Page 114 - Stakis Consolidated Teaching Note

years ago. There came a point though that, he had lost
sight of these two very important financial areas. Reo had

the “cash cows” (Boston Group Matrix) hotels and

especially the casinos, which in particular returned a
good source of cash. A casino was expected to retain 20%

of every wager placed, good returns indeed. These two

“cash cows” if properly managed and costs controlled

could finance investments in other areas and that is
exactly how Reo built his empire. Strength.

When Andros embarked on the “aggressive organic

growth” he concentrated so much on growth both
organic and by acquisition, that he took his eye off the

core businesses and profits from the casino and hotel

businesses almost halved. Andros seemed to have a false
sense of security, where nothing could go wrong and the

costs would look after themselves. An example of Andros’

lack of appreciation of cash flow was the £14.5 million he

spent on leasehold agreements for some hotels. This may
have seemed like a good idea to save £1 -£1.5 million a

year, but it was not a good idea when case flow is

concerned. Andros also fell into the trap of not preparing

a detailed expenditure budget, when starting a new
venture and overspending money that was not accounted

for. Weakness.

Robertson and Michels knew they had to sort out the

cash flow situation and the best way of doing it was to

put strict cost control regime into place. Neil Chisman,

who was brought in and then stifled by Andros, came to
the fore and worked with Michels to rescue the financial