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 DOESN’T 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.

• INTHE 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 CITIZEN’S 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 High

Bargaining Power of Buyers High

Bargaining Power of Suppliers Medium

Threat of Substitute Products High

Intensity of Rivalry High

Attractiveness of Industry Unattractive

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