Question

Urgent need help ...please read the below Case and answer the required questions :

Atlantic City Casino Several years ago the management of a large hotel chain, Hotel Corporation of American (HCA) purchased a casino in Las Vegas. Pleased with the results HCA constructed another casino in Atlantic City shortly after casino gaming was legalized in that city. At the time the proposal in this case arose (see below) there were 9 other casinos operating and 2 additional casinos under construction. The casino is an independent operating unit within the hotel chain. For example, all financial and accounting services are provided in- house. The casino has been profitable since the day it opened. However, the level of profits has not been satisfactory. Corporate management is well aware that HCA would have been better off if the huge sums involved in the construction of the casino had been invested in certificates of deposit. The Proposal Management of the Atlantic City Casino has employed several consulting services to study the market and the casino's position in the market. Consumer surveys have shown that the casino is viewed as an average casino, with no distinguishing characteristics. Coupled with its location (several blocks from where most of the casinos are located) this perception of blandness seems to explain the casino's relatively small walk-in trade (most visitors to Atlantic City visit more than one casino; people staying at one casino who visit a second are considered walk-ins at the second casino). A proposal has been made to expand the casino and hotel (state law prescribes a fixed number of hotel rooms per square feet of casino space). As part of this expansion, the proposal includes the construction of a theme entertainment center. The center would be separate from, but attached to, the casino. The showpiece of the center would be a large Ferris wheel designed to look like a giant wheel of fortune. It would be visible from a large portion of the boardwalk. Additionally, the area would include a unique water slide, bumper cars, a space capsule ride and a fun house. Throughout the area would be a number of small souvenir and snack shops, push carts, tent shows and midway-type games to provide an old-fashioned style carnival atmosphere. An admission fee would be charged to enter the theme center and most of the rides and entertainment would be included in the admission fee. Management expects to be able to use free admission tickets to the center as a promotional item. There would be easy access from the center to the casino floor. It is anticipated that a large number of the visitors to the center would also visit the casino. Although management is impressed by the plan and has already had detailed architectural plans prepared for the expansion, they are cautious. When the casino was first built, everyone was enthusiastic about the casino's potential, but the results have been disappointing. Management wants a thorough study made of the financial prospects for this expansion before committing funds to it. Detailed financial data for every casino in Atlantic City are public information and are routinely exchanged. Thus, data such as that given in Tables A and B for the current year are readily available. TABLE A Selected Annual Financial Data (000s omitted)

Answer 1

Ans 1. Value Chain Analysis

• Casino operations

- Restaurants : To Eat and meet place for the people.

- Spas : Proper spa service to create relaxing environment.  

- Bars : Pay for alcohol so that people will spend more money which would be helpful for the revenue generation.

- Shopping : Another option for people to spend money.

• Hotel operations

- Housekeeping department : Management of housekeeping so that to give better service for the customers.

- Food & Beverages department : To keep control on food & beverage.

- Front office department : To help customers and to take care of them and serving them the best.

• Cost Reduction

- Virtual Security : Facial recognition cameras and online software protection are just two of the ways you can protect the casino without having to hire more security personnel.

- Incentivize the employees : Creating a system where your employees can see how they’re performing in relation to other employees can also help motivate employees.

- Provide Quality training to employees : Employees who know how to do their jobs well are more likely to be profitable employees. Ensure they know the company processes by providing them with high-quality training.

• Value added Ideas

- The Faster the better : The first way to increase value is simply to increase the speed you deliver the kind of value people are willing to pay for.

- Offer better quality : To creating wealth is by offering better quality than your competitors at the same price.

- Increase Convenience : Increasing the convenience of purchasing and using your product or service.

- Improve customer service : Providing the better quality of the service.

According to the understanding of the competitive position of Atlantic City Casino In terms of the revenue the HCA must look after generation revenues through casino, rooms, food & beverages. They should implement the process of Value chain analysis which will help them in improving the net income of the casino. Even they should look after constructing more space in casino so that more people can stay at one place, increase the no of rooms and restaurants and provide quality service to the people.

Ans 2. Yes HCA should invest into theme entertainment center because keeping the casino idle would make people just walk-in and go. To keep them busy there should be some entertainment for the people. Though the investment would be high and would not make profit for the first time bust as keep on serving better and improving the quality of the product it may change into the profitable business. The theme entertainment center would increase the cash flow into the business and would make people stay longer and enjoy the entertainment.

Ans 3. The success factor should be included are :

1. Entertainment focus - For the purpose of the entertainment they should keep focusing on it because this will increase the number of customers. There will be more re-visits on the customers. The cash flow into the business will get increased.
2. Financial perspective - There should be focus on the cost reduction that is providing good quality service by low investment. Which describes like training of the employees so that with less employees good service can be provided. Management of the Food & Beverages this should be stored as per the requirement which will help in reducing storing cost.