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A Pest Analysis Of Genting Malaysia Tourism Essay

Genting Group is a subsidiary and affiliates operating under the ‘Genting’ name and is recognize as one of the Asia’s leading and best manage multinationals company. There are currently 5 public companies and 3 jurisdictions in the group which is also operate under the name of ‘Genting’ with a combined market capitalization of over RM131 Billion (US$41 billion) as at 30 November 2010 (Genting Group, 2010).

The 5 public companies in the Genting Group which is including Genting Berhad, Genting Malaysia Berhad, Genting Plantations Berhad, Genting Singapore PLC, which is also the subsidiary company and Genting Hong Kong Limited is an affiliates company (Genting Group, 2010).

These public companies and their subsidiaries and affiliates are involved in different businesses, including leisure & hospitality, power generation, oil palm plantation, property development, biotechnology and oil & gas. In this group, they have over 58,000 employees, 4,500 hectares of prime resort land and about 133,000 hectares of plantation land. Genting’s well-known consumer brands in the leisure & hospitality sector such as "Resorts World", "Maxims", "Crockfords", "Awana", "Star Cruises" and "Norwegian Cruise Line" (Genting Group, 2010).

Genting Berhad is an investment holding and management company of Genting Group. The founder of the Genting Group Tan Sri (Dr.) Lim Goh Tong by the late in 1965, when he start the opening development works of constructing a 20 kilometre private access road, across rough mountainous terrains from the foothills to the top of Mount Ulu Kali which is located at 2,000 metres above sea level (Genting Group, 2010).

On 30 July 1968 the company was set under the Companies Act 1965 in Malaysia under the original name of Genting Highlands Hotel Sdn Bhd to operate a hotel and casino, and to develop an integrated tourist complex in Genting Highlands. Genting’s company registration number is 7916-A and the company changed its name to Genting Highlands Hotel Berhad and its switch into a public company on 24 July 1970. It believed its current name of Genting Berhad on 9 June 1978 (Genting Group, 2010).

Genting Berhad 39.5% is owned by Kien Huat Realty Sdn Bhd, a private company controlled by the late Tan Sri (Dr.) Lim Goh Tong’s family. Genting Malaysia Berhad also known as Genting Malaysia which is a private limited company on 7 May 1980 in Malaysia by shares under the name of Resorts World Sdn. Bhd. and the company was under the Companies Act of 1965 in Malaysia. The registration of the company is 58019-U and on 14 July 1989 the company changed its name to Resorts World Bhd and also change into a public company (Genting Berhad, 2010). On 30 August 1989, Genting Berhad and Genting Malaysia start a restructuring work, which resulted in Genting Malaysia's control from Genting Berhad its whole gaming, hotel and resort operations including of goodwill and other related assets. Since 22 December 1989 Genting Malaysia’s shares have been listed on the Main Board of Bursa Malaysia (Genting Berhad, 2010).

Genting Malaysia is mostly running in the hospitality and leisure business and the activities include theme parks, gaming, hotels, seaside resorts and entertainment. The most important place is Resorts World Genting which is included family leisure and entertainment resort at the peak of Genting Highlands successfully attracted 19.5 million visitors in 2009 (Genting Berhad, 2010).

Known as Resorts World Genting, the resort include six hotels with 10 thousand rooms, over sixty fun rides, hundred seventy restaurant dining and some shopping outlets. Besides that there is also mega shows theatre, business convention facilities and endless entertainment in the resort (Genting Berhad, 2010).

The six hotels at Resorts World Genting are Maxims Genting, Highlands Hotel, Theme Park Hotel, Resort Hotel, Awana Genting Highlands, Golf & Country Resort and First World Hotel which is the world’s largest hotel with 6,118 rooms as acknowledged by the Guinness World Records and Ripley's Believe It or Not. Resorts World Genting was voted the World's Leading Casino Resort in the year of 2005, and 2007 to  2009 and Asia's Leading Casino Resort from 2005 to 2009 by World Travel Awards (Genting Berhad, 2010).

Apart from the Genting highland resort, Genting Malaysia also owns and operates two beautiful seaside properties name Awana Kijal Golf, Beach & Spa Resort in Terengganu and Awana Porto Malai in Langkawi (Genting Berhad, 2010).

1: The macro environment analysis of the company

What is the PEST about? It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning. In the macro environment PEST is mean that the P stand for Political factors, E stand for Economic factors, S stand for sociocultural factors, and T stand for technological factors (MarketingTeacher, 2010). The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. Economic factors which are the marketers need to consider the state of a trading economy in the short and long-terms. This is especially true when planning for international marketing. Sociocultural factors are mean that the social and cultural influences on business vary from country to country. It is very important that such factors are considered. A technological factor is vital for competitive advantage, and is a major driver of globalization (MarketingTeacher, 2010).

PEST analysis of Genting Malaysia.

Political: In Malaysia, gambling legalization still faces cultural, religious and political opposition. However, politicians as policy-makers obviously support the conduct of Casino de Genting. On the other hand, other political issues that may be ignored that the casino is owned and operated by a powerful and influential group with high political connections. The money generated in such casino could be used in accessing political parties and contributing to campaign efforts or other political-related activities (ThinkingMadeEasy, 2010).

Because the Malaysian government experienced difficulties in stamping out horse-race betting as well as numbers games after independence was attained in 1957, the government officials set regulate gaming and privatising state-run lotteries and also taxing the trade. However, ethnic Malays are barred by law from casinos lone casino, the Casino de Genting which located 35 miles outside of Kuala Lumpur. Their ethnic Chinese countrymen, nevertheless, are free to mingle with the foreigners at the tables and slot machines. An idea to tap foreigners for gambling revenues, Malaysia becomes a home base for companies that operate only in other countries aside from the domestically operated Casino de Genting (Genting Group, 2010).

Economic: In spite of prohibiting Muslims and local citizens from playing, Casino de Genting is prosperous, and is expected to continue to do so. The casino has provided a major number of jobs as well as revenue for the government. The economic power of the country lies in the fact that Casino de Genting is a part of an important tourist destination. Casino de Genting is under the service industry which also provides profitability to other industries and sectors in Malaysia such as hospitality, transportation, retail and food and beverage. Casinos are also important venue where the interplay of goods and services takes place as well as the transfer of ownership, making it a productive sector (ThinkingMadeEasy, 2010).

The continued support of the government to promote tourism in Malaysia proved to be significant in the success of Casino de Genting. The Visit Malaysia 2007 tourism programme was deemed successful, not to mention the lower currency rate in the country. Malaysian tourism strategy could highlight the superb gambling experience Casino de Genting could offer in their future tourism programmes. Major Asian cities with wealthier populations and foreign national’s access would be also an opportunity for Casino de Genting to exploit. As the only way forward, the growing consumer demand and market outlooks are forecasted to continually grow in scale and scope (ThinkingMadeEasy, 2010).

Social: Social problems associated with casinos make governments hesitant in pushing gambling efforts. Even so, there are governments which chose to lessen the negative social impact by means of restricting the access of some or all locals or by building casinos in remote areas. The social problems that casinos cultivate include surging of mafia gangs, money-laundering, prostitution and other drug-related crime, and these social dilemmas are regarded to produce high social costs. Casino de Genting is not an exemption, like any other casinos in Asia and all over the world, casinos are perceived to be breeding grounds of high profile crimes and organised crimes (ThinkingMadeEasy, 2010).

Besides that, there is a various training and conferences and team-building events were held in 2009, including GENM’s 21st Senior Managers’ Conference at Sentosa Resort & Spa in Singapore with the theme “Branding and Leadership in a New Competitive Environment” and GENM’s 16th Human Resources Conference 2009 themed “Championing HR Fundamentals” held at Awana Genting Highlands. Team building workshops, annual family day events, Employees’ Appreciation Night and Genting Employees’ Carnival were also held by the business divisions of the Group to foster team spirit amongst executives and staff (Genting Group, 2010).

Technological: Casino de Genting combines the appeal of fast paced technology and the cyberworld. This slot machine haven is equipped with a wide selection of state-of-the-art electronic table games and cashless gaming systems for its machines, with neo-coloured lights and rich graphics, which aims at providing the customers with the ultimate gaming experience. Casino de Genting also makes use of eSourcing through Group Centralised Procurement (GCP). As such, requests for quotations/ proposal/ information will be conducted online and only online registered suppliers will be invited to undergo the selection process. Further, the casino also invests in SAS software to better understand the customers and extract from the informations gathered the most suitable strategies in dealing with them (Resorts World, 2010).   

2: The international consideration

In the year of 1993, Genting expanded its leisure and hospitality businesses into cruise line operations by establishing Star Cruises Limited. Star Cruises was listed in the Singapore Stock Exchange in April 1998 and in the Stock Exchange of Hong Kong in November 2000. In 1998, Genting Malaysia undertook an equity investment in Genting Hong Kong Ltd (formerly known as Star Cruises Limited), the leading cruise operator in the Asia Pacific. Genting Malaysia currently owns about 18.4% of Genting Hong Kong Ltd (ICMR, 2004).

After all a while, Genting Singapore PLC ("Genting Singapore") is a leading integrated resorts development specialist with over 20 years of international gaming expertise and global experience in developing, operating and marketing internationally acclaimed casinos and integrated resorts in different parts of the world, including Australia, the Americas, Malaysia, the Philippines and the United Kingdom (Genting Singapore PLC, 2010).

It is a subsidiary of Genting Berhad and was incorporated in 1984 to invest in leisure and gaming-related businesses outside Malaysia. Genting Group is a collective name for Genting Berhad and its subsidiaries and associates. Genting Group is one of Asia’s leading and best managed multinationals. The Group is renowned for its strong management leadership, financial prudence and sound investment discipline (Genting Singapore PLC, 2010).

Genting Singapore is listed on the Main Board of the Singapore Exchange Securities Trading Limited ("Singapore Exchange"). Genting Singapore has an experienced management team that is focused on and committed to growing its business globally. The Group is the largest casino operator in the UK and is developing a world-class integrated family resort in Singapore. Genting Singapore is continuously reviewing new opportunities in the gaming, leisure and hospitality businesses (Genting Singapore PLC, 2010).

 

On 15 October 2010, Genting Malaysia completed its proposed achievement of casino businesses in the United Kingdom, Genting UK from Genting Singapore PLC. Genting UK is the largest casino operator in the UK and a leading innovator in the provision of high quality, customer focused gaming. Genting UK operates 5 casinos in London under renown brands including Crockfords, Maxims Casino Club, The Colony Club, The Palm Beach and London Mint; and a further 41 casinos located within the UK provinces under 3 key brands, namely Circus, Maxims and Mint. These casinos offer visitors a memorable experience with its various slots and table games in addition to restaurants, bars and other entertainments (Genting UK, 2010).

On 13 September 2010, Genting New York LLC an indirect wholly-owned subsidiary of Genting Malaysia was selected as the developer and operator of a video lottery facility at the Aqueduct Racetrack in the City of New York, United States of America. The facility, set upon an area of 413,000 square feet will be known as Resorts World New York. Features of the facility includes approximately 4,500 video lottery terminals, 7,000 car parking lots, a 450-seat 2-storey fast food promenade, 2 high-end restaurants with 200-person capacity, a sports bar restaurant and lounge. Phase 1 is expected to contain approximately 1,600 VLTs to be completed by late spring 2011 and be fully operational by the end of 2011 (Lovett, 2010).

3: The growth of business

Ansoff’s product market matrix is a well known marketing tool was first published in the Harvard business review 1957 in an article called ‘strategies for diversification’. It is used by marketers who have objectives for growth. Ansoff’s matrix offers strategic choice to achieve the objectives. There are four categories for selection which is Market Penetration, Market Development, Product Development and Diversification (MarketingTeacher, 2010).

In the Genting Berhad, the corporation is targeting the new market in New York City, United States. So the company is using the market development section because Genting Berhad is selling the Casino and Hotel Product, so with the existing product range in the new market. This means that the product remains the same but it is marketed to the new audience (MarketingTeacher, 2010). Organization introduces their new products to the new market such as new countries in order to gain more customers and profit (ThinkingMadeEasy, 2009).

In this New York gambling project, Genting Berhad spends $1.3 Billion according to its proposal submitted to state authorities. Genting New York will pay a licensing fee of $380 million, above the minimum $300 million required by the state. Genting New York intends to spend up to another $350 million to develop the facility, which upon full completion will span 413,000 square feet and contain more than 4,500 video lottery terminals, or electronic slot machines (Low, 2010).

Dubbed Resorts World New York, the proposed three-storey facility will also contain several restaurants, water features, an outdoor terrace connected to the Aqueduct racetrack which will be able to accommodate up to 10,000 people and a 2,200-bay car park. Genting New York said it aims to complete the entire development of Resorts World New York within 12 months from the date it obtains formal approval from the state to proceed. As part of a wider development plan, Genting New York is also proposing to build three hotels of differing standards, shopping, recreation, spa and other resort facilities at a total cost of $650 million, and the whole project would take 1.3 Billion (Low, 2010).

4: New venture

The Porter's 5 Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps corporation understand both the strength of the current competitive position, and the strength of a position corporation considering moving into. With a clear understanding of where power lies, corporation can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps. This makes it an important part of corporation planning toolkit. Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. However it can be very illuminating when used to understand the balance of power in other situations too (MindTool, 2010).

The Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation. These are Supplier Power, Buyer Power, Competitive Rivalry, Threat of Substitution, and Threat of New Entry (MindTool, 2010).

Threats of New Entrants

Apart from the existing regional competitors, there are no major domestic competitors for Casino de Genting. There are rumours of potential new entrant of Genting Berhad will go into Macau (Ang, 2009). Malaysian analysts had said that the investments could pave the way for Genting to acquire a stake in MGM or to take over the US casino operator's investment in MGM Grand Macau (Reuters, 2009).

Substitute Products

Domestically, there are no substitute products and services being offered by Casino de Genting. However, if we are going to look at the regional schema, China would be the greatest rival. There are at least four major gaming establishments in China as spread in Beijing, Hong Kong and notably, Macau (ThinkingMadeEasy, 2010)

In terms of differentiation, Casino de Genting is strategically located complementary to other tourist destinations such as resort and hotels and theme park. Casino de Genting has a distinctive competency of the mixture of Monte Carlo and Las Vegas gaming environment and experience (ThinkingMadeEasy, 2010)

 

Bargaining Powers of Supplier

Casino de Genting has a more advantageous position that its supplier. This is because the Genting Group has the sole autonomy on the gaming products and services, and that suppliers could be easily changes once the group becomes unsatisfied of a certain product or service. Gaming products and services that Casino de Genting considers are audio or visual, electrical and signage, chips and cards and game equipments as well as gaming development, cash handling and facility design and construction (ThinkingMadeEasy, 2010).

 

Bargaining Power of Buyers

Based on the responses, the bargaining power of buyer is definitely weak due to the monopoly in Genting Highlands Resort. As a world-class gaming entertainment area, Casino de Genting has standards suitable for international clientele. If the group desires to monopolised the prices of the products and services, it will have the freedom to do so, which leave the buyers at a disadvantaged position (ThinkingMadeEasy, 2010).

 

Competitive Rivalry

As already mentioned, Casino de Genting has no domestic rival to date, only regional rivals. The strong leadership position of Casino de Genting, however, would not be easy to defeat (ThinkingMadeEasy, 2010).

Conclusion

The overall appeal and demand of the gaming hospitality experience depends not on a single element. However, the casino brand design must put at the core a distinct defining factor for example the customers, it is also not enough that a casino collates extreme responses because strategic business decisions would not be met if feedbacks are either too good or too bad. Important to have for every casino is an ongoing talk to real casino customers in order to put real meaning to the figures in reports. The best customers also are perceived to be the most honest customers in the pool. They will say what they want, what they need and what is lacking about the brand and how it could be improved (ThinkingMadeEasy, 2010).

Genting Group and the Casino de Genting must always bear in mind that customer is now a priority. All the decisions, whether top down or bottom line, shall put the interests of the customers. Several casino properties until now operate in line with the ‘built it and they will come’ concept. But such stance is now an old mindset. What came to be as important as the corporate image or brand is the maximisation of the role of the customers in optimising the casino operation and the gambling industry as a whole. Competitive advantage is not enough but Casino de Genting must always strive for sustainable competitive advantage. It is recommended that Casino de Genting shall invest more on customer research and in those managers who will advocate customer knowledge management. Nevertheless, Casino de Genting must consider separately internal and external customers. There must be a 360-degree view of the customer by which the modern service standards must be based (ThinkingMadeEasy, 2010).

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