other aspects of life such as perception, economic times or government regulations. For instance in China, the government has tight grip social behaviours and discourages gaming as a leisure activity. I would go with the first option, since it would help the firm back to its winning ways.
MGM Resort International ought to follow the explained outline of alternative strategies. Firstly, would be offset the enormous asset base which have brought a lot of debt to the company. Thus, it would be in order to reduce the debt. Secondly, the wages and benefits that accrue to the employees should be reduced by offsetting their services following a subsequent asset offsetting. Assuming that economic times and the social spending behaviours remain constant, it would be imperative to focus on the tourism and hospitality industry solely.
MGM Brand Case Study Examples
Type of paper: Case Study
Topic: Finance, Investment, Disabilities, Company, Strategy, Video Games, Wealth, Debt
Pages: 2
Words: 600
Published: 2020/03/02
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