INTRODUCTION

THE CASINO GAMBLING INDUSTRY IS LEGAL IN THE US AND HAS BEEN BECOMING POPULAR. IN 2002:

TOTAL: 500 CASINOS REVENUE: $37 BILLION IN 2002. EXPECTED: 5% OF REVENUE DUE TO NEW CASINOS IS OPENING.

EVERY STATES CAN GET NEW CASINO GAMBLING LICENSES AND REGULATE THE INDUSTRY. SOME CASINOS ALSO HAVE INTERNET GAMBLING FOR ONLINE CUSTOMER WHO DOESNT IN THE COUNTRY CAN ENJOY.

THE GROWTH OF THIS INDUSTRY LEADS TO THE RIVALRY BETWEEN COMPETITORS. THEY TOOK MANY EFFORTS ON ACQUISITION AND MERGING TO EXPAND THEIR ACTIVITIES AND ACCOUNT THE MARKET. THEY TRY TO DESIGN EACH CASINO WITH ATTRACTION AND UNIQUE. HOWEVER IN 2001 THE REVENUE OF CASINOS IS THREATENED BY TERRORIST ATTACK ON THE AIRPLANE. AS A RESULTS, REVENUE LOST 11% IN SEPTEMBER 2001. ANOTHER IMPEDIMENT IS THE CRITICS SAID THAT GAMBLING IS BAD EFFECTS IN THE COMMUNITY. THEREFORE CASINO IS NOT ALLOW UNDERAGE OR PERMIT MINOR CUSTOMERS.

1. RIVALRY AMONG EXISTING FIRMS

A) DEFINE THE CASINO GAMBLING INDUSTRY

IT IS A HIGH INTEREST INDUSTRY IN WHICH THERE ARE 150 CASINOS FACILITIES, MAKE 26 BILLION OF PROFIT IN 2002 AND ITS GROWTH IS EXPECTED TO BE 5% IN 2003.
B) WHAT IS ITS LEVEL OF CONCENTRATION?

THE HIGHEST CONCENTRATION OF CASINOS IS IN NEVADA (STATEWIDE) WITH 240 CASINOS AND $9 BILLIONS REVENUE. HOWEVER, THE LOCATION FOLLOWS NEVADA IS THE HIGHEST REVENUE CASINO WHICH IS MISSISSIPPI,INDIANA, ILLINOIS, LOUISIANA, MISSOURI, AND LOWA WATERWAYS WITH $10 BILLION REVENUE. BECAUSE THE NUMBER OF CASINOS IS QUITE HIGH, THE RIVALRY AMONG THE EXISTING CASINOS IS QUITE HIGH.

2. THREAT OF NEW ENTRANTS

WHAT ARE THE BARRIERS TO ENTRY INTO THIS INDUSTRY?

WHEN THE AMOUNT IF NEW GAMBLING MARKET IS DECREASED THROUGHOUT 1990S, THE US ECONOMY IS GOING DOWN. BECAUSE OF THE PRESSURE ON THE LOCALITIES, THE GOVERNMENT CONSIDER THE HIGH TAX IN THE GAMBLING INDUSTRY. IN 2002, THE HIGHER TAXES ARE APPLIED ON THE GAMBLING INDUSTRY WHICH MAKE A BIG CHANGES FOR THE NEW ENTRANTS. BESIDES, THE INCREASE OF THE INTERNET GAMBLING IN 2002 ALSO AFFECT THE REVENUE OF THE GAMBLING INDUSTRY. THEREFORE, IT IS MORE DIFFICULT FOR THE NEW ENTRANTS SINCE 2002. THE THREAT OF NEW ENTRANT IS QUITE HIGH BECAUSE OF THE HIGH RISK THAT THE NEW CASINO HAS TO FACE WHEN IT OPEN SUCH AS HIGH TAXES AND INTERNET GAMBLING.

3. BARGAINING POWER OF SUPPLIERS

A) WHO ARE THE SUPPLIERS?

SUPPLIER POWER REFERS TO THE ABILITY OF PROVIDERS OF INPUTS TO DETERMINE

THE PRICE AND TERMS OF SUPPLY. SUPPLIERS CAN EXERT POWER OVER FIRMS AN INDUSTRY BY RAISING PRICES OR REDUCING THE QUALITY OF PURCHASED GOODS AND SERVICES, SO REDUCING PROFITABILITY.

IN

THE CASINO GAMBLING INDUSTRY, SUPPLIERS IS WHO PROVIDED GAMBLING MACHINE AND TOURISM AGENCIES.

IN LATE 2003, IGT RECEIVED APPROVAL FROM THE NEVADA GAMING COMMISSION TO
ACQUIRE A LESS DIRECT RIVAL ACRES GAMING.

3. BARGAINING POWER OF SUPPLIERS

B) DISCUSS SUPPLIER BARGAINING POWER

THE POWER OF SUPPLIERS CAN BE AN IMPORTANT ECONOMIC FACTOR IN THE

MARKETPLACE BECAUSE OF THE IMPACT THEY CAN HAVE ON PROFITS OF GAMBLING INDUSTRY.

4. BARGAINING POWER OF BUYERS

A) WHO ARE THE BUYERS? B) DISCUSS WHETHER THE BUYERS HAVE BARGAINING POWER?

BUYERS ARE USUALLY CONSUMERS OF THE PRODUCT OR SERVICE BUT

BUYERS CAN ALSO INCLUDE WHOLESALERS AND RETAILERS WHO BRING THE PRODUCT TO THE CONSUMER.

IN THE GAMBLING INDUSTRY, BUYER ARE VISITORS, PLAYERS AND TRAVELER. IN THE GAMBLING INDUSTRY, THE BUYERS WILL HAVE MANY KINDS OF GAMES.

5. THREAT OF SUBSTITUTES
WHAT OTHER SUBSTITUTES LIMIT THE SALES AND PROFITS FOR FIRMS IN THIS INDUSTRY?

THE BETTING FROM HORSE AND DOG HAS BEEN INCREASING SINCE THE SLOT MACHINES ARE INTRODUCED. THEREFORE, THE INCREASES IN THIS INDUSTRY WILL LIMIT THE SALES AND PROFITS OF THE GAMBLING INDUSTRY.

THE THREAT OF SUBSTITUTES IS QUITE LOW BECAUSE THE NUMBER OF HORSE AND DOG RACE IS NOT HIGH IN COMPARISON WITH CASINO CONCENTRATION.

6. RELATIVE POWER OF OTHER STAKEHOLDERS

WHO ARE OTHER MAJOR STAKEHOLDERS?
GOVERNMENT, LOCAL COMMUNITIES: CHURCH

THE GOVERNMENT CAN HAVE THE POWER ON THE GAMBLING INDUSTRY BY THE POLICIES SUCH THE TAX INCREASE IN 2002. ALTHOUGH THE RESIDENTS OF COMMUNITIES ARE SUPPORT THE CASINOS, THE PART OF COMMUNITIES ARE NOT SUPPORT THE CASINO SUCH AS CHURCHES, AD HOC CITIZENS GROUPS, AND NATIONAL ORGANIZATION (E.G. THE NATIONAL COALITION AGAINST LEGALIZED GAMBLING). THE REASON FOR THIS ARGUMENT IS FROM THE NEGATIVE AFFECTS THAT THE GAMBLING INDUSTRY BRINGS TO THE SOCIETY SUCH AS THE GAMBLING HABITS FROM CHILDREN AND THE INCREASING AMOUNT OF BANKRUPTCIES.

THE RELATIVE POWER OF OTHER STAKEHOLDERS IS QUITE HIGH BECAUSE WE CAN SEE THAT THE INFLUENCES OF THE COMMUNITIES AND GOVERNMENT ARE VERY IMPORTANT TO THE EXISTENCE OF ANY ORGANIZATION.

7. RELATIVE POWER OF COMPLEMENTORS

WHO ARE THE COMPLEMENTORS?
TOURISM AND AVIATION THE VISITOR FROM THE OTHER COUNTRIES ARE THE POTENTIAL AND BENEFICIAL FOR THE CASINOS BECAUSE THEY ARE TRAVELLING AND WILLING TO CHALLENGE WITH GAMBLING. HOWEVER THE TRAVELERS ALWAYS NEED THE TOURISM ORGANIZATIONS TO GUIDE THEM TO THE CASINO . FURTHERMORE, THE AVIATION ALSO HAS IMPORTANT AFFECTS ON GAMBLING INDUSTRY. WE CAN SEE THE AFFECT OF TOURISM AND AVIATION CLEARLY WHEN THE TERRORIST ATTACK ON SEPTEMBER 11, 2001 HAPPENED, THE TRAVELERS AND AVIATION ARE DECLINE RAPIDLY WHICH ALSO AFFECTS THE REVENUE OF THE GAMBLING INDUSTRY.

THEREFORE, THE RELATIVE POWER OF COMPLEMENTORS IS VERY HIGH

8. DISCUSS THE IMPLICATIONS OF THE ABOVE LEVELS OF INTENSITY

A) WHICH FORCES OF COMPETITION ARE MOST THREATENING NOW? WHICH DO YOU EXPECT WILL CHANGE OVER THE NEXT, SAY, FIVE YEARS?
RIVALRY AMONG EXISTING FIRM BECAUSE THERE ARE MANY COMPETITOR EXISTING.
WE EXPECT THE NUMBER OF CASINOS WILL DECREASE IN THE NEXT 5 YEARS. HOWEVER, WE EXPECT THE DECREASE COMES FROM THE MERGE OF THE SMALL CASINOS SO THAT THE GAMBLING INDUSTRY WILL BE MORE INTERESTING WITH STRONG COMPETITORS AND WE ALL KNOW THAT THE STRONG RIVAL WILL MOTIVATE THE ORGANIZATION TO OPERATE BETTER.

8. DISCUSS THE IMPLICATIONS OF THE ABOVE LEVELS OF INTENSITY

B) WHAT ARE THE IMPLICATIONS IN TERMS OF PROFIT MARGINS IN THIS INDUSTRY TODAY? OVER THE NEXT FIVE YEARS?

COMPETITOR SUBSTITUTES

ECONOMY GROWTH
LEGISLATION

8. DISCUSS THE IMPLICATIONS OF THE ABOVE LEVELS OF INTENSITY

C) AS THE CEO OF A FIRM IN THIS INDUSTRY, WHAT ACTIONS DOES THIS ANALYSIS SUGGEST YOU IMPLEMENT IN ORDER TO STRENGTHEN YOUR COMPETITIVE STRATEGY?
- INVEST FACILITIES - PRODUCT DEVELOPMENT

- DIVERSIFY LOCATION

8. DISCUSS THE IMPLICATIONS OF THE ABOVE LEVELS OF INTENSITY

D) AS AN ADVISOR TO A POTENTIAL ENTRANT, WOULD YOU RECOMMEND ENTRY? WHAT STEPS WOULD YOU ADVISE THEM TO TAKE?

-WE WILL RECOMMEND THE POTENTIAL ENTRANT TO ENTRY. - WE WILL ADVISE THEM TO: - CAREFULLY RESEARCH ABOUT THE EXISTING SERVICES

AND PRODUCTS AT THE EXISTING

CASINOS - RESEARCH ABOUT THE EXPECTATION OF THE CONSUMERS - RESEARCH AND PREDICT THE TREND OF ECONOMY GROWTH - LEARN FROM FAILURE OF THE EXISTING CASINOS SERVICES AND PRODUCTS - LOOKING FOR THE LOCATION WITH GOOD HOTEL SYSTEM - OF COURSE, THE PREPARATION FOR HUMAN RESOURCES AND FACILITIES ARE IMPORTANT AND COMPULSORY.

CONCLUSION
Barriers To Entry Bargaining Power of Buyers Bargaining Power of Suppliers Threat of Substitute Products Intensity of Rivalry Attractiveness of Industry High High Medium High High Unattractive

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