Casino business is a good example of risk management. While casinos are in gambling business, the business itself is no gamble. Casinos take very few risks with the money that customers spend there. In addition, the business is not merely about gambling but there are several other connected businesses running usually at the same locale. The Las Vegas Sand Corporation is one of leading international developers of multi-use integrated resorts. The businesses of the corporation in U.S, China (Macau), and Singapore (Ireland et. al. 2008, p. 261)
The business faces several risks, the details of which are covered in the Annual Report for investors. The present report analyzes five specific risks in the following areas
Economic Casinos are the luxury end business and hence depend on the discretionary spending by customers. This factor is extremely sensitive to economic downturns. In addition, the financial downturn also affects the tourism industry which brings in a significant number of customers to resorts like the ones operated by Las Vegas Sands (Las Vegas Sands, 2008, p. 23). The recent financial slump has caused several casinos to close, with even President Barack Obama warning people not to visit the casinos to spend money on gambling (Garrahan, 2010). Operating a successful casino in such an environment is extremely risky.
Financial Las Vegas Sands has been just as much affected by the financial down as other businesses in US. In its financial report, the company mentions that the inability to raise additional capital in near future would lead to abandon its expansion plans entirely. The corporation has a substantial debt to the tune of 10.47 billion long-term debt outstanding as on 31st December 2008. This is an extremely risky situation in the present times since the financial condition of the company would be extremely vulnerable. Further, the corporations debt instruments are extremely restrictive with respect to generating additional debt or disposing assets and entering into acquisitions, which means that the options available to the company in the event of sudden cash inflow are extremely few (Las Vegas Sands, 2008, p. 23, 25-26).
Government In the resort business, the ability to attain and retain licences is extremely difficult because of the strict regulations about gaming resorts. There are extensive regulations governing the gaming resorts and failure to comply with these restrictions may lead to revoking of license which might even lead to the casino being closed. The risk due to this is increased because the regulations cover the actions of any stakeholder of the corporation. A change of law, especially in the present troubled times would also be risky as the corporation might be required to put in additional expenses (Las Vegas Sands, 2008, p. 28).
Human resources According to Kilby, Fox and Lucas (2005, p. 43), one of the keys to success for a casino, or any business venture is the effectiveness of the management team, which has a direct impact on the profitability of the casino operation. The frontline employees need technical skills to fulfil their positions while the employees at the top of the organizational chart require fewer technical skills and more management skills. Hence, potential loss of key personnel is a major risk faced by casinos. Las Vegas Sands has incorporated several corporate policies however, not everyone holds employment agreements. Also the agreements were scheduled to expire in 2009, which means new rounds of negotiation. A major deterrent to the casino being an attractive place to work is the lack of company insurance policy for any of the senior management team. ( Las Vegas Sands, 2008, p. 27)
Global In addition to its domestic operations, Las Vegas Sands has international operations in China (Macau). Any business having international operations, especially in China, faces significant political, economic, and social risks. Some risk factors under this category include international unrest, health epidemics such as the bird flu, terrorism, or military conflicts. (Ireland et. al. 2008, p. 262) These risks become magnified in a casino business because traditionally governments have known it to keep the business tightly under control, because of its speculative nature. Further, the laws governing and regulating such business are complex, which combined with their recentness (in Macau), poses additional risks since they can be modified based on any assumptions and interpretations that the local government might choose (Las Vegas Sands, 2008, p. 31-32).
Out of the five factors discussed above, the one that would affect Las Vegas Corporation the most would be financial risk specifically inability to raise the required capital. Because of the industry in which the company operates and the present financial slump, the company faces multi-fold problems, should it need to raise extra capital. First, the number of customers as well as the money they spend on gaming resorts has declined sharply, and the numbers are not expected to dramatically rise anytime soon in the near future. This reduces the attractiveness of the business to potential investors. Second, the companys present debt instruments are too restrictive and many ways to raise additional capital are either closed to them or require permissions from the existing debt-holders, who may or may not desire the new investors for any number of reasons. Finally, the slump in the economy leading to the foreclosure of several banks and other financial institution means that the number of investors available has also reduced sharply, and the ones that are available are extremely cautious and conservative in spending their monetary reserves.
Relate the three areas of talents, organizational culture, and ethics to what you feel should be your role as a senior level corporation manager. This discussion should demonstrate your in-depth ability to analyze these 3 areas and relate them together.
Senior manager form the link between the company leadership and line managers. The function of the former is to create a vision and strategic direction for the company, while the latter work with employees to create the vision. Senior managers form an interface between these two extreme ends. Hence, the primary role of a senior level corporate manager would be to translate the vision and strategic direction into specific goals for various divisions of the organizations. One of their main roles is to develop organization specific cultural ideas and meanings, which would direct and constrain the behaviour of managers, leadership as well as the other employees of the company. As Yarnall (2008, p. 140) notes, the organization culture establishes standards of behaviour, many of which are unwritten for all employees and its tone is usually shaped by the senior managers, heavily influenced by the leadership and other members of the executive team .
Present day organizations are no longer merely about efficiency, innovation and knowledge of cutting edge methodologies are equally important. It is hence correct to call the successful organizations in the present day as knowledge-based organization. Hence organizations are increasingly becoming aware that to be successful they need to hire and retain critical talent (Philips Edwards, 2009, p. 140). Having said that, it is neither easy to define talent as it is specific to a particular organizations needs, nor is it easy to retain people for a long time, with the threat of competitors usurping the talent with better offers. Hence, a key role of the senior management is to develop effective hiring policies and also to design employee benefit packages. In addition, the senior manager should also ensure that the company has a positive image and brand in the market, so that the employees have an additional incentive of good company reputation, when they inevitably compare their positions with those of their contemporaries.
The role of senior manager with respect to talent management does not however end here. The talent recruitment and retention should not merely be as per the organizations strategic requirements, but should also fit the organizational culture. This means, the companys organizational culture as it affects the employees should be clearly stated so that potential candidates as well as present employees understand it well. This description provided by the senior managers by mentioning various aspects of their organizational culture in specific terms such as the hiring and promotions being free from gender and regional biases, the corporate social responsibility of the organization such as its policy towards the environment and active participation in helping the local community. Also, the senior managers must also ensure that there is balance between various types of talent in a team as well as in the organization as a whole, by generating guidelines in terms of required number of employees in a strategic business unit in various divisions (Philips Edwards, 2009, p. 140-141).
Business ethics is an essential part of an organizations culture. Goldsmith and Carter (2010, p. 292) rightly point out that while most of the organizations do have a code of conduct that provide some guidelines in this respect, these codes are often written by lawyers without regard to more than meeting the letter of the law. They cite the example of the recent scandals on Wall Street where executives were rewarded lavishly with performance bonuses by leading their organizations into bankruptcy. As is seen above, talent at least at higher levels is attracted not merely by attractive remuneration packages but also by the positive image of the organization. This image can be just as easily destroyed by the perception of wrong doing as the actual wrongdoing itself. Hence, talent management programs need to ensure that the individual behavioural aspects of adherence to moral and ethical standards in actual ethical dilemmas faced by employees at various levels. Merely setting standards is not enough though, and it is also clear that the objective and realistic measurement of this factor is not easy either. Hence, the most effective way in which the senior corporate manager can promote ethical behaviour is by being a role model to the subordinates. The actual tolerance levels of ethical misconduct within the organization accompanied by the behaviour of the senior manager himself, influences the employees more than any written ethics (Goldsmith Carter, 2010, p. 292).
Picking one of the three areas of personal strengths, organizational culture, and ethics, and relate it to some story or series of stories in the Wall Street Journal that from the last term period. Make sure you connect the article(s) with content of the area you pick. An in-depth analysis of the WSJ article is necessity. Do not just relate the article.
The slump in various business sectors post the 2008 recession has been seen in the hospitality-sector also, chiefly the high-end of the industry. The high-end side is dominated by luxury hotels such as resorts. To counter the slump such industries were relying on their corporate clientele such as those on convention and business travels. A recent article (January 26, 2010) posted on the Wall Street Journal by Kris Hudson brought into light an interesting occurrence the luxury resorts hotels dropping the word resort from their respective names. Although a small point, the dropping of the word indicates the sensitivity of luxury hotels towards economic lavishness. The issue, according to Hudson, started post the AIG-bailout in late 2008, when the aforementioned company decided to hold a sales retreat atSt. Regis Monarch Beach Resortlocated at Dana Point in California. The public outcry and the severe backlash prompted AIG to cancel the event as it had just received billion of dollars in taxpayer assistance. The resort wasnt lucky and because of the negative publicity prompted by the event, had to be foreclosed. Following this the pharmaceutical industry retaliated by revising its code of conduct to discourage holding conferences at resorts
Ethical standards are especially important in hospitality business because the image of the hotel is what attracts the customers in the first place. Prior to the slump, indeed during earlier slump periods like during the 1930 Great Depression or the 2001 dotcom bubble bust, the ethical standards were merely lip service, and while companies made some effort towards having an ethicallymorally clean reputation, it wasnt a major requirement. But the advent of modern communication as well as the collapse of the major entities like Lehman Brothers due to entirely their own highly questionable decisions, have made the pubic extra sensitive to issues that while are legally correct, cannot be justified morally. Hence, in addition to the services the hotels provide, they also need to show moral standards by being sensitive to public sentiments. (James, 2009, p.120-121)
The article however makes it extremely clear that while the name resort has been taken out, the services provided is just the same. Most importantly and the reason behind the change is not prompted by any sense of obligation but is based on suggestions given to resorts from their corporate clientele, since they can now no more avail of the luxurious facilities at the pretext of business conferences, just because of the word resort. This is a major lapse on the part of both resorts and chiefly the corporate, since the issue here was not the word resort, but what they represented lavish spending using taxpayersstockholders money. Hence, while the issue might make business sense to the resorts themselves, its success would be dependent on the perception of the corporate clients. Further, should this scheme prove to be successful, it would show another example of how corporate create ethical and moral codes of conduct and themselves provide means to bypass them.
We have discussed Business Ethics and the three approaches to Managers Morality and the 4 company approaches. Discuss your personal stance and when you become a CEO what approach would you use for your company and why
Business ethics and morality are very tricky issues to deal with in practices. The common perception is of course that the two of them do not mix at all. Being in business automatically excludes the owner from a moral conduct and expecting an ethically correct behaviour from a company is not only futile but a company following such practices is necessarily not interested in making money i.e. is non-profit in nature. Operating a business with high ethical codes of conduct is hence not as easy as it is made out to be in various theories.
The four approaches to a companys ethical conduct is hence an extremely interesting and practically important issue that one needs to understand and be clear on before starting a company or being a CEO.
Approaching the ethical issue for a company is hence the most realistic when the fourth approach i.e. compliance approach is chosen. The interpretation of this can be varied and would be dependent on the head of the company. The compliance approach is easiest to apply because it is based on a stepwise change and the growth towards an ethical way to do business is not only possible but also based on real-time feedback on what can prove to be a hurdle. The company can always point out that it is follows ethical practices based on a code of conduct, which also includes the tolerance levels for ethical misconduct. Since the operation of a complete company is based on how each employee follows the process, it is much better to go for a stepwise approach, rather than have an excellent ethical code of conduct that is so lofty that the employees start feeling that they can never achieve the high standards required and work according to their own interpretation of the code of conduct.
While approaching the managers morality, it would be best to be a moral manager. This is because the employees would respond better when they see that the leadership truly believes in ethical behaviour and hence his expectations from other employees are a genuine requirement. The application of ethical principles would work out best if the CEO himself practices these and has realistic alternatives and behavioural approaches to the real-world problem what to do in a situation when ethical approach is completely reverse of what makes financial sense.
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