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Steve Wynn hotels and casinos is an enviable position. It is perceived as the leader in the gaming industry. Its aggressive expansion to China, specifically in the gaming city of Macau, encourated major players to follow Wynn’s lead and together they transformed Macau as a mirror-image of Las Vegas.
However, Steve Wynn and his business associates must keep an eye on sustainability, innovation and risk management, if they want to survive and thrive in the 21st century.
Steve Wynn’s hotels and casinos, in Las Vegas and Macau, are viewed as enviable business models in the gaming industry. In the present time, the company is considered as the role model on how to operate a profitable hotel and casino enterprise. However, the company must focus on innovation, sustainability and risk management to outlast competitors in the 21st century.
The Importance of Mr. Steven Wynn?
In a book entitled, Managing Reputational Risk, the author asserted that, “Investors will often pay a premium for equity in companies with a good corporate reputation and robust governance because the risk is lower. McKinsey’s global investor study found out that, around the world, 73-78% of investors are prepared to pay a premium for companies exhibiting high governance standards” (Rayner, 2004, p.29).
If Steve Wynn decides to abandon the company, he will take investors’ money with him, whereever he decides to go. The company’s credit lines will dry up. In other words, the company will most likely fail, if Steve Wynn is not at the helm of the organization.
Strengths and Weaknesses of Wynn’s Macau
In China’s booming economy, there are millions of Chinese citizens that have acces to significant amounts of disposable income. The are atrracted to the sights and sounds of Macau. The added allure is that there is no not need to fly halfway around the world in order to have a Las Vegas experience. Nevertheless, Macau is a distant runner-up to Las Vegas, in terms of investor confidence and sustainable growth.
There are plenty of potential pitfalls and there are many variables that are almost impossible to quantify. There are so many sources of problems when a US-based company invests billions of dollars in an emerging market. For example, China did not have full control of Macau until the Portuguese government handed it back in 1999.
Steve Wynn and his corporate leaders are going to invest a lot of money and energy in terms of monitoring the political and economic situation around the region. In recent years, the most disruptive issue is the tension created by China’s aggressive stance when it comes to territorial disputes with neighboring countries like Vietnam, Japan, and the Philippines.
One wrong move from either side of the fence can rapidly escalate into a full-blown diplomatic disaster. When this happens, tourism will be severely affected and Wynn Macau may have to close down.
Sustainability, Innovation, and Risk Management
Steve Wynn must simultaneously focus on sustainability, innovation and risk management. Whatever corporate strategy their leaders can think of, it must contain these three elements. The crafting of effective strategy can begin by focusing on the company’s competitive advantage over other firms. Wynn casinos offers a “luxury destination experience” (Pearce & Robinson, 2013).
Applying the principles of sustainability, innovation, and robust governance through appropriate risk management, it is prudent to continue the tradition of providing an unforgettable luxury destination experience within Steve Wynn hotels and casinos. However, each element creates a push and pull tension with each other (Melicher & Norton, 2014).
For example, in order to maintain high standards in the gaming industry, Steve Wynn needs to purchase state-of-the art equipment. According to one report the bacarrat tables in a Wynn casino is worth the trip to the gambling Mecca. But this means that the company had to spend a great deal of money to secure this kind of advantage.
On the other hand, if the company tries to put a severe cap on expenditures, innovationa and forward thinking can be stifled, to the dismay of preferred customers. An extremely difficult balancing act is needed to fine tune the interaction of sustainable practices and the drive to develop innovative strategies.
Now, if a business consultant comes in and add the requirements of prudent risk management practices, the balancing becomes more complicated.
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In the case of Macau, Steve Wynn must continue to pour in investor’s money to attract “high-rollers” from China, Japan, and the Southeast Asian region. On the other hadn he must keep a watcful eye over government policies, making sure that he knows how to pull the plug to protect shareholders’ interest.
In the case of Las Vegas, Steve Wynn needs to monitor on the potential risks emanating from high fuel prices. On the other hand, the company must not hold back from investing in business practices that will result in the creation of a luxurious experience for patrons and guests.
Although, the company must be careful in spending billions of dollars to upgrade their hotels and casinos in Las Vegas, they have to pursue innovative strategies. They must prepare for an inevitable increase in demand coming from newly minted millionaires in China’s booming economy and the deluge of disposable income coming from baby boomers in the US mainland.
Melicher, R. & Norton, E. (2014). Introduction to finance: Markets, investments, and financial management. CA: John Wiley & Sons.
Pearce, J. & Robinson, J. (2013). Strategic management: Planning for domestic and global competition. MA: McGraw Hill.
Rayner, J. (2004). Managing reputational risk. CA: John Wiley & Sons.