Crown resort (CWN’s) is an Australian hospitality company that serves diverse people both locals and foreigners. It has diversified its business by spending much on gaming, Crown Casino and leisure Complex. This makes it possible for the institute to tender services to sundry consumers. According to the report 2015, the organization made a net profit of $446.3 million. This amount was a decline from the profit registered in the preceding year. The drop off stood at 36.5 percent. This was attributed to the gaming at Macau that experienced heavy loss of business turnover. On the other side, the hotel business triumphed in the economy hence earned revenue for the organization. This helped reduce the concentration and effects of loss made in the betting segment (Suh, 2011). Violence and security concerns also forms part of the issues that the company is worried about. Participants in betting often find it easy to engage in violence hence needs to provide adequate security. Big money punters crown carries with them huge money an action that affects the performance of casinos.
The company has faced internal mismanagement in terms of planning and funds allocation. It invested a sum of $2.8 billion in the upgrading of Australian resorts. This amount did not commensurate the level of services offered to clients who preferred other rival restaurants. Therefore, the hotel could have invested and concentrated in improving their service delivery endeavors as well as marketing activities. In addition, a substantial amount of money was applied in running online social gaming provided via DGN games LLC. This exposed the society to numerous risks and competition from global institutes such as Microsoft. The association is located in Australian with minimum investment outside the state as well as the continents. This limits the growth and expansion of the business in serving the universal population. It is therefore paramount that the organization starts diversifying its operation by investing in the international market. The controlling procedures to handle the quality of services offered in the group appear on lower side as seen in the financial results. This goes hand in hand with the organization of cost of operation. The company has not been laying more emphasize on the control processes which are essential in maximizing the profits made by an entity. Crown is one of the organizations in the world that is incapable to cut on its overhead costs. This reduces the amount of profits realized by the organization by a large pact (Robertson, 2016).
Risks of material misstatement in financial statement
The organization reported normalized revenue of $3,404.5 million in the year 2015. The total expenditure for the same year rose to $ 2,579.6 million. Therefore, a great gap was left to be filled by the entity to meet the current expenditure through the short run period. The organization would engage in borrowing money from monetary organization to convene the deficit. This would reduce shareholders benefits as most of the profit earned was used to pay off the debts. Another item brought out in the report includes significant items which stand at $61.3 million a higher amount than what was recorded the previous year 2014. In the year 2014, significant items stood at $ 46.7million hence appeared within manageable levels (Qi, 2016).
It therefore means that the company allocated a lot of money to manage its infrastructural components. The management pursued upgrading endeavor to see the organization acquire an international image or platforms that would help drive traffic into the premises. However, the organization allocated diminutive finances to the training programs. This had a pessimistic attributes to the profit made by the entity. Having qualified and highly productive labor force is important for hotel businesses. The services offered require personage oriented services that call for diverse strategies. Therefore, employees need to go through training to offer services that meet international standards.
The operating surroundings in which the entity exists was experiencing a lot of changes in terms of financial cycle. In Macau, the market and industry was going through trade and industry turn down that led to low turnout in tourism and local transport. Thus, commercial institution made little from their outlay and operation in the industry. At the same time, the organization had committed a lot of funds in upgrading its premises across the region. In addition, innovative projects were being commissioned in the same year hence imposed pressure on the budget as well as the financial status of the organization. The investments were long term in nature hence benefits will be realized in the future (Fyall, Kozak, & Andreu, 2009).
In comparison, last year was a good year for the business as it was able to make profit while controlling its costs than this year. However, things are deemed to change with the recovery of Macau economy. Total revenue in 2015 amounted to $3404.5 million an increase from the year before which registered $2935.4 million. Equity on the other side stood at $161.3 million and $129.9 million in year 2015 and 2014 respectively. This insinuates that the corporation was growing and expanding despite incurring losses. It enabled the institute increase its customer base while maintaining its place in the souk. However, the application of technology and gaming endeavors seemed to be a difficult task and an expensive endeavor to labor on. Having acquired a number of entities known for their gaming activities, the business organization will make profits with consistence selling of its products.
Crown is expanding in terms of size and regional investment in countries such as Europe and china. However, the investment requires a lot of funds to oversee the utilization of resources available. This comes hand in hand with the acquisition of diverse hotels and institutions that offer diverse services. The portfolio has placed the organization at an advantageous position in facing competition. The sailing has not been smooth because rival companies have invested in destructive strategies such as introduction of online services (Binetti, 2012).
The new trend in the hotel business denotes increased use of computer and technology. This has reduced the operation cost while increasing efficiency of system delivery. Phone calls are recorded by computers while customers data shared maintained through cloud computing. This makes it possible for the entity to track its consumers as well as sales. Crown has managed to install some of the recent technologies in some of its premises. Through these initiatives, crown manages to dominate some section of the entire industry (Binetti, 2012).
Financial ratios are indicators of financial strength of the entity. One of the ratios that show that the organization was able to meet its current demands is current ratio.
Current ratio=current asset/current liabilities
= 3,404.5 /2,579.6
It therefore means that the organization is capable of financing its expenditures.
In conclusion, we find that the organization’s financial strength enables it to acquire other businesses on the same line. Diversification is one of the strategies that the organization utilizes to its own advantage. This incorporates a numbers of steps and procedures to be followed in regards to financing and operating activities.
Binetti, T. (2012). State Regulation of Casino Entertainment. Gaming Law Review, 7(1), 51-56. doi:10.1089/109218803762871908
Fyall, A., Kozak, M., & Andreu, L. (2009). Marketing Innovations for Sustainable Destinations. Oxford: Goodfellow Publishers.
Qi, S. (2016). Hotel Website Quality Versus Star Level: The Case of Macau Hotel Websites.Information and Communication Technologies in Tourism 2016, 11(3), 325-338. doi:10.1007/978-3-319-28231-2_24
Robertson, D. (2016). Regulatory Agencies and Operational Risk. Managing Operational Risk,12(3), 131-158. doi:10.1007/978-1-137-44217-8_5
Suh, E. (2011). Examining the indirect impact of showroom entertainment on hourly slot gaming volume: The case of a Las Vegas hotel-casino. International Journal of Hospitality Management, 30(3), 522-529. doi:10.1016/j.ijhm.2010.08.006