Harrah's operations are also closely connected with property acquisitions in the Las Vegas and Atlantic City. Throughout 2005, the company has consolidated its land assets basis in these U.S. regions for further operational development.
Financial Analysis:
Revenues increased at Harrah's to $7.11 billion in 2005, an increase of 56.35% from 2004. On the other hand, net income marked a decline to $236.4 million, 35.7 $ less than the net income in 2004. This marks both an increase in operational costs, but it can also be assimilated to the increased investments for sales.
The total assets have grown in value at an exponential rate from 2004 to 2006, with 139%. This growth in asset value can be assimilated with the new land and property purchases in Las Vegas and Atlantic City, as well as with the opening of new casinos in countries such as Spain and the Bahamas. This practically sustained the idea that the company has had a constant development over 2005.
III. Statement of critical challenges
The challenges for the company are likely to come both from general economic and business factors, as well as from those deriving from the highly competitive entertainment and casino market in which the company is operating.
An important challenge that the company will be facing overtime is to be able to survive in this highly competitive market environment, which means that it will need to increase its level of customer retention and, at the same time, attract new customers at a faster rate than its competitors. This will determine the trend that its revenue and net income will follow.
Another challenge will be related to keeping operating expenses down, since the period from 2004 to 2005 marked an increase with up to 63.2% of the total operating expenses. Obviously, a reduction of operating expenses is likely to increase the profitability of the organization.
Finally, international expansion, successfully begun in 2004, needs to be continued in 2005 in an attempt to diversify the markets and ensure additional customers from overseas, as well as a brand expansion in foreign countries.
IV. Alternatives
The company's alternatives are determined by the challenges and, factually, are not really alternatives, but unique methods by which the company will continue to remain a profitable business for its shareholders. As such,...
One issue on which a need for emphasis is felt at this time, and which has only succinctly been mentioned previously, revolves around the internal operations of the organization. In this order of ideas, MGM Mirage's operations consist of "17 wholly-owned casino resorts and 50% investments in four other casino resorts, including Bellagio, MGM Grand Las Vegas, Excalibur, Circus Reno and Silver Legacyof Grand Victoria [...]. Other operations include
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