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Harrah’s Investment in Information Technology and Analysis for Growth

This case analysis explores whether Harrah's can continue to grow profits by investing in information technology and analysis, despite competitors focusing on facility investments and the threat of copycat marketing. It examines the strengths, weaknesses, opportunities, and threats faced by Harrah's and presents three alternatives for consideration.

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Harrah’s Investment in Information Technology and Analysis for Growth

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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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