Thesis on "MGM Mirage and Strategic Management"

Thesis 20 pages (5179 words) Sources: 6 Style: APA

[EXCERPT] . . . .

MGM Mirage and Strategic Management

Today's companies strive to achieve, maintain and consolidate a high competitive position within the market and within their industry. They manage this through a full satisfaction of the customers' needs and wants. The organizational clients have become the core of corporate operations simply because they are the determinants of success. They decide if they like the product or service and if they will return within the organization to solicit it again, ensuring as such the economic agent with sustainable revenues.

Therefore, the full satisfaction of the customers' needs is crucial in all organizations, but even more so within the service sector, where the provider does not offer a material product and can only succeed based on the quality of the delivered services. A most relevant example in this instance is given by the restaurants and hotels industry.

MGM Mirage is a successful representative of this industry and this paper will focus on several aspects of their business, including features such as challenges and strengths, financial performances or future strategic steps they could take. MGM Mirage takes great pride in the quality of their services and the dedication of their staff members. Their mission statement provides: "Our dedicated staff of over 70,000 employees are committed to providing an unsurpassed experience for every one of our guests. We are actively expanding our presence globally, with potential developments in a number of domestic and international markets. At MGM MIRAGE, we are all striving together to deliver our enticing blend of entertainment to every corner of the world" (Website of MGM Mirage, 2009). The vision statement of MGM Mirage based on the principle that great ideas can change the world and it revolves around "putting great ideas into action, stirring emotions in the unexpected, forging new relationships around the globe, having the dedication to develop the extraordinary, working as one to enrich lives, creating opportunities for people to grow, delivering on a promise" (MGM Mirage 2007 Annual Report)

2. Company History

MGM Mirage is one of the most reputable and successful hotel chains in the world. The company is relatively new, being founded no sooner than 2000. The headquarters have been established in Las Vegas, Nevada, where the company also operates hotels. They employ an estimated 70,000 individuals and their revenues for fiscal year ended on December 2007 totalled up to $7,691 million, revealing a sustained ascendant trend (MGM Mirage 2007 Annual Report).

The company we see today is the result of a 2000 merger between MGM Grand and Mirage Resort. The formed company, MGM Mirage, was the largest gambling organization in the world, but was soon overthrown by its number one competitor Harrah's Entertainment (Land, Land, and Rocha, 2004). Until 2004, operations were conducted smoothly and with little attention from the press, 2004 however was a more intense year - the company sold its two Golden Nugget casinos; they started the endeavours towards the purchase of Mandalay Resort Group (one of their main competitors); they launched the operations towards the building of a new entertainment center, which would incorporate a hotel, a casino, apartments for rent, as well as other facilities. The project was called Project City Center and is expected to attract the first customers by 2009 (Pr Newswire, 2004)

Throughout the past years, the multinational organization has been engaged in various process of organizational change, including the sale of some of its assets or the purchase of new ones. Its main strategy has been that of growth and expansion in both operations and revenues. MGM Mirage remains focused on serving their customers by increasing their satisfaction relative to "quality entertainment, luxurious facilities and exceptional customer service" (Website of MGM Mirage, 2009).

The company's history is an impressive one, staring before the actual merge of the two giants. The reason why this specification has been made revolves around the idea that the corporate history is a powerful tool in the business community. It creates and reveals corporate tradition and it generates the trust of the stakeholders. Otherwise put then, the history of a company can easily constitute a managerial tool in achieving corporate success. MGM Mirage has implemented this strategy and has further improved its market perception.

3. SWOT

The next step in conducting an analysis of MGM Mirage is that of developing a SWOT analysis. The SWOT matrix reveals the internal strengths and weaknesses the company is facing, as well as the opportunities and threats revealed by the external environment. The analysis is crucial in the planning process and much of the company's success relies on the managerial team's ability to clearly and objectively identify the features affecting the company from within and outside its borders. The primary aim of identifying these forces is that of being able to develop strategies in response to them so that they better support the organization in reaching its overall objectives. The following lines reveal the four components of the SWOT analysis for the chain MGM Mirage:

Internal Strengths the MGM chain possesses vast expertise in the industry it was built through the merger of two successful and reputable organizations, which further increased its favourable reputation global presence through 24 destinations which offers them increased access to the market fair and equal treatment of employees, including various incentives and training programs their human resource strategies ensure high quality of the services delivered and increased customer satisfaction they cherish and embrace the diversity of their staff members, which further increases customer and employee satisfaction (the culturally diverse employees can relate to the culturally diverse clients) the company's internal policy has been based on the financial theory of portfolio diversification - this basically means that the chain conducts various operations, which help it maximize its profits and reduce its risks; they operate in entertainment, gaming, hospitality and own shares in casino and non-casino resorts (Website of MGM Mirage, 2009) they reveal strong financial results and an ascendant trend in profits throughout the past five years; the 2007 profits for instance have registered a 7.2% increase as compared to the results of fiscal year 2006 another strength is given by their philanthropist reputation, and by the benefits they generate upon the communities through their charitable events and donations

Internal Weaknesses the corporate stock has been trading at decreasing values, which could generate lack of trust among the MGM Mirage shareholders the MGM hotels have been the onset of fires which hurt the customers and reduced the trust in the organization; the latest fire occurred in 2008 at the Monte Carlo Resort and Casino in Los Angeles and the losses were mainly material, but the company's reputation was severely damaged in 1980, when a fire at their MGM Grand took the lives of 80 people and injured another 700 (Mylchreest, 2008) however it operates globally, the company is headquartered in the United States, the region most badly affected by the contemporaneous financial crisis, a feature which could cost the organization in terms of customers, loans or business partners upon its creation, MGM Mirage was the leader of the industry, but this position was soon conquered by Harrah's Entertainment

External Opportunities despite the internationalized economic challenges, the gambling industry continues to grow; it is true that the growth is reduced in comparison to the previous year, but it still exists the gambling industry will feel reduced impacts of the economic crisis as the population continues to bet in times of financial difficulties, motivated even more by the possibility of easy money most of the players in the hotels and restaurants industry reveal a tendency of hiding the minorities in positions in which they do not interact with the customers; this is a plus for MGM Mirage since they do not proceed in this manner and the contrast with the competition is significant

External Threats the globalized economic crisis threatens the economic stability of nations, meaning that the financial security of MGM customers and business partners may be affected, leading to negative effects upon the chain competition has been intensifying throughout the past recent years, and just like MGM Mirage has entered strategic partnerships, so do the competitors, further strengthening their edge the fact that they operate globally means that they are subjected to various policies and legislations across the globe, further increasing their costs their international operations also imply an additional degree of risk (such as currency exchange risks), against which the company must protect itself, further consuming time and financial resources

4. Environmental Analysis

The environmental analysis is yet another important aspect to consider in the process of achieving corporate goals. The environmental analysis is divided into three major components: the internal environment, the external environment and the corporate stakeholders. Some of these features could also be present in the SWOT analysis.

4.1. MGM Mirage Internal Environment

The internal analysis of the organization is mostly based on the assessment of its core competencies and its limitations, revealed in the previous section of the paper (the internal strengths and weaknesses as presented in the SWOT… READ MORE

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