Harrahs - Strategy Re-Alignment

Readings

You should read Zook/Allen Growth Outside the Core.

You should read the case: Harrahs.

Core Idea

The case is largely about re-aligning strategy & operations, via customer focus, a key approach to re-alignment.

Format of Response

Then, you are required to use the following questions to format/organize your response. Please do not write essay style response.

Instead organize your response:

• In a structured manner
• with bullets or numbers
• providing brief points
• which highlight adequately the items you are asked to describe/discuss/reason
• in an easily understandable manner
• Failure to do so would result in losing some marks
• Because this is part of concisely communicating your point in a written format

Questions

1a. Distinguish between the two extreme strategies of casinos in the industry. Make a quick comparison between the two extremes via Porters view of competitive positioning.

We saw MGM and Mirage trying to innovatecreating highly themed environments that

had lots of new experiences for their customers.

1b. In the early 1990s, Harrahs growth is less than ideal and others were criticizing them for not doing like others. Why would they not follow the dominant strategies?

While there was great temptation to go down that path because it was exciting to try to design and build.

1c. Harrahs is a maturing business. Discuss: How can we look at Harrahs growth challenges and opportunities as engaging in re-alignment (what are the pointers within the case, analyze/provide reasoning)?

Harrahs was facing the formidable task of growing the business in a limited market.

2. (i) How can the whole focus of Harrahs case, as described in the case, be reduced to below statement? Why? (why not) (ii) How did Harrahs discover the statement below? (iii) Why did not know about it before? (Hint: 1 of the KEY approaches to re-alignment highlight the focus of the choice!).

36 cents out of their gaming dollar.

3a. There are 3 ways that Zook/Allen advocate to re-focus on customers, what are they?

3b. Harrahs decided to re-target its customers differently from the past. Is this re-focus related/connected to the concepts of Zook/Allen and also lecture notes? How? Why?

3c. Harrahs decided to develop and test programs. Please pick only one of the programs, the one that in terms of LOGIC is closest to one of the 3 approaches advocated by the Zook/Allen and lecture notes? Explain Why? and How?

Harrahs believed it had developed a customer centric approach to direct marketing.

4a. Opportunity-based segmentation is a different way of focusing on the value of a customer to a company and specifically in the entertainment/gambling context. (i) What was the prior way of evaluating the customers value at Harrah? (ii) Why was it used? How?

4b. (i) List what are the 3 newly uncovered opportunities as a result of Opportunity-based segmentation. (ii) What would be different from the past? (iii) Why these could provide greater revenue and profit potential? Use Graphic B as a starting point.

Using this detailed information for every customer, Harrahs predicted potential customer playing

behavior at Harrahs properties.

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Loveman launches initiative to support Harrahs new approach to reviving the company which has 3 components. Below use details of the case to analyze these components and elaborate on them. You must use the order of their appearance in the case.

5a. (i) Summarize 1^st component in 1-3 sentences and its emphasis. (ii) Link this component to one apex in the strategy triangle and (iii) describe its role in the Harrahs new initiative.

5b. (i) How did Harrah work on this component of new initiative to help Harrah achieve its strategy goals. (ii) Why was it important to do this? [Please do not merely repeat the case data, analyze the data.] [New Hint: What would have happened to the new initiative if this component was not in place? You cannot answer, it would not have worked or it would have worked, you must provide detailed/drill-down why reasoning!]

Changing the organizational structure was a major accomplishment in light of the fact that historically, as with all our competitors today, each property was like a fiefdom.

6a. (i) Summarize 2^nd component in 1-3 sentences and its emphasis. (ii) Link this component to one apex in the strategy triangle and (iii) describe its role in the Harrahs new initiative.

6b. (i) How did Harrah work on this component of new initiative to help Harrah achieve its strategy goals. (ii) Why was it important to do this? [Please do not merely repeat the case data, analyze the data.] [New Hint: What would have happened to the new initiative if this component was not in place? You cannot answer, it would not have worked or it would have worked, you must provide detailed/drill-down why reasoning!]

How are you doing tonight, sir? and he said Shitty. It dawned on me that my parents had not taken me through the How are you shitty dialogue.

7a. (i) Summarize 3^rd component in 1-3 sentences and its emphasis. (ii) Link this component to one apex in the strategy triangle and (iii) describe its role in the Harrahs new initiative.

7b. (i) How did Harrah work on this component of new initiative to help Harrah achieve its strategy goals. (ii) Why was it important to do this? [Please do not merely repeat the case data, analyze the data.] [New Hint: What would have happened to the new initiative if this component was not in place? You cannot answer, it would not have worked or it would have worked, you must provide detailed/drill-down why reasoning!]

She (Ms. Maranees) was probably a great customer, but a great customer of Harrahs competitors. It makes sense to invest in converting her to a Harrahs customer. In the past, she would not have shown up on the radar screen.

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8. (i) How did Harrahs go about eliminating same day cash? Why? (ii) How was this different from the industrys dominant approach? (iii) Did it succeed or fail for Harrahs? Why? How? (iv) Relate this to the components of customer focus for re-alignment.

Our industry has it everywhere and they advertise against us. The piece that is critical for us is to get our internal folks to recognize that we need to do things that drive incremental revenues.

9. IMAGINE: You are in the neighboring Flamingo Casino and you have heard of Harrahs success. You hire away one of the propeller heads through a head hunting firms. Highlight how you would be able to copy (or not) the design and implementation of a Harrah-like approach for re-alignment? Why? How?

That is why we are running as fast as we can.

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Q10. Read the text and table which is related to the below quote from the case. (i) What is Harrahs trying to do? (ii) How? (iii) What is the Lesson? Why?

The objective of the New Business Program was to convert first time customers into long time Harrahs customers. Customers who signed up in a given month were sent offers of varying types and values, and were redeemable one month, two months and three months after the first visit. Exhibit 2b provides us the details of the responses to such a program. These data indicate that from a pool of 1,022 customers who signed up in the month of April with a total theoretical value of $31,992 per month, this program was able to get 125 of these customers back in May, 103 customers back in June and 85 back in July.

Q11. Read the text and table which is related to the below quote from the case. (i) What is Harrahs trying to do? (ii) How? (iii) What is the Lesson? Why?

For Loyalty Program Budget Upside (Use Exhibit 2d of case) Exhibit 2d tracks the behavior of 578 customers who had a budget upside potential. These customers were mailed offers redeemable in the months of NovemberApril. Each offer consisted of one coupon per month, and the objective of the program was to capture a larger share of a customers total gambling budget. To assess the impact of this program, we should look at the average theoretical per trip as indicated in the column marked Avg. Trip in Exhibit 2d.