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Little Vegas Casinos Czech Republic. ECON Project Dr. Amacher Fall 2004. Introduction. Jonathan Scott Sara Morgan-Dyke Thy (Kat) Nguyen Paige Burns Dolapo Ogunsanlu Marcus Onvani. Introduction. Our Existing Company American Financially Secure

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Little VegasCasinosCzech Republic

ECON Project

Dr. Amacher

Fall 2004


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Introduction

  • Jonathan Scott

  • Sara Morgan-Dyke

  • Thy (Kat) Nguyen

  • Paige Burns

  • Dolapo Ogunsanlu

  • Marcus Onvani


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Introduction

  • Our Existing Company

    • American

    • Financially Secure

    • Casino Operator in US and Western Europe

    • Look to Expand into Central and Eastern Europe

    • All Economic Indicators Point to The Czech Republic


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Outline

I. Political Environment

II. Economy/ Demographics

III. Tourism

IV. Our Proposal

V. Means of Differentiation

VI. Potential Problem Areas

VII. Competition

VIII. Conclusion


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I. Political Environment

  • Geography


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I. Political Environment

  • Geography

    • Westernmost, most affluent of Warsaw Pact

    • Landlocked: Slovak, Poland, Germany, Austria


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I. Political Environment

  • History

    • 1948-1989: Czechoslovakia

    • 1989: Velvet Revolution

    • 1993: Czech Republic

      Social & Economic system changes


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I. Political Environment

  • Current Status

    • Political Structure

      • Parliamentary Republic

      • Multi-party democratic political system

    • Current status of national/international relationships

      • OECD, WTO, NATO

      • EU : May 1st, 2004


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II. Economy/Demographics

  • Population Statistics/ Demographics

    • Population

    • Education

    • Per capita Income


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II. Economy/Demographics

  • National Economical Models

    • Monopoly regulation

  • Financial Data

    • GDP: $69.9B

    • Per capita: $5,560


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III. Tourism

  • Government encouragement

  • Rising Tourism

  • Reasons for Increase

    • Historically intact cities

    • Fall of communism - 1989

    • Proximity to wealthy nations

    • Inexpensive country to visit (Low CPI)


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Outline

I. Political Environment

II. Economy/ Demographics

III. Tourism

IV. Our Proposal

V. Means of Differentiation

VI. Potential Problem Areas

VII. Competition

VIII. Conclusion


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IV. Our Proposal

  • Our Existing Company

    • Financially Stable

    • Looks to invest in The Czech Republic


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IV. Our Proposal

  • Business Type


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IV. Our Proposal

  • Entry Strategy

    • Construct NEW Casinos in 3 cities

      • Prague

      • Znojmo (Austrian Border City)

      • Karlovy (German Border City)


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IV. Our Proposal

  • Financing Options

    • Invest with Internal Funds

      • Retain Control

    • Initial Public offering

      • Increased costs of flotation

      • Deal with Board and Shareholders

      • Loss of Control


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IV. Our Proposal

  • Dominant Currency is the Koruna (K)

  • Current Exchange Rate $1=24.27K

  • Recommendation: Hedge Currency Risk by purchasing currency options

  • Exchange Rate Risk

Source: www.bot.or.th


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IV. Our Proposal

  • Marketing Scheme

    • Media Coverage

    • Free Travel from Germany and Austria

    • Billboards in those countries, en route


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IV. Our Proposal

  • Profit Proposal

    • Transworld owns 3 casinos in Czech


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IV. Our Proposal

  • Amacher Business Plan

    • Who are my customers?

    • What are their expectations?

    • How are we going to exceed their expectations?


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V.Monopolistic Segment of our Business

  • Atmosphere

    • American Style

    • Sports Gambling

    • Customer Service Driven

    • Dining Featuring an Internationally Diverse Selection

  • Shows/ Concerts

    • American Theme

    • American Celebrity Actors


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V. Other Means of Differentiation

  • Barriers to Entry

  • Food

  • Complimentary Alcoholic Beverages

  • Hospitality/Training

  • Travel


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Outline

I. Political Environment

II. Economy/ Demographics

III. Tourism

IV. Our Proposal

V. Means of Differentiation

VI. Potential Problem Areas

VII. Competition

VIII. Conclusion


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VI. Potential Problem Areas

Problem #1: Requirements to Obtain a Casino Operating License

  • Minimum amount of capital

  • Clean criminal record

  • Monitoring system

  • Fund public benefit programs

  • CASINO OWNERS MUST BE CZECH CITIZENS!!!!!!!


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VI. Potential Problem Areas

  • American Board of Directors

  • Czech Management and Employees

  • Work with a Czech Company who holds the Casino License.

  • Manage All Operations and Lease Gaming Equipment to the Czech Company.

  • We receive management fees based on a percentage of profits and receive equipment lease fees.

Response #1: Requirements to Obtain a Casino Operating License


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VI. Potential Problem Areas

Problem #2: Recent casino bombing


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VI. Potential Problem Areas

  • New legislature making casino licenses more difficult to obtain

  • This incident was limited to a dispute between members of an Israeli organized crime group, not between rivaling casinos.

Problem #2: Recent casino bombing con’t


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VI. Potential Problems Areas

Problem #2…..Possibly to our advantage?

  • Act now: Open a casino while gaming licenses are still easy to obtain. (A future barrier to entry for other companies.)

  • As a clean and honest company, we have nothing to worry about.


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VII. Competition:

Industry Level:

Other Entertainment Competition in Prague:

  • Opera

  • Theater

  • Concerts

  • Galleries

  • Museums

  • Clubs

  • Cinema

  • Planetarium


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VII. Competition:

Casino Level:

Major Competition In Prague:

Casino Admiral:

  • Largest Casino in the Czech Republic

  • The most professional managed casino in town.

  • Upscale bar.

  • Prime Location on top of the Palace of Culture

    Casino Palais:

  • Elegant interior makes it a stop among tourists who aren’t even gambling!




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VII. Competition:

Casino Level:

In Prague: Few large casinos

Proposal: One extra-large casino

In Karlovy: One small casino

Proposal: One midsize casino

In Znojmo: Two small casinos

Proposal: One midsize casino


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VIII. Conclusion

  • Summary

    • Czech is geographically desirable

    • Favorable political environment

    • Increasing tourism, booming industry

    • We propose 3 casinos in Czech Republic

    • Our atmosphere and style is unique, giving us a competitive advantage

    • We have identified potential problem areas and used them to our advantage

    • Internally Financed

    • Long-term objective: approach near monopoly status