Business Plan: Business Plan for MGM

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Business Plan for MGM to Enter the Franchise Market

Implementation Plan

Functional tactics

Action Items

Milestones and Deadlines

Resource Allocation

Organizational Change Management Strategies

Key Success Factors

Contingency Plan

Access to Capital

Environmental Influences

General Risks

MGM Resorts International have a desire to grow, but are held back by a high level of debt which may stifle capital requirements needed for traditional organic growth strategies. An approach which will mitigate this shortfall, and allow the firm to build on their existing strong reputation is the use of a franchise model; selling franchises to business partners who will use the MGM brand name and provide services using the MGM model (Mintzberg et al., 2011). This is a new strategy which will require an implementation plan.


Implementation Plan

To implement a franchise strategy, selling franchises for leisure and gaming resorts, MGM Resorts International will undertake a clear and defined course of action, with the strategy implemented over the period of a year, and the recognition that nay franchise agreements which are reached with trading partners may take longer than this to implement; especially of the partner will be building a new resort to carry the MGM name (Mintzberg et al., 2011).



The objectives will include


The establishment of a specialized franchise division in the company, focusing initially on the sale f the franchise agreements, and then the monitoring of the agreements to ensure full compliance. The franchise division will be set up within a period of three-month, after which time the department will be ready to start marketing franchises to potential business partners.


Negotiations to have commenced with at least two potential franchisees by the end of the first year.


At least 2 franchise agreements to be agreed and signed by the end of the second year.


To have at least 5 major leisure and gaming franchise resorts opening and operating within a period of 8 years.


Functional tactics

In order to realize the objectives the firm will need to adopt suitable functional tactics. Before anything can be sold; an idea, service or a product, the company has to identify potential target market and then communicate with that market regarding products/services that are to be offered. MGM will need to develop a suitable marketing strategy, identifying targeting organizations that have existing interests in the hospitality market who they believe may be interested in purchasing a franchise, or firms in other business areas, such as other leisure interests, who may be interested in diversification. The development of a specific marketing strategy will identify the target market, as well as the way in which that target market may be approached. The development of a direct sales strategy, along with marketing through prominent franchise exhibitions and business shows, either directly through the professional press which serves the hospitality industry may be undertaken.

The functional approach towards achieving this aim will be the division of the franchise apartment into different regional areas; these may include the Americas, Europe, Africa and the Middle East, Asia and Australasia. The different areas have different requirements and different patterns, along with different dominant hospitality firms. The division of the franchise department into these different regions will facilitate specialization for the particular areas both for the initial selling of the franchises, and then for the monitoring and control of the franchises when they are in operation.


Action Items

As the organization does not currently have a franchise division, the first action item will be the setting up of the franchise division. This will include the identification of suitable staff, including those who are knowledgeable regarding franchise operations, and the recruitment of staff positions which cannot be filled internally. As the organization does not have experience in franchise model, the utilization of headhunting services to acquire an experienced and knowledgeable franchise manager/director may be beneficial. The acquisition of specialist knowledge in this manner may reduce the steepness of the learning curve. In addition to the franchise manager/director, there are also needs to be employees who are able to negotiate in cell the franchises.

Prior to the sale of any franchises it is necessary for the organization to develop a standard franchise contract, outlining the commitment an obligation of both parties. The standard agreement may be altered through the negotiation process, but will serve as a basic model for all negotiations.

The development of the franchise model will also require the development will supporting franchise tools. This will include the documentation of company standards and processes, to ensure that all elements of the business are run according to the MGM standards. The process of creating the franchise tools and documents will be lengthy, as they will cover all areas of operation, from housekeeping and reception through to ethical standards for croupiers. MGM also need to develop training courses for potential franchisees and their employees as part of the support program, which will be utilized when franchises are initially set up. The company may also provide additional training for a fee on an ongoing basis; this is part of the negotiation.

The company will need to identify potential sources of marketing, including the major trade franchise shows and arrange attendance at the shows, as well as identify potential sources of direct and media marketing to potential franchise holders, and design a marketing campaign that will appeal to the target market.


Milestones and Deadlines

Milestones will include the setting up of a franchise office, complete with a suitably qualified and knowledgeable franchise manager/director within a period of three months. The design and implementation of a marketing campaign, aimed at potential franchise partners to be launched by the end of the fourth month. The attainment of at least enquiries by the end of the first year, with at least two entering into negotiations regarding a potential franchise contract, and at least two contracts agreed by the end of the second year, to have at least three leisure and gaming resorts is operational, or in the construction stage by the end of the fourth year, and at least five major resorts open an operating within a period of eight years.


Resource Allocation

Resource allocation will include physical resources to facilitate the development of the strategy, including real estate space. The strategy will also require specialized manpower, consideration of the skills knowledge and experience of professionals inside the firm will be beneficial in order to determine the most appropriate employees financial resources may be required in order to headhunt a suitably qualified and connected franchise director who may take over the running of the department and the implementation of the strategy. The company will require the support of other departments in order to operate, including human resources, accounting and legal, which may increase the workload of those departments. Initially this increased workload is likely to be minimal, with the possible exception of the legal department, but as the franchise department grows the Resource Allocation from these departments is also likely to increase, and possibly require subdivisions, especially in the legal department.

Financial resources will need to be allocated for the setting of the department as well as an extensive marketing strategy. The lead period for a franchise model may be extensive, but the capital requirements will be far less than an equivalent strategy undertaken to expand through organic growth. Therefore, resources may also require access to capital as a competitive rate of interest.


Organizational Change Management Strategies

The adoption of the franchise model will have only a minimal impact on the existing organizational structures and strategies. The existing organization may utilize its current assets, such as the MGM Grand and other facilities, to act as a showcase for the MGM brand, and as a destination of training for employees or work at the franchise locations. Employees should be notified of the changes which are coming, although they do not directly impact on, so that they feel they are engaged with the employer, which will support motivation. This will also prepare the staff for the potential to undertake a role in training staff for the franchise resource, as well as providing MGM staff support for the opening if it is required.


Key Success Factors

Key success factors will be the identification of suitable franchise owners, and an ability to engage and negotiate with them in order to finalize contracts. For the franchise to be attracted to a potential franchise owner, the franchise agreement needs to facilitate a high level of return for the franchisee, and provide a clear and unambiguous agreement. Therefore, the development of the franchise model and supportive legal documents that are acceptable to the potential franchisees will be key success factor (Blair & Lafontaine, 2010).

In the development of franchise support, including training, support and documentation of the MGM values, strategies and processes will also be a key success factor (Blair & Lafontaine, 2010). Gaining the franchise agreements is only the start of the process, if the franchisees are to be successful, and… [END OF PREVIEW]

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Cite This Business Plan:

APA Format

Business Plan for MGM.  (2013, December 16).  Retrieved June 17, 2019, from

MLA Format

"Business Plan for MGM."  16 December 2013.  Web.  17 June 2019. <>.

Chicago Format

"Business Plan for MGM."  December 16, 2013.  Accessed June 17, 2019.