Customer Relationship Management and Support Related Cost

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Harrah’s Entertainment

Case Questions

1. Discuss briefly the factors that drove Harrah’s customer relationship strategy. 2. Discuss briefly the integration between Harrah's patron database and the marketing workbench. 3. Discuss briefly whether Harrah’s business and IT strategies were aligned, and what factors contributed to or detracted from achieving alignment. 4. Does Harrah's have a sustainable competitive advantage? Can other companies duplicate what Harrah's has done? 5. What are the lessons you learn from the experiences at Harrah’s that can benefit other companies embarking on a customer relationship management initiative?

In Old costing system , material realted overhead cost was divided into 3 categories 1)Material related
2)Production related
3)Support related
The support related cost were allocated based on sum of direct material , direct labor costs , material overhead and production overhead. Compared to old costing system, in PROKASTA 2 additional cost pools (Order processing and special components related cost) to allocated support related costs. This strategy was in line with management belief that support cost was more driven by number of orders of motors and number of special components required to process the order instead of machine hours and labor hours required to process the order

With PROKASTA , the cost of base motor and cost of custom component using old costing system but support related cost pool (pre-PROKASTA) unit cost . Then PROKASTA cost elements were then added. It allowed the firm to relate cost and product mix strategy With new costing system , firm was able to determine proper cost of each order and the profitability of the order it received. Based on the PROKASTA the manager were able to identify which orders were profitable and which were not . It also allowed to determine price at which motors were transferred from EMW toto the sales Division

3.Do you agree with Siemens’s decision to set up both...
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