Harrah's entry strategy

India

Abhay jain Kushal Kanodia Mohijit Dasgupta

Agenda
Introduction to Harrahs. Harrahs international strategy. Indian scenario. MECE on entry decision. Options for entry. Stakeholder analysis. Competitive analysis. Criteria to make a better decision.

Introduction- Harrahs Present in 48 countries

Worlds largest provider of branded casino entertainment 4 million square feet of casino space 40,000 hotel rooms 100,000 employees 40 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

Harrahs Entertainment

CRM strategy

Historical Demand

Customer Profitability
Availability Revenue Management Available Inventory Forecasted Demand Customer Worth

Forecast Demand
Current Demand

Rate

Historical Demand

Systems

Indian scenario- 17.9 million foreign visitors to India in 2010,

Top 5 State destinations- Maharashtra (5.1mn), TN, Delhi, UP, Rajasthan

Why should Harrahs worry?

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

2. Social activists would revolt Gambling considered unethical

3. Corruption issues

4. Red tape & bureaucracy

5. Terrorism issues

Wait theres more..

6. Government opposition & Legal issues

Now we discuss the industry as a whole

New entrant Same as below, but once entry is gained threat will be high.
Buyer power:

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.

Maybe apprehension at first. But new generation can be attracted .

Porters 5 forces:

Substitutes High threat due to unorganized setup, lotteries etc.

To sum it up.

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.

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

PESTEL FRAMEWORK

ENVIRONMENTAL: not much effect apart from land acquisition issues.

SOCIAL: It is considered unethical in INDIAN societies.

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

Who are the stakeholders?

Stakeholder Map
Harrah's

Decision Maker

Affected

Against-

For- Government
for revenues

Social activists, Govt. for unethical argument

Benefit
Franchisee Tourism industry Property (Site) Owner

Hurt
Other Gaming facilities- legal and illegal

The players sized up

Harrahs
Critical Success Factors
Geographical Diversity
Marketing Customer Loyalty Financial Position Market Share Information Technology Weight Rating Weighted Score

MGM Mirage
Rating Weighted Score

Boyd Gaming
Rating Weighted Score

0.15
0.15 0.05 0.05 0.05 0.15

4
4 4 4 4 3

0.60
0.60 0.60 0.40 0.40 0.15

3
3 3 3 3 4

0.45
0.45 0.45 0.30 0.30 0.20

2
2 2 2 2 2

0.30
0.30 0.30 0.20 0.20 0.10

Diverse Clientele
Theme-Based Properties Customer Service Brand recognition

0.10
0.15 0.05 0.10

3
2 3 3

0.30
0.10 0.30 0.15

2
4 4 4

0.20
0.20 0.40 0.20

4
3 2 2

0.40
0.15 0.20 0.10

TOTAL

1.00

3.60

3.15

2.25

Time for a MECE!

MECE for Harrahs entry

1. First movers advantage

2. Huge untapped market 3. Revenue stream for Govt. 4. Legalizing what was illegal 5. Foreign tourists 6. Saving Indian spending on travel abroad only for casinos 7. Removing peoples fear

yes

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

8. Huge scope to tap a potential online market

Should Haaras enter India no 1. Legal issues 2. Indian values 3. Political reasons

Let us define the following parameters for Haaras to make better decisions: 1. Market size or industry potential Legal =30000 crore Illegal = 50000 crore Online + lottery = 15000 crore 2. Growth potential Research reports say expected to grow over 20-25% annually. Increased spending power with the Indian consumer.

total industry

3. Demand supply equationSupply<<demand

4. Profitability- total profit/total investment

Over 25-30%

5. Opportunity to create a company of high value1st movers advantage Huge untapped market 6. Opportunity for differentiationBrand value leverage Successful international experience 7. Stage in industry life cycleInternationally it might be in the maturity stage, but in India still in the Introduction stage 8. Intensity of competitionCompetition? For Harrahs ? In India? 9. International examples- Macau, Australia, New Zealand

Requirements: Staff : recruit and training Artists: from India and abroad Hospitality: fine dining and hotels. Infra required: no. of tables, land, slot machines, I.T requirements Legal approvals- Corporate giants coming together for entry.

Sales

Revenue split up casino F&B lodging

others

Revenue $9.8 bn Debt $5.2 bn

Research work Locations that can be considered: 1. Self owned casinos or hotelsa. GOA- Inter. Airport. Goa #11 (foreign tourists) Maharashtra is #4 in domestic tourism and # 2 in foreign tourists Advantage GOA : beaches, alcohols Foreign tourists to Maharashtra 19.9 lakh Goa : 3.7 lakh Total 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 Harrahs. Stiff opposition from political parties and social activists.

Stiff political opposition and social activism would provide hurdles in establishment. Public response to this would be negative, and they might not come.

Yes

Medium

Research reports and past land acquisition events. It is against societal values and norms to gamble.

News, consulting agencies.

Yes

High

Traditional Indian norms and ethics.

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

Solutions for entry

Lobbying For govt. Show benefits

Regulation of industry

Revenue for industry

Opportunity for other sectors

solutions
Remove perception on gambling.

Marketing & P.R

For people
Customize rewards in nonmonetary terms. Keep in line with laws.

Ways for entry.

Advantages: Direct investment
1. No profit sharing. 2. exclusive brand presence.

Joint venture Entry options

Licensing

challenges:

1. Huge initial investment.

2. Lack of local know-how 3. Brand building required. 4. Legal obligations to be complied. exporting

ABC analysis A- ADDICTION- STUDY BY UNIVERSITY OF ERVINE B- BANKRUPTCY- STUDY BY NORC C- 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 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.sharing of risks with a venture partner. 3.There is an imbalance in levels of expertise, investment or assets brought 4.Joint ventures can be flexible into the venture by the different 5. JVs offer a creative way for companies partners. to exit from non-core businesses. 4.Different cultures and management styles . 6.Companies can gradually separate a business from the rest of the 5.Success in a joint venture depends on organization. thorough research and analysis of the objectives.

Thank you

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