Strategic decision and evaluation essay
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Excerpt from Dissertation:
Recommendation of a Growth Strategy for MGM Resorts Foreign
MGM Places International is actually a major amusement and gaming organization. The business is commencing a great strategy as viewed with the organic and natural growth which can be taking place throughout the development of new resorts, such as the current development of MGM Coati, which is scheduled to open in 2016, and also the proposed development in Ontario, to be taken on in partnership with Fairview Cadillac (MGM, 2013). Various other plans for further development can also be being regarded. However , if an organization desires to undertake a great aggressive development strategy, you need to consider the various potential strategies which may be applied. The aim of this paper should be to consider the way MGM results International may well undertake a rise strategy, with the different options which are available.
Ansoff identified four potential methods of progress based on two dimensions; companies markets, and whether the firm which to focus on the existing dimension or increase them (Kotler and Keller, 2011). This created a 2 x a couple of matrix when the four potential growth strategies were presented; these are marketplace penetration, product development, market advancement, and diversification (12manage. com, 2013; Kotler and Keller, 2011). Ansoff matrix is usually shown in figure one particular below.
Number 1; Ansoff’s Matrix
(12manage. com, 2013).
To consider different development strategies and the potential for employ by MGM each different strategy inside the various quadrants will be evaluated individually. The first strategy is market penetration (12manage. com, 2013). This is a technique in which the organization is using the existing product/services and existing markets, and seeks to simply sell more of the same products or services in the same market segments, effectively raising its market share and income by leveraging its existing position (12manage. com, 2013; Kotler and Keller, 2011). This is a potentially beneficial strategy, as it can help an organization to increase performance by realizing the economies of scope and range as well as reducing overheads per customer (12manage. com, 2013). However , it’s rather a difficult strategy to implement, specially in a mature and competitive market (Kotler and Keller, 2011). As the sport in the leisure industry is a ready extremely competitive, with MGM competing against many other organizations, the cost of increasing business may be prohibitive, especially provided the current working losses of MGM (MGM, 2013), and the stronger budget of rivals, who may well compete very protect their particular market share (Kotler and Keller, 2011). In the event one views market penetration strategy, one may also wish to consider the application of video game theory, as well as the danger that in a strong competitive environment there may be the development of a price battle which will be detrimental to all rivals (Davis, 1997).
The second technique is that of marketplace development. Industry development can be described as process in which the organization can seek to maximize sales by developing new markets, but choosing the existing products or services (12manage. com, 2013). Market expansion may be regarded as in terms of marketplace segments or perhaps geographic limitations. Market advancement is a all set been taken on by MGM, as viewed with the development into new geographic areas, including the designed expansion in to Ontario and the current advancement in Coati (MGM, 2012). MGM already have only a limited range of functions in The united states, mainly Nevasca, as well as The state of michigan and Mississippi, and the majority interest in the hotel and Online casino at MGM Macau (MGM, 2013). Therefore , Mark enlargement free geographic expansion could possibly be a viable technique, especially offered higher level of reputation of the brand brand. The potential to discover new areas and casinos in other areas may be very desirable, especially in Asia where the sector appears to be within a rapid growth phase. Nevertheless , it should become remembered which the market expansion strategy will demand capital, especially where there is a building of wholly owned facilities, a strategy which may be challenging given the existing financial position of MGM.
The third strategy is that of product development. This is when business seeks to stay selling new items and services to their existing client base (12manage. com, 2013). When reviewing MGM Resorts International, a lot of the customers or perhaps clients go to the resorts for only brief periods every year, so a brand new product or service which will contact with these people while they can be not inside the resorts might be beneficial. A specific area that could be of use is gaming around the Internet, which is gradually gaining a higher level of acceptability and legality in several U. T. states (Seeking Alpha, 2013). Therefore , a new product or service which may be offered could incorporate on the net gaming. Yet , the MGM brand could also be leveraged in order to create, enhance will support other items, for example the activity into selling gaming items, such as homemade cards, mobile gambling establishment sets etc ., all of which might be seen as related diversification. In a product enlargement strategy it is additionally possible for the organization to undertake related diversification; entering into completely new areas which are not related to existing operations. This could have some potential benefit, and may provide rewards associated with diversification of risk, especially the video gaming and vacation resort industry suffers due to external factors, including the economy (Pearce Robinson, 2013).
The final potential growth technique outlined by Ansoff is that of diversification, where there is an effort to sell new items in new markets (12manage. com, 2013). Again, this might be undertaken inside the context of related or unrelated diversification (Pearce Brown, 2013). This strategy has also been referred to as the “suicide” strategy, as it has a high level of risk, with a very steep learning curve (Kotler and Keller, 2011). The strategy can be risky as the organization will be expanding new products, which usually it has limited knowledge, to be able to sell in new markets, again if company features only limited knowledge; this can be a strategy which can be most likely to get corrupted (Kotler and Keller, 2012).
From an examination improve of tactics, it would appear that one of the most viable strategies are those of market advancement and application. The organization is actually a ready commencing market creation, and may potentially have to undertake further development help to make the brand available in more urban centers across the world. However , the way in which this is certainly undertaken in the modern situation might be constrained due to the capital limitations. Therefore , in order to undertake market expansion/development, this maybe argued that the utilization of strategic complicité would be helpful, as found with Fairview Cadillac in Ontario. Yet , if the firm wishes to undertake a more hostile strategy, the utilization of operation agreements may be beneficial. Franchise agreements will allow the brand to expand, and MGM Places International may benefit from the technology of additional income the initial and ongoing dispenses that are received. The strategy may be useful for MGM resource Foreign, as others will carry the risk connected with each market, as well as supply the capital for the purchases. The dispenses will reap the benefits of use of the MGM Areas International identity, and contracts may be used effectively to be able to ensure that the franchisees will be bound by simply terms dictating specific high standards (Mintzberg et al., 2011). The franchise model has been used extensively with a large number of businesses, including individuals in the leisure industry, to accomplish international growth at an instant rate. For example, but are certainly not limited to, IHG Inc. has used it extensively with their Holiday Inn and Holiday Resort Express brands, and firms such as Starbucks and McDonald’s regularly employ this approach.
The merchandise development technique may also have got a great deal of potential, especially given the changes which can be taking place inside the legislative environment in the U. S. with regards to online video gaming. The development of a brand new service to facilitate online video gaming may catch the attention of many MGM existing clients, and may always be tied along with the existing MGM customer programs. This is a new product concentrating on existing industry, and as it is established a current product, this may also facilitate even more expansion in to new markets were on the web gaming contains a ready been more established.
The grand approach recommended in the adoption associated with an aggressive development strategy, leveraging the existing brand image difference associated with MGM as a superior quality supplier of leisure and gaming solutions. The approaches will be executed in a manner that will assist you to reduce overall costs and improve earnings for the organization. It is recommended that the corporation continue development through a combination of market creation and product development. Market expansion may be the majority of effectively accomplished through the utilization of a business model, creating additional revenues without increasing liabilities or perhaps costs apart from as build a operation office. Product development into on-line gaming could possibly be seen as a all-natural progression, offer related variation. The two development strategies which facilitate progress may also be viewed as highly lined up with the existing strategies, appropriate in very well with the existing brand.
12 manage. com, (2013), Product/Market Main grid (Ansoff), recovered http://www.12manage.com/methods_productmarketgrid.html
Davis, M, M