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Harrah’s Entertainment Inc. Lal, R. (2001, Rev. 2004). HBS, Case #: 9-052-011

Harrah’s Entertainment Inc. Lal, R. (2001, Rev. 2004). HBS, Case #: 9-052-011. Case Analysis Anthony F. Lucas, Ph.D. Situation Analysis. Phil Satre was enjoying the 100% increase in stock price over the last year Marketing success in the low-roller segment helped achieve this result

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Harrah’s Entertainment Inc. Lal, R. (2001, Rev. 2004). HBS, Case #: 9-052-011

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  1. Harrah’s Entertainment Inc.Lal, R. (2001, Rev. 2004). HBS, Case #: 9-052-011 Case Analysis Anthony F. Lucas, Ph.D.

  2. Situation Analysis • Phil Satre was enjoying the 100% increase in stock price over the last year • Marketing success in the low-roller segment helped achieve this result • This success appears to stem from Harrah’s investment in info technology • Key competitors have focused their investment in facilities

  3. Problem Statement • Satre must decide whether Harrah’s can continue to grow profits by investing in information technology and analysis • Their competitors have heavily invested in facilities, leaving Harrah’s behind in this regard • The threat of copycat marketing looms, possibly limiting the return on future investments in business intelligence

  4. SWOT Analysis • Strengths • 100% growth in prior-year profits (p.1, ¶2) • Customer loyalty initiatives • ID’d as a core competency (p.5, ¶6) • Org. structure emphasizing company ownership of players vs. ind. properties (p.6, ¶5) • Adv. campaign based on research (p.7, ¶3) • Superior customer service • Recognized by Casino Player Magazine (p.7, ¶6)

  5. SWOT Analysis • Strengths • Models to predict future worth of players (p.8, ¶1) • Clear plan for direct mail campaign (Ex. 5) • Experimental/measurement-based approach to marketing (p.9, ¶3; Ex. 2b; Ex. 2c) • Patented technology linking player performance data across properties (p.12, ¶1) • Successful cross-marketing processes (p.12, ¶2)

  6. SWOT Analysis • Weaknesses • Facilities, as compared to competitors (p.5, ¶3) • It is a 50-year-old company, making across-the-board facility upgrades difficult & expensive (p.5, ¶5)

  7. SWOT Analysis • Opportunities • Continued investment in business intelligence to create SCA’s via superior marketing programs (p.11, ¶5) • Invest capital in business intelligence to distance the company from competitors • Use a portion of the profits produced by the recent success to refurbish properties in key markets

  8. SWOT Analysis • Threats • Competitors investing in superior/newer facilities (p.5, ¶5; p.13, ¶4) • Copycat marketing by competitors (p.1, ¶3) • Decreasing the ROI on technology & analysis investments

  9. Alternatives • Status Quo • Enjoying financial success (p.1, ¶2) • Further investment in technology/analysis carries risk • ROI is uncertain, given the possibility of copycat marketing by competitors (p.1, ¶3)

  10. Alternatives • Continue aggressive investment in information technology & analytics • Difficult to rebuild a 50-year-old company, with respect to physical structures • Business intelligence is the core competency of the company • Corporate personnel hired to deliver SCA’s based on business intelligence, via their unique skill sets • i.e, Loveman + Mirman & others (p.8, ¶1)

  11. Alternatives • Throttle back investment in business intelligence and divert funds to remodel properties in key markets • Key threats and weaknesses are tied to the inferior physical structures (see SWOT analysis)

  12. Solution • Alternative #2 • It has worked well thus far (p.1, ¶2) • 100% YOY increase in profits and stock price • Target is low-rollers (p.1, ¶2) • Cash flow from low-rollers would not provide a sufficient ROI on extravagant properties • As a result, Alternative #3 would not appear reasonable • Key strengths support Alternative #2: • Experimental/measurement-based techniques • Data mining processes • Existing information technology infrastructure

  13. Solution • Alternative #2 • Status quo (Alt. #1) affords competition an opportunity to engage in copycat marketing • Difficult to rebuild a 50-year-old company, with respect to physical structures • Business intelligence is the core competency of the company • Corporate personnel hired to deliver SCA’s based on business intelligence, via their unique skill sets

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