PEST Analysis of Genting Highlands

Genting Highlands, also known as Resort World Genting, was the idea of the late Tan Sri Lim Goh Tong. He wanted to create a holiday resort in Malaysia, 2000 feet above sea level, where one can experience cool weather and have a relaxing vacation amongst the nature. Today, Genting Highlands is a leading leisure and entertainment resort. It compromises of six hotels, a country and golf resort, two apartment blocks and a theme park, international shows, gaming experience, leisure cruising and meetings and conventions. Their vision is “to be a leading integrated resort operator in the world” (Genting Malaysia Berhad, 2011)

Genting Malaysia: http://www.gentingmalaysia.com/

Resort Word Genting: http://www.rwgenting.com/

Marketing Problem

Marketing Audit

External PEST

Political and Legal Environment

In 1965 when Tan Sri Lim Goh Tong purchased a mountainous land in between Selangor and Pahang there was an anomaly issue of the ownership title, one part of the land being leasehold and the other being freehold. Dato Harun Idris the Menteri Besar of Selangor at that time (politician) agreed to grant a freehold.

When one has a business in a country, the laws that are set have to be complied. In political and legal forces the laws that govern the corporations have an impact on decision making. Some of the most commonly used political strategies are constituency building, political action committee contribution, advocacy advertising, and coalition building.

Economic Environment

Here in Malaysia the economic climate has been quite sound. We have trade freedom, labour freedom, monetary freedom and high levels of fiscal independence. The highest corporate tax rate and the highest income tax rate are moderate. The tax revenue is low as a percentage of GDP. Inflation is very minimal and government does not alter market prices much with direct subsidies. The simple hire procedures with no minimum salary make the labour sector flexible and help businesses to stay competitive.

Social Environment

Customers have increasingly visited Genting Highlands as it was the first ever integrated resort. Globalisation has marked Malaysia on the globe and also increased more tourists to come over and spend their vacation in Genting Higlands. However times are becoming more challenging as new integrated theme parks are opening in Malaysia.

Technology Environment

Over the course of time the rate of change in terms of technology has moved to a rapid pace. Technology contributes directly to its competence in terms of substantially increases competitive levels as others may be better placed and have more sophisticated internal technology systems. Gentings Leisure and Hospitality also emphasizes technological facilities advancement. As mentioned by Mr. Andrew innovation is always encouraged in the theme parks bringing in new rides and adventure so as to not stagnate with the old school rides but keep adapting to deliver that experience of a lifetime. The Manager also mentioned that in terms of building customer relationship technology has evolved the strategies from analogue to digital. In terms of establishing a relationship between Genting and its customers, more mobile apps such as android or smartphone friendly websites are designed to cater to the customer’s convenience.

Supplier, Publics, Intermediaries, Customers and Competition (SPICC)

Suppliers

Most of the suppliers are from a local source. If only the supply is exhausted or the requirement can’t be fulfilled by a local vendor, then Genting looks for a foreign alternative. Even the live food stock for the restaurants and hotels in Genting Highland, they are purchased from a domestic vendor from the surrounding small business owners.

Publics

Genting Highlands provides abundance job opportunities, as per se there are 15000 employees working for Genting Berhad altogether. At least one person is said to be working for Gentings from the families of the neighbouring villages around Genting Highlands. Mr Andrew also mentioned that there are some avenues for the Orang Asli community. Help is being offered in the form of domestic aid and education aid.

Intermediaries

There are intermediaries such as the travel agencies and holiday package providers. They promote the leisure activities to the foreign and local market. Even the state tourism promotes the fun come holiday vacation at Genting Highlands.

Customers and Markets

Competition

As Gentings was the first evert integrated resort in Malaysia it did have much competition for years. Recently over the past 10 years many changes have occurred in terms of tourism in Malaysia which opens avenues for business to open more resorts and theme parks around the country. As a result few months ago Legoland opened up with its theme park and resort. Soon to come many more integrated resorts may be built so Genting Highlands has to renew its brand image to upkeep as a key player in this industry.

Relative Market Share

Genting Malaysia Berhad is in the cash cow sector. According to five year annual report summary, it shows that earnings before interest, tax, depreciation and amortization (ebitda) to be profitable as it increase from 2,024.2 Million (2010) to 2,330.2 (2011). Genting group Malaysia is considered to be in a matured market as it was operating since 1971which is still generating cash and making profits for the company. In the interview with Mr.Andrew, marketing manager of Genting Malaysia Berhad, he mentioned the Hotel is always occupied and customers need to do their bookings 2 to 3 weeks before visiting. From this it can be gathered that the Genting Malaysia berhad is continuously making money and he also mentioned that there is less investment needed in the company to be made to maintain its service. The investment made is only on the maintenance of the theme park, room service, renovation and refurbishment on the hotel which is going on from 1st October 2012 until the end of January 2013.

Competitors

The competitors of Genting Malaysia Berhad can be defined as any company that is in the similar industry. Genting Malaysia Berhad is into the Theme park and hotel business in Malaysia but also at the same time Genting faces competition from the Sunway Group Malaysia, Lego land and Mines Resort city.

Sunway lagoon and Sunway Resort

Sunway lagoon is a multi- park destination and into the theme park sector and one of the famous amusement park in Asia , with five division such water park, amusement park, extreme park, wildlife park, scream park (sunwaylagoon,2012). Together with Sunway lagoon attached with its own Sunway resort and spa five star hotel.

Lego Land

Lego Land recently opened in September 2012, and located in Johor, Malaysia. The size of the theme park is 76 acres (310,001 m2). Other park such as Legoland water theme park and hotels will be opening soon (Wikimedia foundation, 2012). The theme park has 40 interactive rides and 7 different theme park (legoland, 2012)

The Mines Resort City and Mines Wellness Hotel

Mines resort city has its own theme park named Mines wonderland and a Shopping Mall.The Mines wellness hotel is a five star hotel together the hotel is build with a man made beach and swimming lagoon.

Internal 5 Ms

Men (labour)

There are 7000 employees of Genting Theme Park. Some of the employees are Malaysians, and some others are from other countries. The employees of Genting Highland or Hotels must be trained before they actually do the work. The time for the training is depends on the job that the employees apply. For example, the employees who work in the front desk or entry level, they have to be trained for six months.

Money (finances)

According to Genting Malaysia Financial Statement in 2011, the company got RM 1,322.3 million profits. And the company total asset is RM 13,490.6.

Machinery (equipment)

Genting theme park has a ride that other competitor do not have, it is the Flying Coasters. The Flying Coasters is a unique hang-gliding roller coaster that mimics the sensation of flying (Resort World Genting).

Minutes (time)

Genting Highland Resort has been running for 47 years. Genting Highland has three parks, which are outdoor park, indoor ark, and Video Games Park. The time operation of those three theme parks has a little bit differentiation.

Outdoor Park

Indoor Park

Video Games Park

Monday – Friday

10 am – 6 pm

10 am – 12 am

9 am – 12 am

Saturday, Malaysia School Holiday, and Public Holiday

9 am – 10 pm

9 am – 1 am

8 am – 1am

Sunday and Malaysia Public Holiday

9 am – 6 pm

9 am – 12 am

8 am -12 am

Materials (factor of production)

Factor of production is an economic term to describe the inputs that are used in the production of goods or services in the attempt to make an economic profit (Investopedia Dictionary).

There are four factors of production:

Land

Labour

Land is all the natural resources used for production. Genting Highland resources it includes the land it self, 12,000 acres and 2,800 acres of land from the Pahang and Selangor State Government.

Each person has different level of skills. In Genting’s company, there are designers who design the hotels look, architectures, engineers, etc.

Capital

Entrepreneurship / Enterprise

A business capital can include, finance or investment for the business, machines, buildings, factories, etc.

The people who can organise the other three factors of production, which is Land, Labour, and Capital. The people are the managers who willing to take the risk and come up the innovatie idea to bring the company in the highest level of business success.

SWOT Analysis

Strengths

Genting Highlands is one of the big attractions especially to a foreigner who come to visit Malaysia. It is provides leisure and hospitality services, which comprise amusement, gaming hotel and entertainment. The strength of Genting Highlands is in great marketing programmed and strong brand image that can take advantage of the opportunity, which is to increase the tourist. Genting Highland also consider as a good location because it is near to everywhere and it takes like only less than one hours of driving away from Kuala Lumpur, the city centre of Malaysia.

In Genting Highlands, they have a five hotels at the resort which is genting hotel, highlands hotel, resort hotel, theme park hotel and first world hotel with a total about 10,000 hotel rooms and they are full house everyday. They are also including the genting convention centre for a meeting, any convention or exhibitions at the resort and also very famous with the casino. Especially during a night hours, we would never get bored because they still open the bar lounge, sports bar and also the safari so everyone can go and have fun in no time.

Weaknesses

As we know, Genting Highlands is a hill resort in Malaysia, and it is nestled on a mountain. So this can be effected by a global warming because it seems less showing because it is publics conscious issues towards the environment and especially when it is rain, so they need to wait or can play the indoor theme park only. It causes the problem to those who already bought the ticket with an outdoors theme park. Another benefits to educate the publics and make them feel confident with the environment on the harm of effect of global warming towards the Genting highlands. Especially, it would be a bad effect for those are coming for the first time and got no chance to play the outdoor theme park.

Opportunities

Most of the foreign Genting visitors come from Asia country such as Thailand, Singapore and China. The company more focus to improve the economic conditions of the market. Genting has also made further investments in other countries in developing its name as one of the international gambling and entertainment giant in the world.

Threats

After we have done with the research, we know that Genting can emphasize more on the uniqueness of having the best theme park and more excitement at a cool whether and can create something more interesting to the customers while having a weather problem. In the other hand, Genting also need to focus on their very close competitors because they are also faces increasing threats from gaming market in the region such as Macau and also in Singapore.

Market Assumptions

Marketing Missions/Values and Objectives

Marketing Strategy

Ansoff

Ansoff (1987) contends that ‘to survive and succeed in an industry, the firm must match the aggressiveness of its operating and strategic behaviours to the changeability of demand and opportunities in the marketplace’ (Thompson & Martin, 2006).

The Ansoff product/market growth matrix provides a simple way of generating four basic alternative directions for strategic development (Johnson, Scholes, & Whittington, 2008). Box A of Ansoff Matrix is an existing product with existing markets. Box B, the top right-hand one is a new product developed by the company with existing markets. Under the box A is box C, which is the existing products in the new markets. The last one is box D. In box D, what companies do is taking the full diversification, with altogether new markets and new products (Johnson, Scholes, & Whittington, 2008).

According to Andrew Leong, marketing manager of Genting group, Genting will have a new ride in anytime soon. The construction is on going. This means, Genting theme park developing a new product in the existing market (box B). He also mentioned that Genting is not just upgrading the theme park, sometimes they also improve the service and make it better. In the Ansoff Matrix, what Genting do is including in box A.

For the hotels, Andrew leong said, “By the time I do renovation in the first floor of the hotel done and it continue until the top floor, I will start to renovate in the first floor again”. From the explanation, the situation of the hotel business is include in box A. And it also can consider that Genting do an active continuously upgrading the business. They provide the best of the best what they can do for the customers and try to put their position ahead from other competitors.

In box A, it includes Market Penetration and Consolidation as the strategy companies used. Market Penetration is where an organisation gains market share (Johnson, Scholes, & Whittington, 2008).

While Product Development (Box B), involves thinking about how new products can meet customer needs more closely and outperform the products of competitors (Portkabin’s Case Studies).

Porters Generic Strategies

According to porter, strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation, and focus (David, 2009). Genting Malaysia Berhad can be categorized using the differentiation strategy.

Location

One of the uniqueness about Genting Malaysia Berhad is the location. The City of Entertainment is situated on the mountains called the Titiwangsa Mountains, which is on the border between Pahang and Selangor of Malaysia (Wikimedia foundation, 2012). Besides attracting Malaysia visitors Genting Highlands have attracted many people from various parts of the world; Marketing Manager Mr. Andrew has mentioned people from countries such as Dubai, Egypt, Saudi Arabia and Thailand, and the Philippines comes here to spend their holidays as it’s a beautiful place with great weather. Genting Highlands came up with a strategic idea by locating their entertainment destination in such area which is different from other competitors. Speaking of the weather, in Genting Highland since is located in the mountains area the weather temperature is not higher than 25 oC( Wikimedia Foundation ,2012) The weather can be described as amid cool misty mountains with spring-like weather year-round (rwgenting, 2012).

Hospitality and Service

Genting Malaysia Berhad has six hotels located in the mountains. The Maxims, Genting Hotel,Resort Hotels,Theme Park hotel, First World hotel and Awana Genting Highlands (rwgenting,2012). From here we can see that Genting Malaysia Berhad has gain its competitive advantage that no Hotels in Malaysia has come up with this strategic and secondly The First World Hotel is the largest hotel in Malaysia and 4th largest in the world with 6,118 rooms/suites available (Wikimedia foundation, 2012). There are few awards that Genting Malaysia Berhad has received this year and one of them are highest profit growth company under the trading/Services, Hotels, IPC and Technology Sectors category, awarded by the edge billion ringgit club. Last year they have also won Industry Excellence Award-Hotel Sector 2010/2011 by BASIS Publications House Sdn & Malaysia National news Agency (Bernama) (genting, 2011)

Theme parks and Entertainment

On the other side, Genting Malaysia Berhad has also gained its competitive advantage from the wide range of games and entertainment offered in Genting Highlands, the space they have provided for games only is over 200,000 square feet. Genting Malaysia Berhad is also known to be upgrading new and latest games for their theme parks that make them distinctive between their competitors. Genting Malaysia Berhad has recently invested in the new Snow World, the biggest winter wonderland in Malaysia with space area of 22.8K square feet and the one and only thrill game in Malaysia, the 4D Motion Masters (rwgenting, 2012).

In other ways to attract customers Genting has also held events for awards ceremonies such as Iffa Awards, Zee Cine Awards, Lux Style Awards and MTV Asia Awards (Wikimedia foundation, 2012). Mr. Andrew also said that he is indirectly marketing the Genting Malaysia Berhad through these ceremonies by having satellite to enable people in other countries to watch the award ceremonies LIVE.

Value Proposition

Their vision is ‘to be leading leisure, hospitality and entertainment corporation in the world’, (Annual Report 2008). Similar to their vision statement, their value proposition is to deliver the best of service to their customers especially their valued customers.

The Gentings Marketing Manager Mr.Andrew said that they take personal care to acknowledge the needs of their customers in order to build a long term relationship with them. He emphasized that they are looking at a very ‘friendly relationship’.

Digitalization has altogether made that very possible as their personal invites to events are sent out via emails, texts and there is a constant immediate response activity between the company and customers. The accommodation for valued customers is prepared to their personal interest and preferences in terms of food and beverages and other services.

As the resort is set out on the mountain with nature and a pleasurable weather, certain group activities are held in the midst of the rainforest or the cliff top overlooking an astounding view. Imagine having a corporate team’s outdoor activities with the tranquil sounds of nature, the scents and fragrance of flora and sometimes one may spot eagles, hornbills and other birds of paradise just cruising through the mountainous terrain. These are some of the customer valued moments that one may encounter in Genting, utmost exhilarating experience to those who hail from the hustle and bustle of the city lifestyle.

Directional Policy

Genting Highlands operates in two segments and they are: Leisure and hospitality, which includes the gaming, hotel, theme park, tours and travel, related to the bnty

Size of the Segment- The number of the customer in Genting Highlands are large. They are in too many category that you can see in the graph below :

Share Market – In this company, the Genting Highlands group has much brunch such as Singapore, because it is one of the major casino resorts, and also in Macau, India, New York and Australia and other more country. These are one of the strategies because it would better luck in the casino and healthy visitor arrivals to boost profits at the resort or any hotel in those countries. At the same time, they can promote and tell to the tourist that they can also travel in the same places but in other countries.

Current Market Share – Genting Company have investment for the racetrack in between US$70S million and US$730million based on US$380 million with the license fee and between US$325 million and US$350 million capital expenditure programmed. The US$250 million can be used to directly offset the capital expenditure, and the company’s net will be between US$455 million and US$480 million. The Maybank in Malaysia analyst said that it was a mere 3% earnings per share accretion which would give a low 6% return on equity on the intended multi billion ringgit investment in resort in New York. So we can see that the current market of Genting company is not focusing only on the one in Malaysia, or one country but they are very active in other countries also. The pretax profit from power increased 3 percent million ringgit on a higher tariffs in Malaysia and China, so at least they can cover whatever they have loss.

Profit Lift – The higher revenue was recorded at the group non-leisure divisions, particularly the plantation. For the plantation revenue, it is 53.8% owned the Asiatic Development amounted to RM249.50 million or the higher 93% higher RM 129 million a year earlier. The plantation company also achieved a higher crude palm oil and the selling price of RM3,403 starting from January to March against RM1,927 per tonne a year.

Marketing

Product

Price

Place

Promotion

People

Processes

Physical evidence

Budgets

Conclusion