MGM Mirage and Strategic Management Thesis
- Length: 20 pages
- Sources: 6
- Subject: Business
- Type: Thesis
- Paper: #56511470
Excerpt from Thesis :
One issue on which a need for emphasis is felt at this time, and which has only succinctly been mentioned previously, revolves around the internal operations of the organization. In this order of ideas, MGM Mirage's operations consist of "17 wholly-owned casino resorts and 50% investments in four other casino resorts, including Bellagio, MGM Grand Las Vegas, Excalibur, Circus Reno and Silver Legacyof Grand Victoria [...]. Other operations include the Shadow Creek golf course in North Las Vegas, two golf courses south of Primm, Nevada at the California state line, and Fallen Oak golf course in Saucier, Mississippi" (MGM Mirage 2007 Annual Report).
4.2. MGM Mirage External Environment
The most adequate manner for conducting an analysis of the external environment is that of developing a PEST analysis. This analysis considers the forces belonging to the political, economic, socio-cultural and technological backgrounds and which could affect the operations and achievements of MGM Mirage. These features will be succinctly presented below:
1. Political forces the United States now has a new president and his agenda is yet uncertain; this basically means that Obama's determination to properly manage the economic crisis could revolve around restrictions, taxes or other laws that could impact the operations at MGM Mirage also, the changing of the president determines a short period of political instability the fact that MGM Mirage operates at a global scale materializes in that they have to subject to the regulations of various parties, such as the United States, the international regulating institutions (such as the World Trade Organization), as well as the legislation in the destination country; this compliance requires additional financial resources the employment laws are changing, requesting employers to increase the minimum wage of their staff members and to offer them better perks (such as medical coverage); they are more tough than ever relative to discrimination; all these imply additional costs
2. Economic forces the most important force in the economic background is the globalized economic crisis it emerged in the United States but is rapidly expanding to other countries as well, threatening as such both the national and international operations of MGM Mirage before the emergence of the financial crisis, the income per capita had significantly increased; this led to more and more individuals travelling for leisure purposes, leading consequently to the development of the hospitality industry the demand for hospitality services has also been generated by the development of the business sector, which determined major growths in business travelling the economic difficulties prevent the sustained growth in income per capita and the development of the business community, materializing as such in reduced demands for hospitality services, and ergo fewer revenues for MGM Mirage the United States banking system is extremely unstable; and not just that, but it has adopted a strategy of the fluctuating rate, which often means that the economic agents will end up paying extremely high interest rates; this further increases their expenditures however it has yet to show signs of stability, after long periods of instability and high values, the inflation rate is decreasing
3. Socio-cultural forces an important specification is that the betting industry has significantly increased throughout the recent years also, the betting industry suffers limited repercussions in times of financial difficulties as the individuals continue to gamble in the hope that they would win the growth of the gambling industry has generated addictions materialized in the loss of economies or even lives; as a result, gambling is often frowned upon 4. Technological forces the technological domain is developing at a rapid pace, supporting the organizations in their endeavours new technological advancements introduced in corporate operations help reduce costs and increase operational efficiency the technological appliances are a fashion in their own sense and companies must constantly update their gadgets in order to satisfy the customers; this however implies additional costs the incorporation of hi-tech utensils has further increased customer satisfaction in the hospitality industry (e.g. hotels which offer wireless connections to the internet) the internet has also managed to bring the organizations closer to the customer through virtual environments; reservations and a wide variety of information can now be achieved online, making the MGM Mirage available to all individuals, regardless of geographic location or time zone
4.3. MGM Mirage Stakeholders
However the internal and external analyses are pivotal components in understanding the company's environment, a thorough analysis can not be achieved without a detailed look at the stakeholders. These incorporate all the individuals and groups of individuals which are directly and/or indirectly affected by the operations of MGM Mirage. Foremost, what must be mentioned relative to the stakeholders is that not only are they influenced by the organization, but that they also have the ability to impact it. Generic categories of stakeholders interact with the company in both environments (internal and external) and could include the organizational employees, customers, the competitors, the general public, business partners (such as the suppliers), as well as governmental or non-governmental organizations.
1. Governmental or non-governmental organizations
MGM Mirage complies with all regulations imposed by the federal institutions. They pay large sums of money to the federal budgets, not only acting in accordance with the law by this, but also supporting the development of communities and also the growth of challenged industries.
MGM Mirage supports the protection of the environment and collaborates with environmental organizations to find solutions that reduce pollution and address other environmental concerns. Environmental organization Green Lodging praises MGM Mirage: "MGM Mirage's $7 billion CityCenter project in Las Vegas will be the first one in the state of Nevada to pursue Leadership in Energy and Environmental Design (LEED) certification. From the top of the organization on down, MGM Mirage has made a commitment to make sustainability a central element of every future Las Vegas project. The company should be applauded for doing this" (Hasek, 2007)
2. The MGM Mirage Customer
The MGM customer represents the core of organizational operations, his satisfaction being the most important aim of the company. In order to achieve this, the hospitality company strives to offer the highest quality products and services, in a varied palette. Foremost, the management at MGM Mirage has voted on the incorporation of CRM practices into their operations. CRM stands for Customer Relationship Management and offers a wide variety of tools to be used in improving communications with the clients, getting to know them better and satisfying their needs. The primary goal of CRM is to transform the occasional client into a loyal one (Anderson and Kerr, 2001). MGM Mirage used CRM practices to "integrate, profile, cleanse and load 50 million customer records and 400 million transactions into a new data warehouse in real time. Guest services, operations and market research will use these results to plan marketing, incentive and direct mail campaigns. "To compete in the crowded casino resort market, we need a detailed understanding of our guests to provide them with entertainment options and offers that will make MGM MIRAGE their preferred resort," said Michelle Messina, MGM Mirage executive director corporate marketing" (Campanelli, 2004)
3. The MGM Mirage Employee
The managers at MGM Mirage understood the role played by their human resource is satisfying the customers and achieving the established corporate goals. In this order of ideas, they strive to create a pleasant working environment which satisfies the needs of the staff members. They offer a wide variety of incentives, which give the employee a sense of belonging and of being cherished. The benefits offered to the MGM Mirage employee include health plans, saving plans, employee assistance programs, child development centers, wellness programs, paid time off and educational and professional growth programs, including education assistance, tuition reimbursement, scholarships or financial assistance (Website of MGM Mirage Careers, 2009).
5. Financial Analysis
The MGM Mirage stock is traded on the New York Stock Exchange at a value of $9.19, revealing a course of steady decrease throughout the past sessions (Financial Content, 2009). The fluctuations are not abrupt however, pointing out a stability of both stock as well as organization. As a result then, this indicates organizational equilibrium, as well as just stakeholder trust.
Another plus for MGM Mirage from the standpoint of financial figures is given by their ascendant trend in the registered revenues. In this order of ideas, since its existence, the company has registered profits which increase on annual basis. 2007 for instance has been characterized by a 7.2% increase in revenues, a 62.9% increase in operational revenues and an astonishing 144% increase in net profits. "The increase in revenues was primarily attributable to growth in hotel room rates and other non-gaming revenues. [...] the increase in operating profit was driven by gains from the CityCenter joint venture project, higher Hurricane Katrina insurance recoveries, and a full year of operations at Beau Rivage" (Datamonitor, 2009). The table below offers a better look at the financial results of MGM Mirage across five years: =$ million=
The company's income statement reveals that most of their revenues come from their casino operations (the rest…