Customer Relationship Management: Harrahs Business Strategy

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Introduction Within the past 20 years, Harrah’s has developed from a small gambling company to the second largest in the industry. The article is base on the study of Harrah’s Case, and tries to track the relationship between the management of database and customer relationship. Firstly, the author will use Porter’s five forces model to analyse the opportunities and threats that Harrah’s face from the external environment and what business strategy does Harrah’s use. Secondly, the article will focus on the effect of the CRM system on the business strategy and profitability. Thirdly, author will try to indentify the function of this system and draw a conclusion on this CRM system, including its advantages and disadvantages, what kind of problem can this system solve. External Environment of Harrah’s The case of Harrah’s began in mid-1990s, when many casinos emerged at the same time and the competitions became more and more fierce. In what follows, the Porter’s five forces model will be used to analyse the external environment of the gambling industry and determine what is the existing opportunities and threat. 1. New entrants: The casino industry faces rising threat of new entrants. The capital requirements for opening a casino are very large. For example, large investment is needed to obtain certain licenses, build up a casino and buy the specialized facilities. All the following factors, however, are favourable for the new entrants. First, the new federal and state law has changed in US since 1990s, which permits gambling on riverboats and Indian reservations. Second, the product differentiation of the casino industry is not obvious. The essential facilities for a casino like table games and slot machines are easy to replicated. Many small casinos can easily enter this market. Third, the switching cost for customers is little. It costs nothing to change the

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