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The Singapore Swing: A Lesson on Balance and Opportunities
by Sudhir H. Kale*

The Singapore Swing: A Lesson on Balance and Opportunities

By Sudhir H. Kale*

Call me a prophet if you insist. In June 2005, I swam against the torrent of public opinion in my article in Global Gaming Business about the gaming opportunities in Singapore. To those eager to secure a license in Singapore, I said “…it might behoove foreign operators to explore newer markets a wee bit more south or north of the equator.” No one listened, but then people never listen to free advice, do they?

Now that only four bidders remain in the fray, one wonders how many millions of dollars were collectively squandered by foreign casino operators in their attempts to impress Singapore politicians and bureaucrats before finally realizing the folly of their actions. Low taxes or not, I for one do not fancy the chances of any casino operator succeeding in a country where Playboy magazine and chewing gum are publicly proclaimed undesirables, and gambling has long been considered a sacrilege by the powerful and the mighty.

Despite the relatively high gaming taxes in Macau, not that far removed from Singapore geographically, Sands Macau recovered its capital investment in less than one full year of operations. Is anything like this possible in Singapore with arguably better plane connections and a superior tourist infrastructure? Not when your capital investment will require two to three billion dollars (U.S.), and less than four percent of your property’s total area can be allocated for gaming.

In trying to enhance revenues and profits, casino operators are better off trying to increase the operational efficiency of the properties that they already have. Rather than spend so much of top management time and attention to go on a wild goose chase only to be thwarted by the whims of politicians and bureaucrats, casino companies could devote this time and attention to their most valuable assets – employees and customers (yes, in that order).

If you want to optimize your ROI in the casino business, you need to focus on but two of your assets – your people and your customers. Operating licenses, deal making, and iconic designs pale in significance when compared to the untapped profit potential of your internal and external customers.

If you understand this truism, the rest what is involved in running a casino business is mere tactics. Not that tactics are unimportant. Developing your employees and customers requires carefully orchestrated tactics and programs such as training, designing proper incentives, market research, and customer relationship management.

The billionaire Andrew Carnegie was once asked given a choice, what he would be prepared to lose – his people or his factories. Carnegie instantly replied, “factories.” “If I have my people,” he argued, “it is easy to set up the factories again. If, on the other hand, I lose my people, I will have nothing left.”

Lest you get the wrong impression, I am not arguing against geographic expansion or diversification. Contemporary globalization necessitates the full exploration of opportunities in the marketplace regardless of where these opportunities exist. What I am advocating is a balance sadly lacking in executive decision making – the balance between consolidating existing business and allocating resources to avail of foreign opportunities. And remember: entering a foreign market is one thing; establishing a sustainable competitive advantage in any market is impossible without due attention to your two most important assets: employees and customers.

Date Posted: 25-Jan-2006

*Sudhir H. Kale, Ph.D., is the founder of GamePlan Consultants, a company devoted to consulting and training on the marketing aspects of casino management. Sudhir has published over forty articles on casino management. He also teaches marketing in the Faculty of Business at Bond University. You can write to Sudhir at skale@gameplanconsultants.net.

 
 
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