Question

Prepare the SWOT Chart. Thoroughly explain at least two major strengths and two major weaknesses of Scientific Games organization culture.

The information below is to help you organize this week’s assignment. Aside from the total of 4 paragraphs (and your SWOT Chart) for the above, please consider the following: For each strength, discuss why this strength can be considered a distinctive competence for the organization Include in your analysis an explanation of how each of the opportunities and threats will likely impact the company and why. Include other companies/industries on which this may also have an effect.

Note: Bullet points are not acceptable Note: Bullet points are not acceptable. Correctly produced APA parenthetical citations and reference list. You must have a minimum of three external research sources, in addition to the Robbins and Coulter text. Check your Spelling, grammar, organization

Answer 1

A swot chart or a swot analysis is something that defines the strength, weaknesses, opportunities, and threats of an organization and helps in evaluating company's competitive position. Below is the diagram of a basic swot chart :

Any business has strengths and weaknesses, but no organization exists in a vacuum. You must also analyze the opportunities and threats that abound in the marketplace. SWOT analysis tool keeps users informed about internal and external factors that affect their company's success. A SWOT analysis is a simple way to discover positive and negative factors in any context. Specifically, it’s a 4-quadrant diagram that identifies strengths, weaknesses, opportunities, and threats. Creating a SWOT chart forces contributors to critically examine their circumstances and find out which obstacles must be overcome or minimized. A SWOT can also help determine steps that should be taken for short- and long-term success.

Scientific games organization:

It is a global leader in gaming and lottery industry. It has been in the business since 85 years through acquired companies. Through the four operating divisions – Gaming, Lottery, Digital and Social, they offer customers a fully integrated portfolio of technology platforms, robust systems, engaging game content, and unrivaled professional services and marketing solutions. Business Overview Headquartered in New York City, Scientific Games Corporation employs 3500 people across the world and is a leader in the global lottery and gaming industries. In its Lottery business segment, SGMS designs instant lottery games, in which a winning ticket is identified by removing a scratch-off coating from the purchased ticket, and draw lottery games, in which a series of randomly selected numbers determine the winner. It also designs monitoring and security systems for lottery administrators to ensure the integrity of games. In its Gaming Business, Scientific Games produces and sells slot machines, video game gambling terminals, and central monitoring systems to a variety of customers such as casinos, racetrack operators, truck stops, night clubs, and arcade halls. Though Scientific Games Corporation originally focused exclusively on the U.S. lottery business, providing lottery-based products and services to state governments on a contractual, revenue-sharing basis, it has since expanded into the gaming business. In the 1990s, SGMS expanded its business to begin the production of slot machines and other interactive gambling terminals. It will become an even larger player in this market following a $1.5 billion merger with slot-machine manufacturer WMS Industries completed in October 2013. Since 2000, SGMS has pursued strategies of overseas expansion through the acquisition of smaller companies, usually valued between $30 and $50 million, with existing operations in targeted markets.

Culture of the company:

Mission: “To empower our customers by creating the world’s best gaming and lottery experiences."

Swot analysis of Scientific Games :

SUMMARY OF SWOT ANALYSIS:

STRENGTHS

1. As a leading player in the lottery and casino gaming industries, SGMS has developed customer relationships and a strong reputation: Scientific Games corporation has been in the industry since 1973 and while being in the industry for so long it has proved itself to be a worldwide leader in gaming and lottery industry. SGMS does business in forty of the forty-four U.S. jurisdictions in which lotteries have been legalized, and it has clients in fifty different countries across the globe. The company enters into three to five year contracts, ensuring that its operations are not significantly impacted in any one year by unforeseen developments. since its inception, SGMS has set records for other lottery and gaming organisations to compete with them and achieve success like them. They have an employee recognition programmes to ensure its employees are highly motivated by providing them with three facets i.e, chart toppers, Greatest Hits and Epic tours. Thus building a good reputation with the employees as well as with customers since happy employees lead to happy customers.

2. SGMS has a worldwide presence, with a foothold in fifty different countries : SGMS has well-established operations in the gaming industry, which includes the production of video games in casinos and arcades, slot machines, and computerized wagering systems for sporting events such as horse races. In October 2013, the company completed a $1.5 billion merger with WMS Industries which will significantly expand SGMS’ presence in all of these markets – especially slot machines, of which WMS was the third-largest global producer. The merger will enable SGMS to diversify its revenue sources even more, ensuring that the company as a whole is not vulnerable to market shocks in any one of its business areas. In addition, it allows SGMS to use WMS’ advanced research and development operations to markedly upgrade its own technology in the casino video-gaming business, which the newly formed company believes will be an area of significant growth in the coming years.

WEAKNESSES:

1. Aggressive expansion through mergers and acquisitions raises questions of successful merger integration :

The recent merger between Scientific Games and WMS Industries, valued at $1.5 billion, represents a fundamentally different type of corporate consolidation. Unlike the other companies that have become a part of the SGMS umbrella, WMS is a very large player in the gaming industry and will account for a significant portion of the combined company’s revenues. It will be a challenge to successfully integrate the two companies and minimize the amount of clashes regarding corporate strategy and company culture. In addition, Scientific Games will need to determine areas in which it can achieve synergies and cut costs, which tend to be the expected benefits from mergers and acquisitions. This requires a careful analysis of the new company’s operations and must be done efficiently and delicately to ensure that vital positions are not cut and at the same time, ensure that staff are not alienated by what may be perceived as unnecessary cost cutting.

2. SGMS depends on a small number of customers for a large portion of its revenues in its lottery business : Due to the nature of the gaming business, the majority of Scientific Games’ sales within this business segment are to casinos. End consumer demanding for casino products is variable and can depend on a variety of factors, including broad economic conditions which affect disposable income. Because casinos are only legal in certain jurisdictions, consumers must travel in order to use SGMS’ products, so SGMS’ revenues have historically been affected by travel costs and fuel costs. A significant portion of SGMS’ gaming revenue comes from upgrading video gaming machines in casinos every three to five years, but demand for upgrades is driven entirely by casino needs and the market is saturated with suppliers. As such, casinos have a high degree of buyer power over SGMS in the gaming segment of the business.

OPPORTUNITIES :

Scientific Games faces many regulatory and legal issues wherever it has operations because the lottery and gaming businesses are highly regulated . In recent years, liberalization of lottery and gaming laws in areas such as the European Union and China have allowed Scientific Games to begin expansion into these markets. Because governments can gain revenue from the operation of lotteries and from taxation on casino revenues, cash-strapped governments are likely to continue the worldwide trend towards looser restrictions on lotteries and gaming. This presents a huge opportunity – if SGMS can expand into new markets and develop long-term relationships with governments and casinos, it stands to gain dominant market share in these markets for years to come.

SGMS currently derives the majority of its gaming revenue from casino-based video games and mechanical reel gaming machines. In these games, casino patrons wager on their performance or specific outcomes. These include local-area progressive games, in which casino patrons bet on jackpots that are formed within their own casino, and wide-area progressive games, in which users from different casinos can all participate in one game, where they all contribute to and stand to earn payouts from a larger jackpot. While such games are still popular, they may not be the future of gaming. Computer games and mobile games and applications have gained popularity in recent years, and such games may become a more popular substitute for casino based video games. SGMS currently hosts the Jackpot Party Social Casino on Facebook, Apple, Android, and Kindle platforms, in which the company sells virtual coins to customers who are in turn allowed to use these to play on physical slot machines. The company also serves real- money gaming website operators in Europe, allowing them to use SGMS games and splitting revenues. We believe that there are significant opportunities for expansion in the mobile gaming sector and we think that SGMS stands to gain from creating content for mobile and Facebook platforms. These can include casino-style and lottery-style games with virtual coin sales, but we believe the company should also produce non-casino mobile games for which they can sell additional features for real money.

SGMS can also carve out a niche for itself in the casino gaming market by creating more sophisticated and interactive gaming content. Currently available products for casino gaming are not widely differentiated, meaning that casinos are able to pressure game makers to compete on price. The technological advancement and sophistication of casino video games has lagged behind the advances in non-casino video gaming technology, but that if SGMS can create more sophisticated games for casinos, it will be able to a higher degree of power over its buyers. We are confident that SGMS can hire developers from non-casino video game companies in order to create more interactive content for its own gaming segment and we believe that this is a major opportunity for product differentiation in the gaming industry.

THREATS:

SGMS operates in well-established markets with a host of large and small competitors, so it faces stiff price competition in every segment of its business. This puts constant pressure on the company to maintain efficiency and reduce costs of production for its video gaming machines and its lottery technology systems. If other companies are able to cut costs or develop stronger research and development operations, SGMS will lose competitiveness in an already tight market with heavily price-based competition. Therefore, the company must either consistently find ways to cut costs, or to ensure that it offers differentiated products that customers will demand regardless of price. Because both of these are difficult to achieve, we believe that industry rivalry and price competition are major threats to SGMS’ business.

While Scientific Games stands to gain in many ways from the liberalization of regulations on the gaming and lottery industries, it also faces a multitude of threats from any legal developments. Because lotteries are generally operated in cooperation with local governments on a revenue- sharing basis, SGMS stands to lose revenues if governments change the structure of these revenue-sharing agreements. If a jurisdiction chooses to outlaw gaming, SGMS must shutter its operations in the area and stands to lose large amounts of money. But it is not just tightening of regulation that poses a threat to SGMS. Easing regulatory burdens opens SGMS to competition from well-established market players, such as large competitors Gtech S.p.A and Bally Technologies, as well as smaller local players. While SGMS may be able to begin business in newly liberalized international jurisdictions, it may not be able to respond as quickly to localized customer preferences or changing market dynamics as quickly as smaller, more localized gaming companies might. SGMS’ rapid international expansion and the scope of its operations may be a liability in such a scenario. Because the lottery and gaming industries are tightly regulated, any change in the status quo can be as much of a threat as it is an opportunity.