Must-know: A SWOT analysis of Las Vegas Sands

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Sep. 19 2014, Updated 1:00 p.m. ET

SWOT analysis

The strengths, weaknesses, opportunities, and threats (or SWOT) analysis is a useful tool for decision-making in businesses and organizations. It’s used for business planning, strategic planning, competitor evaluation, marketing, business and product development, and research reports. It helps companies identify the positive and negative factors inside and outside an organization. Here’s a detailed SWOT analysis of Las Vegas Sands (LVS). Strengths

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  • It’s geographically well-diversified within the popular casino destinations in the world. It has a duopoly in Singapore. It possesses one of six licenses in China. Macao is the largest gambling market in the world.
  • Its financial health has improved since the recession—compared to its competitors like MGM Resorts (MGM), Wynn Resorts (WYNN), and Caesar Entertainment (CZR). Exchange-traded funds (or ETFs), like the Consumer Discretionary Select Sector SPDR Fund (XLY), track these companies.
  • It has accessibility to over one billion people estimated to live within a three-hour flight from Macao. There are over three billion people estimated to live within a five-hour flight from Macao.
  • About 85% of LVS’s business is leveraged towards Asian gaming. Asian gaming is the biggest growth opportunity.  Click here to learn more about the growth in the commercial gaming market.
  • It maintained occupancy rates above 90% in its resorts in major gaming cities.
  • In October 2013, LVS received an additional five-year exemption from Macao’s corporate income tax. The exemption was for profits generated by operating casino games.

Weaknesses

  • It doesn’t own one of three concessions given by the Macao government. It owns a subconcession from Galaxy Entertainment.

Opportunities

  • Macao draws a significant number of customers. The customers are visitors or residents of Hong Kong.
  • It plans to expand into Vietnam, Japan, and South Korea.

Threats

  • The Macao government, with the consent of Galaxy Entertainment, may terminate the subconcession under certain circumstances. The subconcession agreement expires on June 26, 2022.
  • Gaming proliferation in California and other areas located in the same region could negatively affect its financial condition.
  • The legalization of casino gaming in or near major metropolitan areas could cause customers to forgo travel to Las Vegas.
  • There has been an increase in Internet gambling. The government took steps to legalize it. This could pose a threat to the company. People could be drawn away from gambling in casinos because they could gamble from their home or smartphone.
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