Harrahs 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 This success appears to stem from Harrahs investment in info technology Key competitors have focused their investment in facilities
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Problem Statement
Satre must decide whether Harrahs can continue to grow profits by investing in information technology and analysis
Their competitors have heavily invested in facilities, leaving Harrahs behind in this regard The threat of copycat marketing looms, possibly limiting the return on future investments in business intelligence
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SWOT Analysis
Strengths
100% growth in prior-year profits (p.1, 2) Customer loyalty initiatives
IDd 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)
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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)

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

SWOT Analysis
Opportunities
Continued investment in business intelligence to create SCAs 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
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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

Alternatives
1. 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)

Alternatives
2. 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 SCAs based on business intelligence, via their unique skill sets

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

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Alternatives
3. 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)

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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

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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 SCAs based on business intelligence, via their unique skill sets
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