ly should have begun the process in the third calendar quarter of 1988, with a plan for completion of the action by the end of the first calendar quar ter of 1989. In order to successfully divest these operations, the company should have been prepared to accept less than the then current value of the operations. With respect to the con tinuation by the company in the hotel/casino business, the maintainence of both Nevada and New Jersey hotel/casino
establishments, the continuation of targeting high rollers for some hotel/casino operations, and the continuation of targeting low rollers for some hotel/casino operations, no changes in existing operations and procedures would have been required by Bally management.
The company's current position was analyzed in two con texts. First, the external environment is considered, and second, the company itself is assessed.
The industry in which Bally Manafacturing participates is hotel/gaming. As the hotel/gaming designation indicates, the activities of this industry are no longer limited to the provi sion of lodging, food, and ancillary services. Entertainment, convention facilities, and special accomodations for business and government guests have long been a part of a hotel's ancil lary services. In the last decade of the twentieth century, however, entertainment, in the form of gaming, is of such great magnitude for some hotels that lodging and food services may almost be considered as ancillary services for gaming activi ties. Typically, the hotel/gaming industry does no better than track GNP (gross national product) growth. Since 1977, how ever, the industry as a whole has not performed even this well. In late 1980s (the time frame of this case), the hotel/gaming industry ws plagued by overcapacity, and an uncertain, if not softening, economy. 3
The most recent business cycle began with an expansion phase in the second quarter of 1983. Sustained economic grow...