Royal Resort and Casino Case - 620 Words

The scheme in the gambling industry is the same everywhere. The main goal is to attract the client first and to make his/her stay as pleasant as possible to spend as much money on the tables as they possibly can. RCC operates as a single firm to maximize the combined net profit from its three divisions. In this case, the three divisions operating as a single firm outperform the three divisions operating as individual companies in the market. There is a synergy between the divisions where the combined result is better than the sum of the individual performances. In fact we could say that Entertainment and Hotel give support to the main income generator that is Gambling. As the beginning of chapter 4 of the book says Team Production†¦show more content†¦Big investments such as infrastructure for the hotel (notice the large invested capital in the Hotel division) are taken into account. To avoid the export of inefficiencies between divisions we have the responsibility accounting and the performance measures Each one of the three divisions would be a cost center, each responsible for their budgets. The performance measure would be to maximize output for a fixed budget but special attention should be given to maintain quality in the case of the Hotel and Entertainment divisions. Regarding benefit and investment centers the three divisions should be treated as one in order to make use of their synergies. Price for the Hotel and Entertainment divisions is sacrificed in order to attract more people and that explains their negative EVAs. Performance should be measured by looking at joint profit. There is in effect a transfer price between the Hotel and Entertainment divisions and the Gambling division. To reflect a good approximation of opportunity cost this transfer price could never be market based because of the large synergies between divisions. Full cost transfer prices would be convenient because they take into count not only variable costs but fixed costs as well. Big investments such as infrastructure for the hotel (notice the large invested capital in the Hotel division) are taken into account. We could say that RCC avoids the agency problem,Show MoreRelatedMarketing in Business660 Words   |  3 Pagespromotion† (Definition of Marketing, 2013). After familiarizing with these Marketing definitions from two different sources it is critical to give marketing the importance it deserves within successful businesses. In this case we will be referring to MGM Resorts marketing strategies and especially to the organization’s reward program M Life. As a current manager within this company, I am an essential part of driving M life. I have to make sure my entire department is properly trained andRead MoreTourism and Hospitality Business - Feasibility Study - Spain4904 Words   |  20 Pagesshows, conferences and exhibitions. 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