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					                        CASINO MANAGEMENT



                       Developing a Strategic Management Plan
                       by Robert Mudd

                                                                 through the Indian Gaming Regulatory Act. Technology in
S   trategic management is an approach that focuses on
    positioning the organization for success - both now and
in the future. This concept integrates planning, imple-
                                                                 the past decade has changed the face of gaming and will con-
                                                                 tinue to move at a breakneck speed. Not too many years ago
mentation, assessment and incorporates concepts from             we had hard and soft meter readers to calculate our drop
strategic planning, operational planning, quality improve-       and win for the day. Those days are gone and as we move
ment, and institutional effectiveness. Strategic manage-         ahead we will see many changes that will enable us to bet-
ment is indeed a process for business organizations to use       ter maximize our revenue. Keeping abreast of the techno-
in forming a strategic vision, setting casino objectives,        logical changes will be the key to success for the intelligent
crafting casino strategy, and executing that strategy. Over      and wise manager.
time, as the environment changes, management can adapt              All casino developments that have an impact on the
and initiate whatever corrective adjustments are in their        environment are subject to certain restrictions by the Envi-
vision, objectives, strategy, and execution as deemed appro-     ronmental Protection Agency (EPA) an arm of the federal
priate. A satisfactory strategic plan must be realistic and      government. Any development requires an environmental
attainable so as to allow managers to think strategically and    impact statement or EIS. The issue of regulations from this
act operationally. The steps involved in developing a strate-    area becomes important for future development of your cur-
gic plan consist of in-depth research covering three envi-       rent property. By monitoring these five factors we can plan
ronments; remote, industry, and operating.                       accordingly and create a framework in which to base the
                                                                 industry environment.
Step 1: Remote Environment
   The remote environment is just that. It is very remote        Step 2: Industry Environment
and few, if any, pay attention to this critical area. One           The industry environment consists of all gaming preva-
major reason we do not contend ourselves with this envi-         lent in the lower forty-eight states. The five factors to
ronment is simply because it is beyond our control, but it       contend with here are entry barriers, supplier power, buyer
plays an important role affecting our operations and ulti-       power, substitutes and competitive rivalry. We will only dis-
mately our bottom line. There are five factors under con-        cuss entry barriers, supplier power and competitive rivalry.
sideration here, including economic, social, political, tech-       In many cases entry into the gaming industry required
nological and ecological.                                        an immense capital investment plus many political hurdles
   The economic factor considers the nature and general          to overcome. These barriers for entry into the Indian gam-
direction of the economy and thus has an impact on the           ing industry have been relaxed in the past decade due to fed-
Indian gaming industry in which we operate. For example,         eral and state policy. Credible lending institutions have now
the impact of continued increases in the prime interest          opened the purse for tribes to borrow money for the devel-
rate will cause customers to limit use of credit cards. All or   opment of Las Vegas-style casinos. More states are nego-
most casinos have automatic teller machines (ATM) scat-          tiating compacts with tribes based on a revenue sharing con-
tered across casino floors and we rely heavily on them, more     cept. This expansion has placed pressure on the corporate
than we have in previous years. To combat some of the pit-       run casinos and their reaction to this threat has been to
falls of the remote environmental factors, it becomes nec-       diversify through acquisition of other major casinos.
essary for upper management to monitor economic trends              Supplier power is best exemplified by one major machine
such as prime interest rates, inflation rates, availability of   manufacturer creating a partnership with another business
credit, level of disposal income, propensity to spend, and       entity, and then breaking the market into two segments. This
growth in gross national product.                                agreement had the manufacturer selling to the traditional
   Social factors affect gaming because our markets are          corporate based casinos and the business entity selling to
made up of different beliefs, opinions, and lifestyles. These    Indian casinos. This business relationship created a situ-
factors are a product of cultural, ecological, demographic,      ation where one market segment paid more for the same
religious, educational and ethnic conditioning. For exam-        product than the other. Suppliers have immense power
ple, the battle of opinions comes into play during the new       and the point here is to recognize this and plan accordingly.
development of casinos in certain jurisdictions.                    Because barriers to entry have been reduced, competi-
   Political factors affect gaming from the legal and regu-      tive rivalry among Indian Nations will increase. Because
latory environment in which we operate. We are all aware         some tribal reservations are located far from any major mar-
of the regulation imposed on the Indian gaming industry          ket it is natural for them to attempt to leverage the Indian

38 Indian Gaming      October 2005
Gaming Regulatory Act in their efforts to have a prof-           4) Capitalize on innovative technology
itable casino to support their governmental services.            5) Strive for superior customer service

Step 3: Operating Environment                                     The balance score card discloses how we can meet each
   The operating environment is an area we can influence       of these objectives.
and control to our benefit versus the industry and remote
environment. For this environment we will need to do a            This is a very small sample of the main elements for
comprehensive internal analysis, which will include com-       developing a strategic planning. Each of the main headings
prehensive financial analysis going back at least ten-years.   will require much more research than is discussed in this
One key area that should be reviewed with utmost impor-        brief article. A strategic plan serves to guide managers in
tance is the contribution margin by departments.               the sometimes gray business world because it forces you to
   Another common method of analysis widely used is the        focus both on the immediate and future of the business. The
strength, weakness, opportunity, threat (SWOT) analysis.       other benefit of this plan is it assists you in benchmarking
Once you have completed an objective SWOT analysis, the        and performance monitoring. This plan also lends itself
next step is to create a balanced score card based on some     towards informing, motivating and involving all employees
long-term objective. For example, our long-term objectives     of the business. Finally, it stimulates change and stagnation
might be to:                                                   and becomes a building block for the next plan. p

  1) Maintain and increase market share                        Robert Mudd is General Manager of Ute Mountain Casino
  2) Increase customer rewards program                         in Towaoc, Colorado. He can be reached by calling (970)
  3) Maintain financial strength                               565-8800 ext. 169 or email rmudd@utemountaincasino.com




                                                                                           October 2005   Indian Gaming 39