haaras assignment

Harrah's entry strategy

India

Abhay jainKushal KanodiaMohijit Dasgupta

Agenda

• Introduction to Harrah’s.• Harrah’s international strategy.• Indian scenario.• MECE on entry decision.• Options for entry.• Stakeholder analysis.• Competitive analysis.• Criteria to make a better decision.

Introduction- Harrah’s Present in 48 countries

World’s largest provider of branded casino entertainment -

4 million square feet of casino space40,000 hotel rooms100,000 employees40 million Total Rewards members

•2,997,800 million sq.ft of retail space, •67,060 game tables, •3,290 slot machines•38,060 hotel rooms

Harrah’s Entertainment

Historical Demand

Current Demand

Forecast Demand

Revenue Management• Available Inventory•Forecasted Demand•Customer Worth Rate

Availability

Historical Demand

Customer Profitability

CRM strategy

Hotel, Event Registration

Slots

MWB

Casino

PDB

Kiosk

Our Guests

Our Slots • Welcome Message • Points available shown upon card-in

Our Card

Our Kiosk • Display Points available • Display Comp available • Issue point voucher • Issue comp slip

Our Systems

Harrah’s Call Centers

“Reserve” Offers Answer questions

Our Employees • Explain Points available • Explain Comp available • Issue point voucher • Issue comp slip • Redeem points or comps for retail, food, cash, etc... • Redeem offer for points

Guest Mailbox • Offers

Systems

Indian scenario- 17.9 million foreign visitors to India in 2010, Top 5 State destinations- Maharashtra (5.1mn), TN, Delhi, UP, Rajasthan

1. highly volatile business environment: inflation vs. interest rates

Why should Harrah’s worry?

2. Social activists would revolt Gambling considered unethical

3. Corruption issues

4. Red tape & bureaucracy

5. Terrorism issues

Wait there’s more……..

6. Government opposition & Legal issues

Buyer power:•Maybe apprehension at first.•But new generation can be attracted .

New entrantSame as below, but once entry is gained threat will be high.

Suppliers•Vast opp. For hospitality industry.•IT needs would be high.•Supplier power would be low, owing to less info.

Direct competition:There is no competition, as it is illegal as of now.

Substitutes•High threat due to unorganized setup, lotteries etc.

Porter’s 5 forces:

Now we discuss the industry as a whole

PESTEL FRAMEWORK

POLITICAL:•At a very nascent stage, would require strong lobbying, at a very higher level.

ECONOMIC:•The illegal gambling industry earns Rs. 50,000 crore annually. •Rs.30, 000 cr legal gambling and lottery business•Rs. 15,000 cr illegal lottery rackets.

SOCIAL:It is considered unethical in INDIAN societies.

TECHNOLOGICAL:Casino ind. require high tech., vast opportunity for IT industry.

ENVIRONMENTAL:not much effect apart from land acquisition issues.

LEGAL:•Gaming law has not developed as a field of practice.•Ministry of Law and Justice is studying a proposal to legalize gambling.

To sum it up……….

Who are the stakeholders?

Stakeholder Map

Harrah's

Decision Maker

For- Government for revenues

Against-Social activists,

Govt. for unethical argument

Affected

HurtOther Gaming facilities- legal

and illegal

Harrah’s MGM Mirage Boyd Gaming Critical Success Factors

Weight Rating WeightedScore

Rating WeightedScore

Rating WeightedScore

Geographical Diversity 0.15 4 0.60 3 0.45 2 0.30

Marketing 0.15 4 0.60 3 0.45 2 0.30

Customer Loyalty 0.05 4 0.60 3 0.45 2 0.30

Financial Position 0.05 4 0.40 3 0.30 2 0.20

Market Share 0.05 4 0.40 3 0.30 2 0.20

Information Technology

0.15 3 0.15 4 0.20 2 0.10

Diverse Clientele 0.10 3 0.30 2 0.20 4 0.40

Theme-Based Properties

0.15 2 0.10 4 0.20 3 0.15

Customer Service 0.05 3 0.30 4 0.40 2 0.20

Brand recognition 0.10 3 0.15 4 0.20 2 0.10

TOTAL 1.00 3.60 3.15 2.25

The players sized up…

Time for a MECE!

Should Haara’s enter India

yes1. First movers advantage2. Huge untapped market

3. Revenue stream for Govt.4. Legalizing what was illegal

5. Foreign tourists6. Saving Indian spending on travel abroad only for

casinos7. Removing people’s fear

8. Strong brand name and world famous. No question of cheating and duping

8. Huge scope to tap a potential online market

no

1. Legal issues2. Indian values

3. Political reasons

MECE for Harrah’s entry……

Let us define the following parameters for Haara’s to make better decisions:

1. Market size or industry potential Legal =30000 croreIllegal = 50000 crore total industryOnline + lottery = 15000 crore

2. Growth potential-

• Research reports say expected to grow over 20-25% annually. • Increased spending power with the Indian consumer.

3. Demand supply equation-

Supply<<demand

4. Profitability- total profit/total investment

Over 25-30%

5. Opportunity to create a company of high value-

1st movers advantageHuge untapped market

6. Opportunity for differentiation-

Brand value leverageSuccessful international experience

7. Stage in industry life cycle-

Internationally it might be in the maturity stage, but in India still in the Introduction stage

8. Intensity of competition-

Competition? For Harrah’s ? In India?

9. International examples- Macau, Australia, New Zealand

Requirements:

Staff : recruit and trainingArtists: from India and abroadHospitality: fine dining and hotels.Infra required: no. of tables, land, slot machines, I.T requirementsLegal approvals- Corporate giants coming together for entry.

Revenue split up

Revenue $9.8 bnDebt $5.2 bn

Sales

casinoF&Blodgingothers

Research work Locations that can be considered:

1. Self owned casinos or hotels-

a. GOA- Inter. Airport. Goa #11 (foreign tourists)

Maharashtra is #4 in domestic tourism and # 2 in foreign touristsAdvantage GOA : beaches, alcoholsForeign tourists to Maharashtra 19.9 lakhGoa : 3.7 lakhTotal 23.6 lakh

b. Gangtok: nearest airport GUWAHATI

people in cross border trade but they heavily depend on govt. regulations and demand supply factors

2. Franchisee with huge Indian player or a Hotel Chain

Indian hotels, Welcome group etc. In their hotels across India, wherever feasible.

Now we consider the hypothesis based on MECE

Issue Hypothesis Impact Key analyses Data sources impact

The regulatory laws would not permit the entry of Harrah's.

Yes high Absence of any laws regarding gambling in the country.

Common law directory.

Special law might be required to allow entry for Harrah’s.

Stiff political opposition and social activism would provide hurdles in establishment.

Yes Medium Research reports and past land acquisition events.

News, consulting agencies.

Stiff opposition from political parties and social activists.

Public response to this would be negative, and they might not come.

Yes High It is against societal values and norms to gamble.

Traditional Indian norms and ethics.

Even if it is permitted, if people do not buy the idea then all efforts futile.

Solutions for entry

solutions

For govt.

Lobbying

Show benefits

Regulation of industry

Revenue for industry

Opportunity for other sectors

For people

Remove perception on gambling.

Marketing & P.R

Customize rewards in non- monetary terms.

Keep in line with laws.

Entry options

Direct investmentAdvantages:1. No profit sharing.

2. exclusive brand presence.challenges:

1. Huge initial investment.2. Lack of local know-how3. Brand building required.

4. Legal obligations to be complied.

Joint venture

Licensing

exporting

Ways for entry……….

ABC analysisA- ADDICTION- STUDY BY UNIVERSITY OF ERVINEB- BANKRUPTCY- STUDY BY NORCC- CRIME AND CORRUPTION- STUDY BY AGA

Joint venture

Advantages:1.opportunity to gain new capacity and

expertise.2.Allow companies to enter new

geographic markets 3.sharing of risks with a venture

partner.4.Joint ventures can be flexible5. JV’s offer a creative way for

companies to exit from non-core businesses.

6.Companies can gradually separate a business from the rest of the

organization.

Disadvantages:1.It takes time and effort to build the

right relationship 2.The objectives of the venture are not

100 per cent clear.3.There is an imbalance in levels of

expertise, investment or assets brought into the venture by the different

partners.4.Different cultures and management

styles .5.Success in a joint venture depends on thorough research and analysis of the

objectives.

Thank you

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