Bankruptcy at Caesars Entertainment – Case Solution

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Bankruptcy at Caesars Entertainment Case Answers

This case solution includes an Excel file with calculations.

Overview – Bankruptcy at Caesars Entertainment

Caesars Entertainment was established as Casino and hospitality services provider. To date, it is managing 49 casinos, hotels, restaurants, and others. Its business activity was primarily organized into four operating units: CEOC, CERP, CGP, and CES. In 2015, Caesars Entertainment filed for Chapter 11 Bankruptcy.

Economy analysis

• The recent economic credit crisis bought financial challenges.
• People are focusing on receiving lower-costly service.
• Lower growth in different business segments indicates the lower disposable income of the people.
• The availability of debt has been reduced over the years because of the credit crisis.

Industry analysis (Porter five forces)

• The threat of new entrants in this industry is relatively low.
• Rivalry among existing competitors is high.
• The bargaining power of suppliers is high as there is a limited number of suppliers.
• The bargaining power of buyers is high.
• The threat of substitutes is high.

PESTLE analysis

Political

• Political stability and support ensure helps to Resorts & Casinos.
• Intellectual property protection.
• Favored trading partners.

Economic

• The availability of a skilled labor force reduces costs.
• Recent credit crisis brought financial challenges.
• Increment of service price negatively affects a number of customers.

Social

• Influenced deeply by the socio-cultural forces of different markets.
• The changing socio-cultural trends and people’s preferences are positively affecting the people’s preference to get Game and casino services.

Technological

• The more innovative the company, the higher is its market share.
• Recent technological developments by Caesars Entertainment Corporation competitors negatively affect its business.

Legal

• Anti-trust law in the Resorts & Casinos industry and overall in the country.
• The legal framework and institutions are not robust enough to protect intellectual property rights in different countries.

Environmental

• Attitudes toward “green” or ecological products by the company create a positive outlook.
• Air and water pollution regulations in the Resorts & Casinos industry become strict.

Company analysis (SWOT analysis) for Caesars Entertainment

Strengths

• Comprehensive product and service portfolio.
• High level of customer satisfaction and a strong distribution network.
• Strong presence in different locations.

Weaknesses

• Underperformance relative to major competitors.
• The high attrition rate in the workforce.
• The profitability ratio and Net Contribution % of Caesars Entertainment are below the industry average.

Opportunities

• Driven by technology and innovation.
• New trends in consumer behavior.
• New customers from the online channel.
• The market development will lead to dilution of the competitor’s advantage.

Threats

• A higher amount of debt.
• Higher labor and administrative expenses.
• Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure

Ratio analysis