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

Case AnalysisCase AnalysisAnthony F. Lucas, Ph.D.Anthony F. Lucas, Ph.D.

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Situation AnalysisSituation Analysis

Phil Satre was enjoying the 100% increase Phil Satre was enjoying the 100% increase in stock price over the last yearin stock price over the last year

Marketing success in the low-roller Marketing success in the low-roller segment helped achieve this resultsegment helped achieve this result

This success appears to stem from This success appears to stem from Harrah’s investment in info technologyHarrah’s investment in info technology

Key competitors have focused their Key competitors have focused their investment in facilitiesinvestment in facilities

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Problem StatementProblem Statement

Satre must decide whether Harrah’s can Satre must decide whether Harrah’s can continue to grow profits by investing in continue to grow profits by investing in information technology and analysis information technology and analysis – Their competitors have heavily invested in Their competitors have heavily invested in

facilities, leaving Harrah’s behind in this facilities, leaving Harrah’s behind in this regardregard

– The threat of copycat marketing looms, The threat of copycat marketing looms, possibly limiting the return on future possibly limiting the return on future investments in business intelligenceinvestments in business intelligence

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SWOT AnalysisSWOT Analysis

StrengthsStrengths– 100% growth in prior-year profits 100% growth in prior-year profits (p.1, ¶2)(p.1, ¶2)

– Customer loyalty initiatives Customer loyalty initiatives ID’d as a core competency ID’d as a core competency (p.5, ¶6)(p.5, ¶6)

– Org. structure emphasizing company Org. structure emphasizing company ownership of players vs. ind. properties ownership of players vs. ind. properties (p.6, ¶5)(p.6, ¶5)

– Adv. campaign based on research Adv. campaign based on research (p.7, ¶3)(p.7, ¶3)

– Superior customer serviceSuperior customer serviceRecognized by Casino Player Magazine Recognized by Casino Player Magazine (p.7, ¶6)(p.7, ¶6)

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SWOT AnalysisSWOT Analysis

StrengthsStrengths– Models to predict future worth of players Models to predict future worth of players (p.8, ¶1)(p.8, ¶1)

– Clear plan for direct mail campaign Clear plan for direct mail campaign (Ex. 5)(Ex. 5)

– Experimental/measurement-based approach Experimental/measurement-based approach to marketing to marketing (p.9, ¶3; Ex. 2b; Ex. 2c)(p.9, ¶3; Ex. 2b; Ex. 2c)

– Patented technology linking player Patented technology linking player performance data across properties performance data across properties (p.12, ¶1)(p.12, ¶1)

– Successful cross-marketing processes Successful cross-marketing processes (p.12, ¶2)(p.12, ¶2)

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SWOT AnalysisSWOT Analysis

WeaknessesWeaknesses– Facilities, as compared to competitors Facilities, as compared to competitors (p.5, ¶3)(p.5, ¶3)

– It is a 50-year-old company, making across-It is a 50-year-old company, making across-the-board facility upgrades difficult & the-board facility upgrades difficult & expensive expensive (p.5, ¶5)(p.5, ¶5)

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SWOT AnalysisSWOT Analysis

OpportunitiesOpportunities– Continued investment in business intelligence Continued investment in business intelligence

to create SCA’s via superior marketing to create SCA’s via superior marketing programs programs (p.11, ¶5)(p.11, ¶5)

Invest capital in business intelligence to distance Invest capital in business intelligence to distance the company from competitorsthe company from competitors

– Use a portion of the profits produced by the Use a portion of the profits produced by the recent success to refurbish properties in key recent success to refurbish properties in key marketsmarkets

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SWOT AnalysisSWOT Analysis

ThreatsThreats– Competitors investing in superior/newer Competitors investing in superior/newer

facilities facilities (p.5, ¶5; p.13, ¶4)(p.5, ¶5; p.13, ¶4)

– Copycat marketing by competitors Copycat marketing by competitors (p.1, ¶3)(p.1, ¶3)

Decreasing the ROI on technology & analysis Decreasing the ROI on technology & analysis investmentsinvestments

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AlternativesAlternatives

1.1. Status QuoStatus Quo– Enjoying financial success Enjoying financial success (p.1, ¶2)(p.1, ¶2)

– Further investment in technology/analysis Further investment in technology/analysis carries risk carries risk

ROI is uncertain, given the possibility of copycat ROI is uncertain, given the possibility of copycat marketing by competitors marketing by competitors (p.1, ¶3)(p.1, ¶3)

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AlternativesAlternatives

2.2. Continue aggressive investment in Continue aggressive investment in information technology & analyticsinformation technology & analytics

• Difficult to rebuild a 50-year-old company, Difficult to rebuild a 50-year-old company, with respect to physical structureswith respect to physical structures

• Business intelligence is the core Business intelligence is the core competency of the companycompetency of the company

• Corporate personnel hired to deliver SCA’s Corporate personnel hired to deliver SCA’s based on business intelligence, via their based on business intelligence, via their unique skill setsunique skill sets

• i.e, Loveman + Mirman & others i.e, Loveman + Mirman & others (p.8, ¶1)(p.8, ¶1)

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AlternativesAlternatives

3.3. Throttle back investment in business Throttle back investment in business intelligence and divert funds to remodel intelligence and divert funds to remodel properties in key marketsproperties in key markets

• Key threats and weaknesses are tied to the Key threats and weaknesses are tied to the inferior physical structures inferior physical structures (see SWOT analysis)(see SWOT analysis)

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SolutionSolution

Alternative #2Alternative #2– It has worked well thus far It has worked well thus far (p.1, ¶2)(p.1, ¶2)

100% YOY increase in profits and stock price100% YOY increase in profits and stock price

– Target is low-rollers Target is low-rollers (p.1, ¶2)(p.1, ¶2)

Cash flow from low-rollers would not provide a sufficient ROI Cash flow from low-rollers would not provide a sufficient ROI on extravagant propertieson extravagant properties

– As a result, Alternative #3 would not appear reasonableAs a result, Alternative #3 would not appear reasonable

– Key strengths support Alternative #2:Key strengths support Alternative #2:Experimental/measurement-based techniquesExperimental/measurement-based techniques

Data mining processesData mining processes

Existing information technology infrastructureExisting information technology infrastructure

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SolutionSolution

Alternative #2Alternative #2– Status quo (Alt. #1) affords competition an Status quo (Alt. #1) affords competition an

opportunity to engage in copycat marketingopportunity to engage in copycat marketing– Difficult to rebuild a 50-year-old company, with Difficult to rebuild a 50-year-old company, with

respect to physical structuresrespect to physical structures– Business intelligence is the core competency Business intelligence is the core competency

of the companyof the company– Corporate personnel hired to deliver SCA’s Corporate personnel hired to deliver SCA’s

based on business intelligence, via their based on business intelligence, via their unique skill setsunique skill sets