PEST Analysis
A PEST analysis looks at the Political, Economic, Social and Technological drivers of a particular industry. PEST are external factors that must be analyzed and understood in order for an organization to succeed. The PEST analysis focuses on the external forces that affects the organization. It is most useful when used together with other tools such as the SWOT analysis.
Political Factors
Political factors play an important role in shaping the businesses and operations of Sands Macau. The casino is subject to local laws and regulations. Changes in the laws and regulations may affect the business. In Macau, tax laws and regulations may be subject to amendment or different interpretation and implementation, thereby affecting the profitability of Sands Macau after tax.
The activities of Sands Macau are subject to administrative review and approval by various government agencies. Sands Macau’s sub concession arrangements with Galaxy can be terminated by the government. In the event that the sub concession is terminated, Sands Macau would be prohibited from conducting gaming operations.
Economic Factors
Significant number of Sands Macau’s consumers come from China, general economic conditions and policies in China could have significant impact on the financial prospects of the casino. Any slowdown in economic growth or reversal of China’s current policies of liberalizing restrictions on travel and currency movements could adversely impact the number of visitors from China to Macau as well as the amounts they are willing to spend at Sands Macau.
The revenues of Sands Macau are dominated in patacas, the legal currency pf Macau, and Hong Kong dollars. Although currently permitted, there is no assurance that patacas will continue to be freely exchangeable into US dollars. Also, because the currency market for patacas is relatively small and underdeveloped, the casino’s ability to convert large among of patacas into US dollars over a relatively short period may be limited.
Sociological Factors
The government requires casinos and other establishments to employ locals. The casino relies heavily on the local labor market. The strength of the casino’s labor force is affected by factors such as the education and skill levels of the labor force. The increase mobility of mainland China and Hong Kong residents affect the strength of Macau’s tourism. It is expected that the wealthier Chinese middle class will become more mobile and will be encouraged to visit Macau because of less onerous travel restrictions, greater ability of Chinese citizens to bring ‘renminbi’ (the Chinese curreny) to Macau, increasing regional wealth and the opening of world-class facilities will transform Macau from primarily a day-trip market to a multi-day travel destination (Las Vegas Sands Corporation 2006).
Technological Factors
The rapid development and wide adoption of digital technology in Macau has lead to great changes in the hospitality and tourism industry. Because of the advancements in technology, physical distance has lesser effect on tourists. Telecommunications and transportation become more efficient and less expensive. Distance is bridged even further using the Internet. Technology allows tourists to book hotel accommodations and air tickets online. Electronic brochures are now widely used in the promotion of trade fairs and travel products.
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