GAMBLING ON THE EDGE OF CHINA

WYNN MACAU

Tue Tran Soraya Feizpour Alex Huynh Chris Coloma Long Hoang Hung Nguyen

BACKGROUND Created in September

2006

600 hotel rooms

205,000 sq. ft. gaming

area

26,000 sq. ft. retail

22,000 sq. ft.

convention space

Further space expansion

in December 2007

Encore at Wynn Macau

created in April 2010

414 hotel rooms

Tourism dropped during recession

Visitor Volume down 3.7%

Gaming Revenue down 7.7%

____________________

Asia Gambling Market= positive growth

2009 to 2011 increased $20,000+ in GDP per capita

ECONOMIC ENVIRONMENT

GAMBLING MARKET IN ASIA

Moderately Strong financial condition

Growing Net Revenue

2006 to 2007 up $1,255,262

____________________

Decreasing Return on Assets

2006 to 2007 down 9.5%

INTERNAL ANALYSIS

5-YEAR STOCK TRENDCurrent Price on Hong Kong Stock

Exchange: $26.25

INDUSTRY VIEW

RIVALRY AMONG COMPETITORS - HIGH

Many competitors already established

Rivals offer similar product High exit cost

THREAT OF ENTRY- LOW

High capital & resources required License required

PORTER’S

5 FORCES

INDUSTRY VIEWTHREAT OF SUBTITUTES- HIGH

Many other casinos Lottery Other non-gaming entertainment

BARGAINING POWER OF BUYER- MODERATE

Hotel rooms, food, other entertainment services

BARGAINING POWER OF SUPPLIER- VARIES

Gaming equipment Services & Employment

PORTER’S

5 FORCES

INSTITUTION VIEWTHEY HELP…

Institutional forces heavily

influence Macau casinos

Beijing gave birth to

Macau’s rapid rise

Macau monopoly-

gambling illegal in the

rest of China

Chinese economy grows

fastest in the world

wealthy people w/

money to spare

Informal institution:

high demand for

gambling

INSTITUTION VIEWBUT HURT…

China limits cash takeout per person, per trip

Big gamblers need to borrow money in Macau

Gambling debts not enforceable in mainland China

intermediaries known as junkets

INSTITUTION VIEWJUNKET PROBLEMS

Expensive take up

to 75% gambling

revenue

Linked to Organized

Crimes occasional

battles for territory

Not Transparent

investigated by

government for

money laundering

Build Relationships w/ Gamblers

that Casinos Can’t may compete

w/ casinos later

Casinos Still Need Them for VIP

Guests!

INSTITUTION VIEW

BAD STREAK FOR MACAU

Chinese economy slows down

Beijing cracks down on corruption

Long-term reduction in gambling revenue

Macau placed cap on # of gambling tables

allowed

Aimed at reducing gambling-based revenue

INSTITUTION VIEW

WYNN

MANEUVERS Young entrant in the

gambling market

Hesitant to employ

junkets

Now reliant on junkets to

pull VIP customers

Closely watched by US

Authorities under Foreign

Corrupt Practices Act

More regulatory layers

INSTITUTION VIEWCORRUPTION OR “GREASE”

Wynn granted land rights to $4 billion

project in Cotai, 2012

Included payment of $50 million to local

company co-owned by:

Edmund Ho, close associate of former Macau

top official

Prominent family in Beijing

No accusations of wrongdoing from US

authorities

Still under investigation by Macau anti-

corruption

RESOURCE VIEW

RESOURCE VIEWVRIO FRAMEWORK

Key Competitive VRIO Advantages

Value Luxury products & services that come second to none

Imitability Retention of high-end customers w/ world class service

Organization Well-established reputable company backed by Steve

Wynn

INTERNATIONALIZING Asian culture’s

favorable view &

Chinese government’s

harsh restriction on

gambling huge

obstacle for expansion

High demand for sport

event outcomes

public attention &

government restrains

sport gambling market

entrance

Expand traditional casino

gambling avoid shortage of

labor & competition

INTERNATIONALIZING

RECOMMENDATIONS1. Concentrate on developing non-gaming

services

Drop in gambling revenue

China track down corruption, decrease in

VIP Customers

Establishment of Encore Macau

2. Marketing Towards Middle-Class Chinese

Chinese has fastest growing middle class

RECOMMENDATIONS3. Training Program for Employees

Macau staff is relatively new &

inexperienced

Need proper training

Maintain brand image & top quality

4. Special Training Program for Board

Members

Complete reliance on Steve Wynn

SUMMARY Background, Economic

Environment, &

Internal Analysis

Industry-Based View

Institution-Based View

Resource-Based View

Internationalizing

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