MGM Resorts International - Example

11 March MGM Resorts International EXECUTIVE SUMMARY MGM Resorts International is a gaming and hospitality company located in Nevada. The company expanded from its original form of business, which consisted of owning and running resorts, to a real estate perspective. This company is the world’s second biggest gaming company. However, MGM Resorts International trails its competitors in the organisational, hospitality and food department. This report seeks to establish the methodologies and winning strategies implemented by some of its competitors. The Competition As mentioned above, the hospitality market is highly competitive. With additional regulatory and economic pressures, the competition is higher than ever. Their top competitors include Las Vegas Sands Corp. as well as Carnival Corporation and Wynn Resorts Ltd. Las Vegas Sands has a firm grasp as the market leader toting an impressive market cap of $532.4 billion in comparison to MGM’s $78.3 billion. Wynn Resorts also exceeds MGM’s scope with a market cap of $152.0 billion. Much of these competitors success can be attributed to the ownership of more properties than MGM Resorts (Hermes 2). Strategies employed by competing companies Companies in the food industry use differing yet creative methodologies to attract customers and maintaining their loyalty. For instance, Starbucks lowered their prices to $5 in order to match with the local snacks departments. The company also has a target market of employed young people aged around 20 years and/or above. This target market mainly consists of people who need a break from home activities and have no attachments such as family or kids. Additionally, the company sells coffee as well as burgers which effectively serve the busy working class who lack the time to prepare breakfast (Bussing-Burks, 6). The coffee served by the company is served in covered plastic cups that can be carried with ease. By doing so, the company not only complements the need of their market but also serve as an option to time saving. This makes the company a force to reckon with in the food industry due to analysing the market and serving their different needs effectively. Since Starbucks targets mainly busy people, the company ensures that they can be easily found by their customers. The company achieves this by ensuring that their establishments are situated in locations that are convenient to their customers. The company uses a cluster strategy by opening several locations within a certain region. This makes their customers avoid going out of their way to get served. Starbucks spice up their services by offering premiums as a means of establishing themselves as a luxury service provider. In addition, the company offers discount as a way of preserving price sensitive customers and reclaiming lost ones. The company also has combination deals whereby, a customer buys several of their products at a subsidised combined price. For example, a customer can buy a latte and a coffee cake at only $3.95. During the summer, customers can use the receipts from beverages bought in their premises to buy medium iced beverages at a price of $2 in the afternoon. Other strategies include offering discounts on drinks or other products when one buys a card at $25. These methodologies help the company retain its customers as well as maintain their loyalty (Bussing-Burks 12). Another company that holds a firm share of the food and hospitality market is Panera. The bread company’s genius lies within its leadership. It has a reputation for providing splendid customer care thus the good market position. The top leadership in the company mainly enforces this by being interactive with its staff on a one-on-one basis. For instance, one of the company’s founder and the former CEO, Ron Shaich was known for visiting members of his staff and listening to them. He would then go ahead and address their concerns. By doing this, the company guarantees the loyalty of its members of staff who reciprocate these good deeds by their management into their customer care. Panera Company appends other services to selling burgers and drinks. For example, the company offers free wifi in some of its joints. This works efficiently by attracting a lot of people who are familiar with technology. Most of the beneficiaries of the free wifi consists of students and business people. Their continued stay at the company’s joints results in increased sales of their products. Panera takes an extra step at ensuring the safety of their food in addition to its quality. This makes it dependable as people would rather eat safe food than risk eating unhealthy food (Fortin 23). The strategies employed by Panera do not revolve around food alone. The company has a splendid financial system that magnificently manages its cash to debt ratio. The company has interests in real estate and other franchises. This is a necessary measure that keeps the investors interested as they have their goals set on making profits. The company has also stepped up its marketing strategy by creating an online profile and buying media. This move makes the company renown among the target market. This combination of assets, quality and good customer service makes Panera a favorite food and hospitality destination. MGM Resorts International also faces stiff competition from Einstein Noah Restaurant Group. The restaurants, just like Starbucks, mainly attract busy people. This characteristic makes them have a good grasp of market in areas such as airports, hospitals and various major towns. The restaurants also offer coupons to their fans in the social media in order to get in touch with them and get immediate feedback. By issuing out the coupons, the restaurants market themselves to potential customers. These customers mainly consist of people such as college students and young adults who use various social sites such as Facebook and Twitter. The company incorporates this strategy with the aim of increasing their customer base and establishing loyalty among its customers (Hephaestus Books 17). The chain of restaurants has added a unique twist to their marketing strategy. The marketing strategy involves the intertwining of fast foods and dining. New products such as salads, soups and sandwiches have emerged in their menus. These products, however, become priced under $5 in order to compete with other establishments offering the same. In a different perspective, the company has increased the price of some of their menu items by 4.9% in order to meet the demanding costs of wheat products. As much as these products have an increased price, the chain restaurants make sure that they remain competitive in the demanding market. McDonalds is the most renowned fast food distributor in the world. It has become famous worldwide with over 30,000 installlments in over 118 countries. The secret behind this success lies in the company’s consistency to provide high quality products. The company mainly sells products such as chicken nuggets, hamburgers and fries. The company seeks to diversify its products by providing coffee which happens to be less expensive than the Starbucks’ price. By selling coffee, the company aims at competing with the more prevalent companies in the market such as Starbucks. McDonalds have also had their share of trouble in the market. For instance, they have been sued for health implications due to the food they serve (Fortin 23). As a result, the company has resorted to healthier food options. Some of these healthier options, as laid out by the company, include milk and apple slices for children and salads. The company shows signs of copying the strategies of its main rivals. As seen in some of the restaurants, McDonalds have a more welcoming platform whereby a customer who only buys a drink can relax. It has also made bigger tables for families to hang out. As explained earlier, this seeks to maximise on the probability of a customer buying several items when he/she spends a lot of time within the premises. This strategy can also be traced to Panera (Schlosser 95). McDonalds also uses another strategy that involves the combination of meals, offering toys and prizes. These usually come along with happy meals. The aim behind this strategy targets to introduce new foods into the market. The company goes as far as offering free meals to promote the new menu items. It also tries to hit two targets at the same time by offering the lowest prices for the best quality of food. A copied strategy observed earlier in McDonalds involves the offering of drinks alongside their meals. This strategy is the main theme behind the Starbucks success story. SWOT analysis (Strengths, Weaknesses, Opportunities and Threats) Strengths Weaknesses Varied interests of the mother company that can boost the profitability of the hospitability department Some of the services offered by MGM Resorts International have conflict of interests e.g.gaming and hospitality Opportunities Threats Some of the franchise of the mother compnay is used in movies. This can be used as a platform to advertise The names of other companies similar to MGM Resorts International can prove to be hazardous Strengths The company has a wide range of interests such as gaming and real estate. This variety of interests needs to be merged to make a huge working force that can boost the hospitality sector. The company also has a broad array of locations including restaurants and nightclubs, and simply never stop improving facilities that are already in place. Both the Bellagio and MGM Grand also have a strong brand recognition having been used in hit movies, and many believe the Las Vegas Strip would not be the same without MGM Resorts’ holdings there. Their operational performance has been on the rise, having boasted an operating margin of 51.69% in FY2011, up from -19.14% in FY2010 (Hermes 1). Weaknesses The company has established itself as a company offering divergent services. For example, the company has gaming facilities and also offers food services. In addition, its main branch can be found in the heart of the entertainment world; Las Vegas. This combination of services can be quite inconvenient for the company. This conclusion arises from the fact that Las Vegas (whose nickname is Sin City) may not be a popular family destination (Poupard 1). Additionally, people who happen to be conservative may not want to associate themselves with any of the company’s branches. As much as Las Vegas happens to be a popular entertainment destination, most of the people who go there do not go to seek hospitality services. The booming business in that location includes gambling, liqour based and other pleasure related businesses. In as much all the other branches maybe found elsewhere, people will most likely associate it with activities found in Las Vegas. To make matters worse, the company also has gaming as one of their service. This being the most common of the Las Vegas lifestyle will make it hard for people to dissociate it with the latter. As a result, people will most like ignore the hospitality perspective of the company. Opportunities The innovative strategies implemented by the competitors of MGM Resorts International, show that spicing up their services helps a long way. The company can be strategic in its approach to providing food services. Marketing its name in the media will also help in clearing the air. The use of innovative strategies in their approach will also help to attract harder to please customers. The basis for this argument results from the fact that people will most likely be attracted to services they have never experienced as compared to daily ordinary, monotonous services. Threats The company’s name “MGM Resort International” bears a very close resemblance to two other entertainment companies. The first of these companies is Metro Goldwyn Mayer which specialises in production, promotion and sale of movies and films. The other company; Resorts International Holdings is a very popular gambling destination (Hephaestus Books 17). With both of these companies being more famous than the former, there will most probably be confusion as per the kind of services being offered. Since Resorts International Holdings can be found in Las Vegas as well, most people will probably assume that MGM Resorts International is a branch of the former. Therefore, it comes as a conclusion that the name and primary location of the company is a major setback towards its food and hospitality services. As a result, it will attract fewer families, conservative and party oriented people as well. Open minded people will however be some of their best customers (Thoroson and Duffy 75). Conclusion The company ought to maximize on its varied interests in order to promote the hospitality sector. It is also essential for it to rebrand and change its name in order to prevent it from being confused with other major companies as explained in this report. In addition, the company needs to implement new strategies in order to make it more appealing to the customers. Works Cited Bussing-Burks, Marie. Starbucks. California: ABC-CLIO. 2009. Print. Hephaestus Books. Gambling Companies of the United States. South Carolina: BiblioBazaar. 2011. Print. Hermes, Othniel. MGM Resorts International. Durham:International Book Marketing Service Limited. 2011. Print. Fortin, Neal. Food Regulation: Law, Science, Policy and Practice. New York: John Wiley and Sons. 2011. Print. Poupard, Vincent. Why is Vegas Called Sin City? June 2009. Web. 3 March 2013. . Schlosser, Eric. Fast Food Nation: The Dark Side of the All-American Meal. Boston: Houghton Mifflin Harcourt. 2012. Thorson, Esther and Duffy, Margaret. Advertising Age: The Principles of Advertising and Marketing Communication at Work. Stamford: Cengage Learning. 2011. Print. Read More