A strategic analysis of Caesars Entertainment
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Strategic analysis is the process of developing a theoretically informed understanding of an organization’s environment and how the organization interacts with it in order to improve its efficiency and effectiveness by increasing its ability to intelligently deploy and redeploy its resources. Strategic analysis is a vital component of the knowledge-creation processes of organizations and must be entrenched within every organization’s core management processes. It is mainly concerned with assessing the external and internal environment of an organization, assessing current strategies as well as generating and evaluating the most successful strategic alternatives. There are a number of analytical tools used in strategic analysis and they include; SWOT analysis, PESTLE analysis, Porter’s five forces analysis, four corners analysis, Value chain analysis, VRIO, early warning scans, and war gaming among others. This report used PESTLE, SWOT, and Porter's Five Forces to analyze the environment Caesars Entertainment works in and how it affects its strategy. The company's generic strategies were also examined to assess how the company has leveraged its strengths in order to position itself within the competition.
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Strategic Analysis of Ceasers Entertainment
Make a PESTEL analysis, Porter’s 5 forces, SWOT analysis, and analysis of generic strategies/competitive motives of Caesars Entertainment. 2,600 words
Key Learning Outcomes
By the end of this exam assignment, students should be able to:
- Evaluate an organization's working environment and how it affects its operations
- Understand the concept of strategic analysis, what it is, and how to do it effectively
- Understand how internal and external factors can influence a company's strategic position in a market.
- Understand the concept of strategy and how to apply it to a real company
INTRODUCTION
Caesars Entertainment, Inc. is the largest casino-entertainment Company in the U.S. and one of the world's most diversified casino entertainment providers controlling 46 casinos mainly in Nevada. Since its beginning in Reno, Nevada, in 1937, Caesars Entertainment has grown through the development of new resorts, expansions, and acquisitions. In 2020, the company merged with “Former Caesars”, in a transaction valued at around $17 billion. As a result of the merger, Caesars Entertainment now controls 47,700 hotel rooms and 2,900 table gas across the US. Caesars Entertainment, Inc. offers diversified gaming, entertainment, and hospitality amenities, one-of-a-kind destinations, and a full suite of mobile and online gaming and sports betting experiences. All tied to its industry-leading Caesars Rewards loyalty program, the Company focuses on building value with its guests through a unique combination of impeccable service, operational excellence, and technology leadership.
With its proven track record of delivering high-quality gaming experiences to customers around the world, the company has in recent years invested in its digital segment in order to capitalize on the major opportunities available in the dynamic and rapidly-evolving iGaming market. With Caesars Digital starting to deliver positive results, the company is alluding to partnerships and tie-ins with a number of top-tier providers and suppliers including Scientific Games, IGT, and Playtech, as key to projected success.
In the first quarter of 2023, Caesars’ net revenues rose to US$2.8 billion (£2.22bn) from US$2.3 billion (£1.82bn) in the same period 2022. During the same period, same-store Adjusted-EBITDA was US$958 million (£761.82m), against the US$296 million (£235.36m) of Q1 2022. According to company reports, growth was driven in several key areas, notably Las Vegas and regional gaming properties and, the hyper improved performance of its digital vertical.
However, there are major challenges that will likely impact the company’s growth of which one major issue is the high rents. Of the 48 casinos owned by the company, 26 currently operate under leasing agreements acquired after the merger with Caesars Palace. VICI Properties is the main lessor with 18 properties under their agreement which makes them the company’s landlord. However, this poses a challenge considering the clause in the agreement that stipulates a rent increase based on the CPI (i.e., inflation) increase during the year 2022. This means that starting January 2023, they would be subject to an 8-10% increase in their $1.1 billion rent expense, which means an additional $90-110 million in rent expense.
Besides, inflation coupled with low consumer confidence and high food prices will likely have a major impact purchase power of consumers. These two factors could result in a decrease in travel to Vegas which will in tandem affect spending in Caesars’ locations. This is a major challenge considering that it could happen during a very delicate and fragile trend of returning to pre-covid levels.
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