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 a 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 brought financial challenges.
• People are focusing on receiving lower-cost services.
• 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 help to resorts and casinos.
• Intellectual property protection.
• Favored trading partners.

Economic

• The availability of a skilled labor force reduces costs.
• The 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 its market share.
• Recent technological developments by Caesars Entertainment Corporation’s 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 Resort and Casino 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 a dilution of the competitor’s advantage.

Threats

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

Ratio Analysis