haaras assignment
TRANSCRIPT
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.
