Conclusion on Pest Analysis
The political, economic, socio-cultural and technological trends significantly affects the performance as well as the strategic marketing plan of MCRI. From the research on the political trends it shows that MCRI is affected by the upcoming election in 2016. In 2012, Obama won for a re-election which supported the sustainability plan previously initiated under the same administration prior to 2012. However, in 2016 remains to be seen. It is identified as a threat because of the uncertainty in how the new sets of leaders would address the concerns of the industry where MCRI belongs. Policies, laws and stipends might be revoked, amended or created that could limit the growth of the industry. In addition, the intense government regulations relating to taxation and business registration and renewal is also considered a threat to MRCI because any movement in these areas could significantly affect revenue. At present, the revenues earned by the players in the industry is already striving. With the high taxes imposed to owners and operators of resort and casino, the minimal revenue generated by the players in the industry is even made lesser.
The poor foresight and the unexpected expenses as incurred by MCRI with its earnest desire to fight the Colorado Gaming Association’s campaign weakens MCRI’s financial position. Although there is a long-term benefit for this if the campaign to ward off the plan to expand the racing facility in Colorado becomes successful because there will be no need to divide the market. Nevertheless, there is no guarantee. If the expansion pursue, not only would it divide the market but MCRI has already lost $1 million which MCRI contributed to the campaign against the expansion. MCRI can rely to its strong product portfolio. The two subsidiaries of MCRI have features that are incomparable to its competitors. For example, Atlantis has a 4-diamond luxury classification or title. Not to mention that it is also the recipient of numerous recognitions and awards from reputable award giving bodies. These recognition help form and create a strong brand name for MCRI. Included in the MCRI’s strength is its diversified workforce. The diversity in MCRI’s workforce is not only limited to gender and ethnic diversity. It also extends to skills, abilities and educational background. Together, all these could help the Company in addressing the needs of the customers which is also diverse and dynamic. However, MCRI should focus on improving its R&D. The culture and model used by MCRI’s R&D is not helpful to the company. The model has to be re-structured or re-evaluated to keep up with the pace and the trend. The socio-economic trend, on the other hand, is one opportunity that MCRI must take advantage. After extensive research it was found that the result of the studies and surveys initiated on the consumer’s behavior and attitude towards the industry is very positive. In fact, the growing acceptance and recognition of the public and the non-segregation of the market is very conducive for MCRI. Complimented by the technological advancement, MCRI can be able to improve its business to meet and address the demands of the client, given the boast in the economy that would support customer spending as it previously were before the recession.
North American Industry Classification System (NAICS) purpose is to collect analyze and publish relevant data applicable to the United States. It relates to the purpose of the enterprise's economic statistical data to classify business establishments using standard federal statistical agencies. NAICS Under the auspices of the Office of Management and Budget (OMB) of the Council, and in 1997 issued System Standard Industrial Classification (SIC) replacement. Economic Commission is for rating policy in the United States National Institute of Statistics. The statistics of Canada and Mexico, combined with the geographical development, allows a high degree of comparability of business statistics.Forthis entertainment industry and the MCRI casino sector, the NAICS code is 713210 (Census.gov, 2014).
Hotel and casinosremain highly competitive in nature as a particular aspect of the casino entertainment industry. Their characteristics are significant in their differences in size and types of facilities, quality, as well as the number of operations and brand identity. The marketing strategies for growth and development as connected to the proactive stance of MCRI, incorporates its resources aligned with its financial strength and capabilities, facilities and management of personnel, as well as competitors along with the geographical diversity are also notable features differentiating the casinos globally. Direct competition remains those currently existing in the entertainment industry as hospitality casinos. Vault Career Intelligence identified MCRI’s direct competitors included Mtr Gaming Group, Inc., Pinnacle Entertainment, Inc., and Stations Casino, LLC. The reason for the competition is primarily due to geographic location which is typical for businesses. Instead, the competition exist because of the common agenda to expand their business from across the US within the same industry as MCRI—the resorts and casino industry.
Company Profile: Mtr Gaming Group, Inc.
Mtr Gaming Group, Inc. is one of the biggest conglomerate of hotel, resort and casino chains in the US. In fact, Mtr Gaming Groups have subsidiaries in California, Nevada, West Virginia, Pennsylvania and Ohio . The standard bearer of the Mtr Gaming Group, Inc. was founded in 1973 with the goal of providing incomparable guest service, vibrant gaming product, award-winning dining experience, exhilarating entertainment and premier accommodation . One of Mtr’s strategy is reinvesting in their properties and communities that are under their umbrella. The company intends to build a community of employees and stakeholders through a family-style approach. This is done to ensure loyalty among all stakeholders.
Company Profile: Pinnacle Entertainment, Inc.
Unlike the other players in the industry, Pinnacle Entertainment, Inc. has no actual casino in Las Vegas. While Pinnacle Entertainment is a Las Vegas-based company, its casinos are distributed in other locations. One of the strategic formula of Pinnacle Entertainment is securing strategic location. In fact, almost all of its casinos are located within driving distance. The company has casinos in Missouri, Indiana, Louisiana and Reno, Nevada. However, four casinos are located in Louisiana. 53% of the company’s revenue were in fact, derived from these four casinos in Louisiana. In 2012, the SEC annual report of Pinnacle Entertainment reported that the company spent $27 million in advertising and marketing promotions alone. It is believed to be the reason for the 5% increase in revenue of Pinnacle Entertainment in 2012. Pinnacle’s revenue increases from $1.141 million in 2011 to $1.197 million in 2012.
Company Profile: Stations Casino, LLC.
Stations Casino, LLC. Is the owner of 20 casinos and hotel casino within the Las Vegas casino strip joint. These facilities offers entertainment, dinning and gaming options. The casinos owned and operated by the company are comparatively smaller compared to the other joints seen within the Las Vegas Strip. However, this is in fact a strategic decision because the company aims to appeal to local customers and gamblers which the company believes is a more stable market compared to the tourist trade. In 2013, Station Casino spent $21 million in advertising. Many analysts believe that it is the reason for the company’s 2.6% increase in revenue in its financial annual report 2013. However, the increase in revenue is also attributed to the technological innovation incorporated by the company into its portfolio. Specifically, this refers to the online gaming operations in Nevada in April 2013 and New Jersey in November of the same year, utilizing the Fertita Interactive . This is also attributed to the $22 million increase in revenue in 2013 fiscal year.
External Functional Analysis Summary
Monarch Casino & Resort, Inc. has also been affected by some of the external forces that exists outside of the organization. Among these forces are things that the organization has no control over. The only step that the organization can do is to adapt and create a contingency plan that would minimize if not totally eliminate the potential threats that it can do to damage the performance and productivity of the organization. The external factors that have an impact in the performance and productivity of MCRI include: (1) political, (2) socio-economic, (3) technological and (4) economic forces. A review of these forces will help identify the opportunities and threats that are presented to MCRI.
Opportunities for Monarch Casino & Resort, Inc.
There were three opportunities that had been identified after completing an external factor audit. These opportunities were brought by the socio-cultural, technological and economic factors. The identified opportunities were in reference to (a) a supporting socio-cultural environment, (2) a technologically advances amenities and facilities and (3) a recovering economy.
A Supportive Socio-cultural Environment.The culture in a western society allows for individuals to enjoy themselves and take moments of relaxation after a long day’s work. While it is not something most Americans do on a regular day to day basis, a great percentage of the population still likes to take road trips, travel, dine and drink, be entertained, spend or in other words enjoy a relaxing and enjoyable break from their regular busy schedules. There are several surveys that would support the claim that casino is among the top leisure and entertainment diversions of Americans. In fact, these survey reveal how favorable and receptive the community is about casino and similar establishments. In a survey commissioned by Harrah’s Entertainment in 2006, it revealed that 52.8 million of American had gone to the casino and played . This year 87% of the respondents asked to participate in a study said that playing in a casino or gambling is a recognized activity . In addition, it revealed that not everyone who visits the casino are rich, affluent people. Instead, it shows that two out three casino visitors are homeowners. That’s 62% of the visitors who come and play in casinos. 70% of them classified themselves asmiddle-class and upper-class. Given all these information, it shows that the socio-cultural factors, specifically lifestyle and trends support that business to prosper.
Technologically Advanced Amenities and Facilities.Technological advancement has been utilized by many organizations to their advantage. One of the industries that benefits a lot from the technological advancements, breakthroughs and innovation is the leisure and entertainment industry. In fact, one of the breakthroughs that is best taken advantage of by the industry is the development of social media to promote and market their business. It is comparatively cheaper and more effective that the traditional marketing tools. This is because it reaches a lot of audience with very minimal effort. In addition, there are also technology that allows for the development of software, applications and new platforms that can enhance the amenities and facilities within a hotel-casino-restaurant business.
A Recovering Economy.After the global recession, US economy starts to pick up. There was a 4.6% increase in last year’s GDP suggesting that there is a bright future ahead. With almost all the figures starting to pick from where it was during the recession, this is a good opportunity for businesses like MCRI. The hotel, leisure and entertainment industry was one that has suffered significantly during the recession. This is because people would rather save money than spend on luxury and unnecessary things. With the economy picking up, the hotel, leisure and entertainment industry will also start to recover because people will have an additional money to spend on activities that allows them to enjoy.
Threats for Monarch Casino & Resort, Inc.
There are three identified threats to MCRI after conducting and external factor audit. Two of these threats are political in nature while one is socio-cultural in nature. The two political factors created the risk relating to a potential disruption in the existing policies and regulations on the operation of casinos and the second refers to taxes, stipends and other regulations. Finally, the socio-cultural factor that could create threat relates to the threat to divide the market.
Colorado Gaming Association Campaign. Colorado Gaming Association’s campaign towards intensifying the gaming industry in the state through an initiative that would expand the racing facilities in Colorado. This is considered a threat to MCRI because it threatens to divide the market. The racing facility will divide the consumers who would go to Denver for leisure and fun. Instead of going to casino, the consumers might venture into the racing facility and bet their money there instead of spending their money in the casino. This would significantly affect the casino revenue even further if pursued.
Upcoming Transition in Political Leadership. When President Obama won for a reelection, the policies implemented under his term were extended. There was continuity in the existing system. However, with the election coming up there would be changes in the political structure. The officials who are currently under office could be replaced. The replacement however, might not necessarily share the same beliefs on how the community or the state should be managed. This would mean that legislations and existing policies can be overturned or amended. That covers the regulations and laws on operation businesses like hotel, restaurants and casinos. The disruption in the continuity process could threaten the stability and sustainability measures currently implemented by businesses like MCRI.
Intense Government Regulation Referring to Taxation. Another threat in the productivity of MCRI relates to intense government regulation on registration, taxation and management of casinos and hotels. This threatens the financial stability of MCRI if it continues to be intense.
After being able to identify the strengths and weaknesses of MCRI through the internal functional analysis summary, the Company’s threats and opportunities will be named through evaluation and analysis of the factors under the external functional analysis summary. Among these factors under evaluation include the political, socio-cultural, technological and economic forces.
Political Situation.The present administration has been able to successfully sustain its political advocacies after the president’s term has been extended after his re-election. That enables the president to pursue continuity in regards to his political agenda for the nation. In addition, the existing fiscal policies initiated by the Obama administration has been proven effective as it has brought numerous investors and businesses into the country.
Economic Condition. After the US faced the recently faced the global financial crisis, the country has been able to successfully withstand and overcome its effects. While majority of the industries has been significantly affected by the recession, the country’s economic contingency plan has been able to help many businesses bounce back after crisis. In addition, the county’s fiscal policies has helped to create a 4.6% increase from last year’s second quarter GDP .
Socio-Cultural Situation.The socio-cultural situation in the US supports for the great inclination of the people to the concept of entertainment. In addition, people are also drawn to game of chances making casino and gambling extremely popular in the US. The culture of the US also supports for the earnest inclination toward wellness and comfort. Thus, spas and health and wellness facilities are becoming especial popular. Similarly, the culture of luxury, comfort and relaxation are also widely embraced in the US.
Technological Situation.Under the 2014 World Fact Book of the United States Central Intelligence Agency, US was described as having the largest and most technologically powerful economy in the world. In addition, the US was dubbed as being in the forefront of technological advancement in almost every field.
After enumerating the external force, the table below lists the weight and the score for each factor that makes up the external factor evaluation matrix. The results were categorized as opportunities and threats to facilitate for the efficient construct of the SWOT analysis later on into this paper. Temporarily, there are six identified EFE components.
TOWS and SWOT Analysis are conducted to enumerate the lists of strategic factors categorized as strengths, weaknesses, opportunities and threats. An SFAS table enumerates MCRI’s internal and external factors. The information presented under Table 3 is a combination of the internal and external strategic factors of MCRI in the presentation of its marketing function.
TOWS Analysis Findings
Looking at the strategic factors identified in the SFAS Table it reveals that MCRI should capitalize on its strength in order to use it to take advantage of the opportunities presented by the industry. MRCI already has a strong product and service portfolio (S1) that is supported and encouraged by awards, citations and recognition (S2) from reputable business analysts. This is an advantage on the part of MCRI to push these edge to customers. The economy has significantly improved after recession (O3). This leads to a dynamic set of consumers who are now capable to spend over luxury, entertainment and pleasure (O1).
The consumers are looking for ways for reaction and casino are now being welcomed and recognize as a good outlet for entertainment and recreation. Hotel and casino blending in together targets two distinct kinds of market. Thus, there is a need to further improve the marketing strategy of the company and take advantage of the technology (O2) that can be utilized to do this. By merging the strengths and opportunities of MCRI, the Company will be able to convert the company’s weaknesses and address the potential threats that impends the progress of MCRI. For example by utilizing technological advancement through the use of electronic platforms to market and promote the company, it will be able to address the problem relating to NCRI’s weakness which is the poor implementation of R&D.
TOWS Analysis Conclusion
Based on the TOWS Analysis, it revealed that MCRI has enough resources to convert the identified weakness and threats that might potentially cause problems for the company. Research shows that majority of the changes that has to be done are internal. MCRI needs to intensify its R&D to actually be able to address the threats of the expansion endorsed by the Colorado Gaming Association as well as the possible risk of disrupting the continuity programs initiated because of the forthcoming transition in political leadership.
After conducting an extensive research on the internal and external forces that affects Monarch Casino & Resort, Inc. this section would facilitate for strategic formulation that could help the company reverse its weaknesses and address the challenges identified as threats by the external forces analysis. Table 4 presents the tabulation of MCRI’s strengths, weaknesses, opportunities and threats. The TOWS and SWOT analysis are useful for strategy formulation. As specified in Table 4, this report performed a matching of strengths and opportunities for the purpose of converting the weaknesses and threats. Through this process, series of strategies and recommendations had been drawn to benefit MCRI.
One way to formulate recommendation is to utilize the use of “three generic strategy.” This model is developed by Michael Porter of Harvard University. These three strategies include (a) cost leadership strategy, (b) differentiation strategy and (c) focus strategy. Out of the three, while it is difficult to create product differentiation in the hotel and casino industry, this is the only aspect of the model that MCRI can establish a strong hold. One best facet that MCRI can target as far as differentiation strategy is concern is being a leader in innovation or at least offering the latest breakthrough or innovation in the industry that is something the customers would be curious about. In this case, MCRI can start enhancing R&D to ensure they are always ahead of competitors. The R&D team should always be able to say specifically what needs are developed and enhanced by consumers from the latest technology in the industry and try incorporating it into the products and services offered by the Company.
Cost Benefit Analysis
According to the documented performance of MCRI’s direct competitors it revealed that these companies has invested in aggressive marketing strategy to increase revenues. In addition, these companies have also invested in incorporating technological breakthroughs like online gaming operations and a well-enhanced and user-friendly company website. Finally, the competitors have also invested in expansions and redesigning of its subsidiaries not only in infrastructure but also in system of operations. As a result, their $21 million to $22 million advertising investments has resulted to 2.6% to 5% increase in revenue.
In 2013, MCRI spent $200,000 to promote Monarch Black Hawk Casino . Development expenses for the renovation and expansion of the Monarch Black Hawk Casino on the other hand, accumulates to $4.5 million. Traditional promotional strategies of both Atlantis and Monarch Black Hawk amount to $29.57 million in 2012 . Given this analysis is can be said that the type of marketing and promotional is not particularly effective because while MCRI’s net revenue is up by 3.7%, casino revenue and accommodation revenue has significantly decreased while the rest of its competitors have documented increase in their casino revenue. This means that the adapted marketing strategy of MCRI needs to be evaluated and modified to address the demands and needs of the industry as well as the customers.
In addition, as far as SPACE Matrix analysis is concerned, MCRI can review the Company’s positions in terms of (1) financial, (2) competitive, (3) stability and (4) industry positions. To summarize MCRI’s advantage on each of the four specific positions.
Base on the inputs from Table 6, the following ratings had been earned:
- Financial Strength -use of rating of +1 (worst) and +7 (best), average of the inputs result is +3.33. MCRI has a good cash flow. However, there is an uneven distribution of revenue and cost. Lately, casino sales has been down and so was sales related to accommodations. MCRI now heavily relies on the sales and inputs made their many amenities like their restaurants and shops. This is also affected by the impulsive expenditure made by MCRI when it contributed $1 million to fight Colorado Gaming Association’s campaign which has a very unstable status. The management has incurred this expense while CAPEX is still high to meet the development project of the Monarch Black Hawk Casino.
- Competitive Advantage use of rating of -1 (best) and -7 (worst), average of the inputs result is -2.5. It is no question that the Company has a very strong product and service portfolio that is supported by wide recognitions and awards given by reputable organizations and a highly competent and diversified workforce. Nevertheless, the poor performance and the weak process utilized by MCRI’s R&D is significantly affecting the performance of the Company. Also, the Company is not fully utilizing its capabilities and potentials to as far as marketing and promotional campaign are concerned.
- Environmental Strategy use of rating of -1 (best) and +7 (worst), average of the inputs result is -3.33. The environmental condition in terms of the economy, politics and technology in the United States particularly in Reno, Nevada and Denver Colorado has been quite favorable for the hotel and casino industry. However, the upcoming transition of government and the very high and stiff requirements and taxation policies in the industry are affecting work performance of the Company.
- Industrial Strength use of rating of +1 (worst) and +7 (best), average of the inputs result is +4.5. The hotel and casino in Denver is still growing and has more to improve. Given this facet, MCRI, specifically Monarch Black Hawk has a lot to take advantage from the industry including the latest development in technology.
Figure 2 SPACE Matrix
An IE Matrix stands for internal-external matrix which is based on the internal and external factors of the organization. It is used to plot the company division in the nine cell diagram which stands for the suggested strategy that the company should take based on the review of the internal and external factors weighted scores. In the case of MCRI, Figure 2 presents the IE Matrix diagram of the Company.
Figure 3 IE Matrix
MCRI falls under the 1st quadrant which falls under the “Grow & Build” approach. Under this approach are two approaches—intensive and integrative. Under the intensive category are the following strategies: (a) market penetration, (b) market development, and (c) product development.On the other hand, under integrative are the following strategies: (a) backward integration, (b) forward integration, and (c) horizontal integration. In the case of MCRI, the intensive approach is recommended because it is more feasible and more efficient. Considering that revenue sales for casino are decreasing, MCRI should think of alternatives on how this can be replaced or supported. This is part and parcel inclusive of the product development strategy. However, while there is no drastic need for replacement on casino activities MCRI can rely of utilizing new approach like integrating new games, new platforms and new techniques on the traditional casino games. In addition, given the result in the survey conducted about the growing diversification of the market, MCRI can capitalize on that and improve the campaign that casino playing is not only for the rich but even for typical and ordinary people. This is a perfect representation of market penetration. MCRI can start targeting local market who are from a much lower socio-economic bracket.
Atlantis Casino Resort and Spa. (2014, October 17). Atlantis Awards. Retrieved from Atlantis Casino Resort and Spa Website: https://www.atlantiscasino.com/landing-pages/atlantis-awards/
David, F., Cochran, D., & Gibson, C. (1985). A framework for developing an effective mission statement. Journal of Business Strategy, 2(2), 4-17.
Deal, T., & Kennedy, A. (1982). Corporate cultures: the rites and rituals of corporate life. Reading, Massachussettes: Addison-Wesley Publishing Corp.
Egan, J. (2008). Relationship Marketing: Exploring Relational Strategies in Marketing. New York: Financial Times/Prentice Hall.
Epstein-Reeves, J., & Weinreb, E. (2013, September 24). Sustainable Business. Retrieved from The Guardian Website: http://www.theguardian.com/sustainable-business/lee-scott-walmart-sustainability
Kotler, J., & Heskette, J. (2011). Corporate Culture and Performance (Reprint Edition ed.). New York: Free Press.
Loveman, G. (2006, July 6). Harrah's Survey: Profile of an American Casino Gambler. Retrieved from Caesars Entertainment Corporation Website: http://www.caesars.com/images/PDFs/Profile_Survey_2006.pdf
Monarch Black Hawk Casino. (2014, October 20). Promotion. Retrieved from Monarch Black Hawk Casino Website: http://www.monarchblackhawk.com/promotions
Monarch Casino & Resort, Inc. (2014, July 24). Press Release: Second Quarter Financial Report (2014). Retrieved from Monarch Casino & Resort, Inc. Website: http://www.monarchcasino.com/news_pressreleasesarticle.asp?id=513
Mtr Gaming Group, Inc. (2014, October 20). Company Profile. Retrieved from El Dorado Resort Website: www.mtrgaming.com
Pearce, J. a. (2010). Strategic Management, 12th Ed. New York: McGraw-Hill Publishing.
Schein, E. H. (2010). Organizational Culture and Leadership (4th ed.). Hoboken, New Jersey: Jossey-Bass.
Schneider, S. C. (1988). National vs. corporate culture: Implications for human resource management. Human Resource Management, 27(2), 231-246.
Stutz, H. (2014, June 9). Poll: Americans accept casinos as they would any other business. Retrieved from Las Vegas Review Journal Website: http://www.reviewjournal.com/business/casinos-gaming/poll-americans-accept-casinos-they-would-any-other-business
Tabora, J. (2014, September 26). United States GDP Growth Rate. Retrieved from Trading Economics Website: http://www.tradingeconomics.com/united-states/gdp-growth
The Vault Career Intelligence. (2014, October 20). Company Profile: Station Casino, LLC. Retrieved from The Vault Career Intelligence Website: http://www.vault.com/company-profiles/travel-leisure/station-casinos-llc/company-overview.aspx
US Central Intelligence Agency. (2014, June 20). The World Factbook: Unite States. Retrieved from The US Central Intelligence Agency: https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
Van Doorn, P. (2014, October 16). Monarch Casino & Resort Inc. Market Evaluation. Retrieved from Market Watch Website: http://www.marketwatch.com/investing/stock/MCRI/profile
Vault Career Intelligence. (2014, October 20). Company Overview: Mtr Gaming Group, Inc. Retrieved from The Vault Career Intelligence Website: http://www.vault.com/company-profiles/casinos/mtr-gaming-group,-inc/company-overview.aspx
Web Finance, Inc. (2014, October 16). Definition: Marketing Function. Retrieved from Business Dictionary Website: http://www.businessdictionary.com/definition/marketing-function.html
Weinberg, N. (2010, August 5). Business News: Most Trustworthy Companies. Retrieved from Forbes Website: http://www.forbes.com/2010/08/05/most-trustworthy-companies-personal-finance-audit-integrity.html
Williamson, D., Williamson, D., Jenkins, W., Cooke, P., & Moreton, K. M. (2003). Strategic Management and Business Analysis. UK: Routledge.
Yahoo Finance. (2012, October 24). Monarch Casino & Resort Reports 2012 Third Quarter Results. Retrieved from Yahoo Finance Website: http://finance.yahoo.com/news/monarch-casino-resort-reports-2012-200500786.html;_ylt=A2oKmKtU6kRU6BsAgL6zRwx.;_ylu=X3oDMTE0cGxkcGxtBHNlYwNzcgRwb3MDNwRjb2xvA3NnMwR2dGlkA1ZJUFBIMDFfMQ--
Yahoo Finance. (2013, November 8). Form 10-Q for Monarch Casino & Resort, Inc. Retrieved from Yahoo Finance Website: http://biz.yahoo.com/e/131108/mcri10-q.html;_ylt=A2oKmJzx6kRUl1gApq6zRwx.;_ylu=X3oDMTE0dTZwM2lsBHNlYwNzcgRwb3MDNARjb2xvA3NnMwR2dGlkA1ZJUFBIMDFfMQ--