Strategic analysis overview

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Strategic analysis overview Name April 9, 2023

Introduction Strategic analysis involves researching a company to come up with a strategy. It involves defining external and internal environments that are to be analyzed and using methods such as SWOT analysis and Porter’s five forces analysis. The chosen company is MGM Resorts International. Strategic Analysis Overview The purpose of strategic analysis is to assess the current strategies of an organization and evaluate strategic alternatives. Strategic analysis plays a crucial role in strategy evaluation, planning, and implementation. It enables individuals and businesses to consider their competitors. Business managers can formulate and implement strategies by evaluating their businesses (Matović 2020). They can determine issues affecting their growth and point out various factors by conducting a strategic analysis. Internal analysis involves looking inside the organization while external analysis involves looking outside the organization. Internal analysis is conducted when companies examine themselves and define negative and positive performances. It focuses on the strengths and weaknesses of a company (Matović 2020). External analysis examines external factors affecting the growth of a company. Examples of external factors include competitors and customers. Strategic analysis tools can help MGM Resorts International develop a future-oriented strategy. By using strategic analysis tools, the organization can develop effective vision and mission statements. The organization can set priorities and ensure that employees are aligned with its vision. It can develop a strategy by identifying weaknesses and mitigating threats (Matović 2020). The organization can develop a strategy taking advantage of the available opportunities and its strengths.

Internal analysis tools used in strategic evaluation include SWOT analysis. This tool enables companies to identify their strengths and weaknesses. Companies develop a strategy while considering their weaknesses. They might have a strategy to improve on their weaknesses or capitalize on their strengths (Benzaghta et al. 2021). Companies can also avoid threats or develop a strategy on how to deal with the threats. External analysis tools such as PESTLE analysis are used in strategic evaluation and implementation. PESTLE analysis enables companies to evaluate legal, environmental, social, economic, and political factors. It enables companies to point out factors they can control and the ones they cannot control. For example, companies identify environmental and political changes as factors they cannot control (Matović 2020). They use PESTLE analysis to determine how various factors affect them. Analyzing the Internal Environment Conducting a value chain analysis can help the company to consider how various steps add value to their products and services. They can realize competitive advantages such as cost reduction by ensuring that activities in the value chain are less expensive and more efficient (Tomar 2020). Value chain analysis can help diagnose the success of MGM Resorts International by evaluating the activities of the company and helping it to achieve product differentiation. The BCG growth matrix can give the organization a framework to evaluate the success of its products. It can help the company to determine the products it should invest more money in and the ones that should be eliminated (Tomar 2020). MGM Resorts International can use the BCG growth matrix to identify the new products to be introduced in the market. MGM Resorts International has good financial health. The company can operate within its boundaries. MGM Resorts International has adequate equity. The company has good cash flows,

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and it does not have a lot of debt. The financial health of MGM Resorts International can be used to make decisions on the company’s strategy. SWOT Analysis The strengths of MGM Resorts International include a strong free cash flow, reliable suppliers, a highly skilled workforce, and a strong dealer community. MGM Resorts International displays great performance in new markets. The company can enter new markets and easily become successful (Benzaghta et al. 2021). MGM Resorts International also has free cash flows providing resources for various projects. The company is unlikely to face problems in the supply chain because it has reliable suppliers. The weaknesses include poor financial planning, inadequate investment in technology, gaps in the company’s product range, and poor demand forecasting. The company’s current asset ratio shows that it can use its cash in better ways (Benzaghta et al. 2021). The company misses opportunities due to poor demand forecasting. MGM Resorts International spends more on employees ’training than its competitors. The opportunities include possible increases in customer spending, more customers through online platforms, and market development leading to the elimination of competitors’ advantages (Benzaghta et al. 2021). MGM Resorts International faces various threats such as intense competition, rising pay levels and minimum wage, environmental regulations, and trends toward isolation in countries such as the United States. Analyzing the Competitive Environment Porter's Five Forces assess the position of companies. The five forces include the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, the threat of new entrants, and competitive rivalry. Supplier power assesses the ease of suppliers to influence

prices while buyer power analyzes the ease of buyers to drive prices down (Tomar 2020). The threat of new entrants can be low or high depending on various factors such as economies of scale, government regulations, and capital requirements. There is a high level of rivalry among the existing sellers. The rivalry among competitors in the industry is intense. MGM Resorts International operates in a competitive casinos and resorts industry. The company can tackle competition by having sustainable differentiation, building scale, and collaborating with other companies (Benzaghta et al. 2021). The threat of new entrants in the industry is high. New entrants can bring innovation and reduce costs or provide new value propositions to the customers. The threat of substitutes in the resort industry is high. Competitors can offer new services to the customers. The bargaining power of suppliers is affected by the number of suppliers available. It is also driven by the uniqueness of various products or services provided by suppliers (Tomar 2020). Companies in the resort industry get their raw materials from many suppliers. MGM international resorts can reduce the bargaining power of suppliers by building efficient supply chains. The bargaining power of suppliers is affected by the number of buyers in the market, their costs of switching to other suppliers, and how much individual buyers are important to the company (Tomar 2020). MGM International Resorts can develop new products and build a vast customer base to solve the problem of buyer power. MGM Resorts International can be impacted by supplier power, competition, and buyer power negatively. The organization should do various things to ensure that the five forces do not have negative impacts. For example, it should build efficient supply chains and economies of scale

(Tomar 2020). MGM should acquire most customers and innovate new services and products rapidly. The organization should be more service oriented and build sustainable differentiation. Analyzing the External Environment A PESTLE analysis studies external factors such as environmental, legal, technological, social, economic, and political. Political factors include tax policies while social factors include demographics and cultural trends. Technological factors include technological innovations, legal factors include laws, and economic factors include interest and inflation rates (Yüksel 2022). The political factors affecting MGM Resorts International include political instability, bureaucracy, wage legislation, and mandatory employee benefits. MGM Resorts International is affected by economic factors such as government interventions in free markets, labor costs, economic growth rate, and exchange rates (Yüksel 2022). The social factors affecting the company are leisure interests, attitudes, culture, class structure, and demographics. There are environmental factors such as weather and climate change and technological factors such as technological advancements. MGM Resorts International has to keep up with technological advancements, study the attitudes and leisure interests of customers, and the impacts of exchange rates and inflation on its branches in various regions. Political factors are unlikely to have negative impacts on the company (Yüksel 2022). However, the company could be affected by raising minimum wages and anti- trust laws about resorts and casinos. Conclusion A comprehensive analysis of MGM Resorts International is very helpful to managers. The managers can make good decisions considering the political, social, economic, technological, and environmental factors. They can also consider the strengths, weaknesses, opportunities, and

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threats facing the organization. Managers can make critical decisions when they take into account both internal and external factors affecting the company. There are growth opportunities in the resort industry. MGM Resorts International can open new branches in various parts of the world. The risks in the external environment include political instability, trade tariffs and regulations, increased taxation, and pricing regulations by governments.

REFERENCES Benzaghta, M. A., Elwalda, A., Mousa, M. M., Erkan, I., & Rahman, M. (2021). SWOT analysis applications: An integrative literature review. Journal of Global Business Insights , 6 (1), 55-73. Matović, I. M. (2020, September). PESTEL Analysis of External Environment as a Success Factor of Startup Business. In ConScienS Conference Proceedings (pp. 96-102). Scientia Moralitas Research Institute. Tomar, D. (2020). Porter’s competitive forces model and SWOT analysis to payments. International Journal of Information , 10 (2), 45-49. Yüksel, I. (2022). Developing a multi-criteria decision-making model for PESTEL analysis. International Journal of Business and Management , 7 (24), 52.

Strategic analysis overview

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