Melco Resorts & Entertainment (MLCO) SWOT Analysis / TOWS Matrix / MBA Resources
Casinos & Gaming
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Melco Resorts & Entertainment (United States)
Based on various researches at Oak Spring University , Melco Resorts & Entertainment is operating in a macro-environment that has been destablized by – geopolitical disruptions, increasing commodity prices, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, increasing transportation and logistics costs,
customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Melco Resorts & Entertainment
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Melco Resorts & Entertainment can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Melco Resorts & Entertainment, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Melco Resorts & Entertainment operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Melco Resorts & Entertainment can be done for the following purposes –
1. Strategic planning of Melco Resorts & Entertainment
2. Improving business portfolio management of Melco Resorts & Entertainment
3. Assessing feasibility of the new initiative in United States
4. Making a Casinos & Gaming sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Melco Resorts & Entertainment
Strengths of Melco Resorts & Entertainment | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Melco Resorts & Entertainment are -
Low bargaining power of suppliers
– Suppliers of Melco Resorts & Entertainment in the Services sector have low bargaining power. Melco Resorts & Entertainment has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Melco Resorts & Entertainment to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Melco Resorts & Entertainment in Casinos & Gaming industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Melco Resorts & Entertainment has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Melco Resorts & Entertainment staying ahead in the Casinos & Gaming industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Melco Resorts & Entertainment has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Casinos & Gaming industry. Secondly the value chain collaborators of Melco Resorts & Entertainment have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Melco Resorts & Entertainment has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Successful track record of launching new products
– Melco Resorts & Entertainment has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Melco Resorts & Entertainment has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Sustainable margins compare to other players in Casinos & Gaming industry
– Melco Resorts & Entertainment has clearly differentiated products in the market place. This has enabled Melco Resorts & Entertainment to fetch slight price premium compare to the competitors in the Casinos & Gaming industry. The sustainable margins have also helped Melco Resorts & Entertainment to invest into research and development (R&D) and innovation.
Ability to lead change in Casinos & Gaming
– Melco Resorts & Entertainment is one of the leading players in the Casinos & Gaming industry in United States. Over the years it has not only transformed the business landscape in the Casinos & Gaming industry in United States but also across the existing markets. The ability to lead change has enabled Melco Resorts & Entertainment in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Casinos & Gaming industry
- digital transformation varies from industry to industry. For Melco Resorts & Entertainment digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Melco Resorts & Entertainment has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Cross disciplinary teams
– Horizontal connected teams at the Melco Resorts & Entertainment are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Melco Resorts & Entertainment is one of the most innovative firm in Casinos & Gaming sector.
High brand equity
– Melco Resorts & Entertainment has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Melco Resorts & Entertainment to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses of Melco Resorts & Entertainment | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Melco Resorts & Entertainment are -
Aligning sales with marketing
– From the outside it seems that Melco Resorts & Entertainment needs to have more collaboration between its sales team and marketing team. Sales professionals in the Casinos & Gaming industry have deep experience in developing customer relationships. Marketing department at Melco Resorts & Entertainment can leverage the sales team experience to cultivate customer relationships as Melco Resorts & Entertainment is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the Casinos & Gaming industry, Melco Resorts & Entertainment needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Employees’ less understanding of Melco Resorts & Entertainment strategy
– From the outside it seems that the employees of Melco Resorts & Entertainment don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Ability to respond to the competition
– As the decision making is very deliberative at Melco Resorts & Entertainment, in the dynamic environment of Casinos & Gaming industry it has struggled to respond to the nimble upstart competition. Melco Resorts & Entertainment has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on Melco Resorts & Entertainment ‘s star products
– The top 2 products and services of Melco Resorts & Entertainment still accounts for major business revenue. This dependence on star products in Casinos & Gaming industry has resulted into insufficient focus on developing new products, even though Melco Resorts & Entertainment has relatively successful track record of launching new products.
Skills based hiring in Casinos & Gaming industry
– The stress on hiring functional specialists at Melco Resorts & Entertainment has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Melco Resorts & Entertainment is slow explore the new channels of communication. These new channels of communication can help Melco Resorts & Entertainment to provide better information regarding Casinos & Gaming products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of United States, Melco Resorts & Entertainment needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– From the 10K / annual statement of Melco Resorts & Entertainment, it seems that company is thinking out the frontier risks that can impact Casinos & Gaming industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Products dominated business model
– Even though Melco Resorts & Entertainment has some of the most successful models in the Casinos & Gaming industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Melco Resorts & Entertainment should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Melco Resorts & Entertainment has a high cash cycle compare to other players in the Casinos & Gaming industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Melco Resorts & Entertainment Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Melco Resorts & Entertainment are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Melco Resorts & Entertainment to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Melco Resorts & Entertainment to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Casinos & Gaming industry, but it has also influenced the consumer preferences. Melco Resorts & Entertainment can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Casinos & Gaming industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Melco Resorts & Entertainment can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Melco Resorts & Entertainment can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Developing new processes and practices
– Melco Resorts & Entertainment can develop new processes and procedures in Casinos & Gaming industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Creating value in data economy
– The success of analytics program of Melco Resorts & Entertainment has opened avenues for new revenue streams for the organization in Casinos & Gaming industry. This can help Melco Resorts & Entertainment to build a more holistic ecosystem for Melco Resorts & Entertainment products in the Casinos & Gaming industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Melco Resorts & Entertainment to increase its market reach. Melco Resorts & Entertainment will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Melco Resorts & Entertainment to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Low interest rates
– Even though inflation is raising its head in most developed economies, Melco Resorts & Entertainment can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Melco Resorts & Entertainment in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Casinos & Gaming industry, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Melco Resorts & Entertainment is facing challenges because of the dominance of functional experts in the organization. Melco Resorts & Entertainment can utilize new technology in the field of Casinos & Gaming industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Loyalty marketing
– Melco Resorts & Entertainment has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Building a culture of innovation
– managers at Melco Resorts & Entertainment can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Casinos & Gaming industry.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Melco Resorts & Entertainment can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Melco Resorts & Entertainment External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Melco Resorts & Entertainment are -
High dependence on third party suppliers
– Melco Resorts & Entertainment high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Stagnating economy with rate increase
– Melco Resorts & Entertainment can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the Casinos & Gaming industry.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Melco Resorts & Entertainment needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Casinos & Gaming industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Casinos & Gaming industry are lowering. It can presents Melco Resorts & Entertainment with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Casinos & Gaming sector.
Shortening product life cycle
– it is one of the major threat that Melco Resorts & Entertainment is facing in Casinos & Gaming sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Melco Resorts & Entertainment will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Melco Resorts & Entertainment.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Melco Resorts & Entertainment needs to understand the core reasons impacting the Casinos & Gaming industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Casinos & Gaming industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Melco Resorts & Entertainment can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Melco Resorts & Entertainment in Casinos & Gaming industry. The Casinos & Gaming industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Increasing wage structure of Melco Resorts & Entertainment
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Melco Resorts & Entertainment.
Weighted SWOT Analysis of Melco Resorts & Entertainment Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Melco Resorts & Entertainment needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of Melco Resorts & Entertainment is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of Melco Resorts & Entertainment is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Melco Resorts & Entertainment to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Melco Resorts & Entertainment needs to make to build a sustainable competitive advantage.