Gambling Industry in Australia - Case Study Example

Table of Contents Introduction 2 Purpose of the report 2 PESTEL Analysis for the gambling industry 3 Porter’s Five Force Model of Gambling Industry 5 Recommendations for the gambling industry 7 Ways to face economic downturn 8 Effect of recession on other industry 8 Conclusion 9 References 10 Introduction The gambling industry in Australia holds a very important place and contributes towards 26 percent of the GDP. The economic reforms framed by the government has supported the gambling industry to flourish which has resulted in the revenues from the industry to be more that A$ 80 billion. The Australian government has taken steps to support the industry but the recent economic downturn has affected the industry immensely. The economic recession has resulted in a decrease in revenues and with the advent of gambling through internet the industry has further taken a hit. Even the reforms of the government which supported growth for the industry is seen to go against it and has resulted in development of more casinos in different part of the world. This has affected the manner in which business was carried out and an effective mechanism needs to be developed which will ensure that industry flourishes again. Purpose of the report To conduct a PESTEL analysis which will help to find out the external factors which is affecting the gambling industry and the influence each factor has on the industry To conduct a Porter Five Model Analysis so that areas where the industry is loosing grounds can be identified and steps taken for it To provide recommendations which will help the gambling industry to grow and help them to face the increasing competition To provide ways which will help to find out ways that helps to fight the economic recession engulfing the country To find out the manner in which another industry has been similarly affected as the gambling industry PESTEL Analysis for the gambling industry Analyzing the external factors which have an influence on every industry will help to find out the manner in which the factors influence the gambling industry. Finding out these factors will help to find out the areas that the different organization needs to watch out so that they are able to use the environmental factors in a manner which influences the decision making process (Kotler, 2001) Political Changes in the political climate has an effect on the industry prospects as change in government becomes changes in the framework of working which thereby has an influence on the working pattern. This makes it important that the players working in the industry are able to understand the philosophy of the government in power and decide their future course of action keeping it in mind (Oppapers, 2010). The Australian gambling industry has been influenced by it because Australia has a strong influence of politics. This is seen in Victoria where a change in government has brought about changes in the mind set of the government and has framed new regulations for the gambling industry by allowing the internet gambling business to grow and need not need a license for the same. Economic Every industry performs in an economy so having changes in the economic conditions bring about changes in the performance. The growth of every industry is seen from the growth witnessed by the economy and any factors which highlights that the economy is moving backwards results in the industry to be adversely affected (Justin, 2008). Changes in the mind set thereby have an influence on the customer and affects the growth rate of industry. This is evident in the gambling industry as the industry has undergone a change. The present economic recession has made the revenues to fall. People visiting the casinos are concerned about their future and are delaying the spending pattern. The positive sentiments of the customer are low which has resulted in the gambling industry to suffer. Social The social condition of any economy determines whether an industry will flourish or not. The culture prevalent in the economy determines which industry is bound to grow. This makes it important that the industry moulds their pattern on working so that it matches the cultural requirements of a country. The gambling industry has been ale to bank on it and take advantage of it as Australian culture favors gambling. This is evident from the fact that the industry contributes towards the GDP of the economy. Since, the people favor the industry it has grown and has mixed with the culture of the country Technological Very industry needs to take advantage of the technological development to be able to grow. The advent of new ways which improves customer satisfaction has made it important that the different industry realized the importance of changing with the changes in changes in technology so that customers are provided with the best facility (Justin, 2008) This is seen in the gambling industry which has seen technological advancement as the growth of internet gambling has affected the business of casinos. The increasing competition due to development of internet has made it difficult for the players who don’t change with time difficult to face competition thereby requiring integrating technological advancement in the pattern of working. Environmental Environmental factors have little effect on the gambling industry because the industry is not involved into business which has a bearing on the environment. Still, the inidstry can look towards contributing towards the environment by taking steps to protect it. Legal The laws framed by the government of every economy determine the manner in which the industry will perform. Any changes in the legal process require the industry to make the changes so that the pattern of working is not influenced. This is seen in the gambling industry which has undergone widespread changes due to changes in legal law. It is seen that the government has allowed the new players to enter the gambling business without license especially if they are looking towards using internet as a medium for gambling. Porter’s Five Force Model of Gambling Industry This will help to find out the different factors which has an effect on the gambling industry and the manner in which the present players need to look towards using it so that they are able to grow (Mullins, 2004) Threat of Potential Entrant The players faces stiff competition from internet gambling business which has grown due to supportive government reforms which has made them to flourish Increased competition from other development of other casinos in Macau which has made foreign tourist especially from China to stay at Macau and gamble thereby affecting the growth of the local players (Rowley, 2005) Bargaining power of buyers The customer are able to get a better bargain as the development of internet gambling business has enabled the customers to gamble from the comfort of their house Increased avenues for customers who want to gamble as a new gambling hub has developed in Macau thereby providing the customers more options to choose from Fall in the per capita income of customers as the economic recession has affected the purchasing power and has resulted in people postponing their spending on gambling Availability of Substitutes The customers can choose to gamble either by playing through the internet or visiting the casinos. The customers has more substitutes thereby providing the customer the leverage to be choosy Increased options as customer that want to gamble can do in Australia or fly to Macau where a new gambling hub has been developed Bargaining powers of Suppliers The bargaining power of the casinos have decreased as with the advent of gambling through internet provides the customer an option to choose from Increase in new avenues like Macau where people can gamble has decreased the bargaining power of suppliers as customers and other agencies have an option to choose from Rivalry among firms Increased rivalry due to increase in the number of casinos. Macau has become as a new gambling hub which has resulted in the rivalry to increase as there are more players providing similar service. Along with it the advent of internet gambling business has stiffened the rivalry as customers can switch and use different options Recommendations for the gambling industry The gambling industry is facing stiff competition due to falling economic growth and intensifying competition from different quarters. This makes it important that a strategy is drawn which helps the gambling industry to grow and is able to sustain the present conditions The casino industry needs to market the casinos by providing the different features and experience that the customers visiting the casinos will have (Cuizon, 2009). The industry should ensure that customers that visit the casinos are provided something in return. This will help to pull customer from the internet gambling business towards the casinos and will provide a framework for the local industry to flourish The gambling industry should ask the government to frame laws and regulations which protect the present players at the same time encourage growth of more industries. Since, the industry contributes towards the growth of the economy so receiving some favors from the government will help the industry to grow and add more towards the GDP of Australia The industry should ensure that the regular visitors are compensated. The industry should look at ways to attract foreign tourist as the development of Macau as a new gambling hub has affected the business so attracting foreign tourist to gamble should be made one of their priorities. The industry should look to change with changing times and bring a change in the outlook. They can look towards developing the casinos so that they are more attractive than casinos at Macau and at the same time launch the online version of gambling so that it provides the players alternative and can attract customers from all places. Ways to face economic downturn The present economic condition prevailing in Australia and world wide has adversely affected the gambling industry. This makes it important that the industry is able to bring a change in the mindset and bring reforms which helps in the development of the gambling industry. The industry can look towards some support form the government to ensure growth. The government can frame laws and regulations which help the domestic industry to flourish by framing certain rules and regulations which changes the mind set of the people and make more customers visit the casinos so that the industry develops The industry needs to adopt a strategy of protectionism especially till the economy faces downturn. This will help the local players to ensure that they are able to save themselves from the downturn and when the economy grows they can be left free to grow. This will help the layers to ensure effective ways to changes the mindset of the customers and will be thereby able to grow. Effect of recession on other industry The economic recession has engulfed all industry and some industry has been more adversely affected than the others. Australia has also seen the influence of recession and along with the gambling industry the hotel industry has been adversely affected. Australia relies on tourism and the sector contributes towards the growth of the economy. The recent economic crisis has engulfed all nations which has decreased the number of tourist visiting the country. This had affected the hotel business as the rooms which used to be pre-occupied are empty. The sentiments of the people are down and have resulted in a downturn. The business has been affected as every industry which has a direct or indirect relation with the gambling industry is suffering. So hotel industry is one which is witnessing a downturn and will grow once the economy revives Conclusion The paper thereby looks into the manner the gambling industry of Australia has undergone changes due to phenomenon which has affected the entire economy. The increasing competition and the advent of technology have made it difficult for the players who don’t change to perform similarly. The gambling industry needs to ensure that use ways to improve the perception and the quality of gambling so that more customers pour in the casinos and the industry is able to perform the manner it used to. This will help to ensure that the economy also grows and the economy is able to sustain the downturn time and again. References Cuizon, G. Audit on Gambling Industry Marketing Strategies. The 4P’s of Marketing, Suite 101.com. 2009 Justin, A. Gambling Industry. Service Sector Management. Business Week. 2008 Kotler, P. Marketing Management. Page 201, 11th edition, Prentice Publication, Upper saddle River, New Jersey. 2001 Koranteng, J. Aristocrat Leisure takes early lead in competition. Advertising Age International, Volume 24, Issue 37, page 63-71. 1999 Mullins, K. Critically examine the main drivers for gambling industry growth. Free Press, New York. 2004 OPpapers. PEST Analysis Australia Gambling Industry Sector. Research paper. 2010. Retrieved August 31, 2011 from http://www.OPpapers.com Rowley, T. Porters Five Force Model. Prentice Hall. Pearson, Harlow. 2005 Read More