Developing an Indian Casino Strategic Management Plan
Strategic management is an approach that focuses on positioning the organization for success - both now and in the future. This concept integrates planning, implementation, assessment and incorporates concepts from strategic planning, operational planning, quality improvement, and institutional effectiveness. Strategic management, a component of the RAM Consulting Indian Casino Financial Consulting service is indeed a process for business organizations to use in forming a strategic vision, setting casino objectives, crafting casino strategy and executing that strategy. Over time, as the environment changes, management can adapt and initiate whatever corrective adjustments are in their vision, objectives, strategy, and execution as deemed appropriate. A satisfactory strategic plan must be realistic and attainable so as to allow managers to think strategically and act operationally. The steps involved in developing a strategic plan consist of in-depth research covering environments; remote, industry, and operating.

Step 1: Remote Environment
The remote environment is just that. It is very remote and few, if any, pay attention to this critical area. One major reason we do not contend ourselves with this environment is simply because it is beyond our control, but it plays an important role affecting our operations and ultimately our bottom line. There are five factors under consideration here, including economic, social, political, technological and ecological.

The economic factor considers the nature and general direction of the economy and thus has an impact on the Indian gaming industry in which we operate. For example, the impact of continued increases in the prime interest rate will cause customers to limit use of credit cards. All or most casinos have automatic teller machines (ATM) scattered across casino floors and we rely heavily on them, more than we have in previous years. To combat some of the pitfalls of the remote environmental factors, it becomes necessary for upper management to monitor economic trends such as prime interest rates, inflation rates, availability of credit, level of disposable income, propensity to spend, and growth in gross national product.

Social factors affect gaming because our markets are made up of different beliefs, opinions, and lifestyles. These factors are a product of cultural, ecological, demographic, religious, educational and ethnic conditioning. For example, the battle of opinions comes into play during the new development of casinos in certain jurisdictions.

Political factors affect gaming from the legal and regulatory environments in which we operate. We are all aware of the regulation imposed on Indian gaming industry through the Indian Gaming Regulatory Act. Technology in the past decade has changed the face of gaming and will continue to move at breakneck speed. Not too many years ago we had hard and soft meter readers to calculate our drop and win for the day. Those days are gone and as we move ahead we will see many changes that will enable us to better maximize our revenue. Keeping abreast of the technological changes will be the key to success for the intelligent and wise manager.

All casino developments that have an impact on the environment are subject to certain restrictions by the environmental Protection Agency (EPA) an arm of the federal government. Any development requires an environmental impact statement or EIS. The issue of regulations from this area becomes important for future development of your current property. By monitoring these five factors we can plan accordingly and create a framework in which to base the industry environment.

Step 2: Industry Environment
The industry environment consists of all gaming prevalent in the lower forty-eight states. The five factors to contend with here are entry barrier, supplier power, buyer power, substitutes and competitive rivalry. We will only discuss entry barriers, supplier power and competitive rivalry.

In many cases entry into the gaming industry required an immense capital investment plus may political hurdles to overcome. These barriers for entry into the Indian gaming industry have been relaxed in the past decade due to federal and state policy. Credible lending institutions have now opened the purse for tribes to borrow money for the development of Ls Vegas-style casinos. More states are negotiating compacts with tribes based on a revenue sharing concept. This expansion has placed pressure on the corporate run casinos and their reaction to this threat has been to diversify through acquisition of other major casinos.

Supplier power is best exemplified by one major machine manufacturer creating a partnership with another business entity, and then breaking the market into two segments. This agreement had the manufacturer selling to the traditional corporate based casinos and the business entity selling to Indian casinos. This business relationship created a situation where one market segment paid more for the same product than the other. Suppliers have immense power and the point here is to recognize this and plan accordingly.

Because barriers to entry have been reduced, competitive rivalry among Indian Nations will increase. Because some tribal reservations are located far from any major market, it is natural for them to attempt to leverage the Indian Gaming Regulatory Act in their efforts to have a profitable casino to support their governmental services.

Step 3: Operating Environment
The operating environment is an area we can influence and control to our benefit versus the industry and remote environments. For this environment we will need to do a comprehensive internal analysis, which will include comprehensive financial analysis going back at least ten years. One key area that should be reviewed with utmost importance is the contribution margin by departments.

Another common method of analysis widely used is the strength, weakness, opportunity and threat (SWOT) analysis. Once you have completed an objective SWOT analysis, the next step is to create a balanced scorecard based on some long-term objectives. For example, our long-term objectives might be to:
1) Maintain and increase market share
2) Increase customer rewards program
3) Maintain financial strength
4) Capitalize on innovative technology
5) Strive for superior customer service

The balance scorecard discloses how can meet each of these objectives.

This is a very small sample of the main elements for developing a strategic plan. Each of the main headings will require much more research than is discussed in this brief article. A strategic plan serves to guide managers in the sometimes gray business world because it forces you to focus both on the immediate and future of the business. The other benefit of this plan is it assists you in benchmarking and performance monitoring. This plan also lends itself toward informing, motivating and involving all employees of the business. Finally, it stimulates change and stops stagnation and becomes a building block for the next plan.

By Robert A. Mudd, President of RAM Consulting Service
Expertise includes Indian Gaming Business Marketing and Indian Casino Financial Consulting