Case Study On MGM Resorts International

Solutions and Recommendations: Strategy Formulation and Implementation

Strategic formulation
Customer analysis, identify who the target customers are and the need that the firm is currently satisfying.
The current market for the business is the corporate industry, travel customers and companies who are holding conferences regularly within towns. Ideally, the company targets non-gaming customers who can bring in more revenues to the firms. MGM Resorts currently aims at fulfilling entertainment and accommodation needs of its customers in the best way possible. In fact, all staff members are well trained to handle this.

Current business strategy- Identify the company’s corporate level strategy-

The company’s current business strategy is to focus on non-gaming ventures since it is the area where there is less competition. In order for the company to increase its market share, it also wants to woo group customers as opposed to single clients. This is to trap as much revenue as possible. Besides, the company is also considering rebranding itself as it is re-energizing for the expansion of its international markets. This has been driven by the demand for fresh hotel products.

Strategic alternatives (develop alternatives

The firm is currently considering several strategic alternatives including operating a standalone entity, forming a strategic partnership and evaluating the sale of part of the company to offset the debts. According to the management, the company is planning to concentrate its businesses in Detroit since most business meetings take place there. This implies that the company will book out most of its rooms for meeting as opposed to personal customers. Experts have not ruled out offering their services at discounted prices so that they can attract more customers. In a nutshell, it is considering several business combinations. All this is done in connection with its goal of becoming an integrated business entity.

Alternative evaluation-

The alternative that appears to be most lucrative is combining its businesses so that it can have more power of attracting customers. The management is also considering floating more of its share into the market so that it can have a huge financial base to counter the burden of debt. Once this is achieved, it will offer its services at reasonable prices that will be attractive to its customers. It will also offer quality services. Most customers are often attracted to businesses that offer the best services and having competitive prices is always a plus to any firm (Brunnermeier, 2009).

Alternative choice (your recommendation and supporting rationale

According to Walshe (2000), the firm should first offer some of its assets for sale so that it can offset the huge debt that might cripple its operations. There were some rumors doing rounds that it can settle on selling some of its assets in Detroit. Although this was among the best alternatives, it has been ruled out since the company still depends on these assets to leverage on income. Secondly, it should consider the option of selling the City Center Resort which is an $8.5 Billion project. The hitch with this strategy is that owing to the magnitude of the project, it is very difficult to get a buyer. Finally, it can consider keeping the assets but try to restructure its debt management. This can be done through meeting with lenders so that they can agree on extending the payment period even if it means giving out some of its assets as collaterals.

References

Brunnermeier, Markus, E. (2009). "MGM and its Competitors. Journal of Economics, 34(1), 102-123.
Walshe,S. (2000). An Overal Valuation of MGM Mirage. Journal of Hospitality, 2(3), 56-89.