Internal Audit For Harrah's

Internal Audit For Harrah's

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HARRAH’S ENTERTAINMENT

BUSINESS CONCEPT

As part of their goal to be the first choice for casino entertainment, Harrah’s continues to spur its growth through the development of new properties, expansion and acquisitions, not only in the United States but also in other parts of the world. Currently, it manages the largest number of casino entertainment facilities in the US, which are not only limited to land-based casinos, but also include riverboat casinos, dockside casinos and gambling facilities on Indian reservations. They also own similar gambling facilities such as slots, thoroughbread racetracks and greyhound racing. All of these establishments are operated under either one of their popular brands: Harrah’s, Caesars and Horseshoe .
Its presence abroad can be primarily found in one of London Clubs International’s many gambling houses in the United Kingdom and its sponsorship of the World Series of Poker tournament. Harrah’s is also in the process of developing a casino and hotel establishment in Spain and the Bahamas, and has recently acquired a golf course in Macau , which further cements the company’s presence in the international gaming scene.
But at the root of Harrah’s Entertainment ‘s sound opereations lie in its focus on building loyalty and value for all of its stakeholders, especially its customers. The company’s promise of great service and excellent products is something they strive for in all of their gaming facilities, which they are able to achieve by similarly building loyalty in their employees, maintaining good long-term relationships with their business partners and suppliers, and involving themselves in the continuous development of the communities in which their various facilities are located in .

ORGANIZATIONAL STRUCTURE/DIVISIONS

Harrah’s numerous properties in the country are considered to be its own operating segment, and thus each establishment is given leeway to make its own decisions and manage its own operations. These properties are grouped into divisions according to their geographical location, which makes it easier for Harrah’s top management to monitor their performance and make adequate responses to the different factors that affect a particular division, seeing that most external factors that greatly affect a casino’s operation usually depends on the location of said facility. For example, there are different laws and regulations regarding gambling for each state, and each location also caters to a particular class or segment of its target market.

MANAGEMENT

The company takes great effort in nurturing and developing all of its employees in its quest for delivering superior customer service to its patrons.

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Harrah’s actively searches for people who have the skill and potential to work with the company towards achieving its goals. Once part of the company, employees are given opportunities to progress their respective careers through continuous training and develpment, and a mentoring program that aims to empower each employee in their line of work.
Harrah’s compensation program is likewise designed to justly reward the effort and contribution that is being put forward by its employees at all levels. As such, their reward strategy is aligned with their business objectives and is meant to evoke a culture of teamwork and performance. Moreover, the company allows the presence of union and labor groups within their organization, and for the 40% of their 87,000 employees who are members of these groups are covered by collective bargaining agreements . From here be seen how Harrah’s considers its employees as an integral part of its operations, and is one of the key factors in achieving their goal of setting the standard of excellent service in their industry.

Code of Ethics and Commitment

To maintain the integrity of the organization, Harrah’s also adopted a Code of Business Conduct and Ethics set by their Board for to be adhered to by their top management. Initially meant to qualify as a requirement by the SEC, Harrah’s has gone a step further and designed their code to not only prevent questionable business activities but also to promote ethical conduct in all levels of their business and full compliance with government laws and regulations .
In addition to the Code of Business Conduct and Ethics, Harrah’s also maintains a Code of Commitment that publicly states the company’s ongoing commitment to promote its customers, employees and the various communities that it belongs to. An essential part of this commitment is Harrah’s continued promotion of diversity throughout its company. They ensure that each establishment in a particular area is able to provide employment and business opportunities for the locals, and in turn by encouraging development in the community, local stakeholders are able to find benefit in maintaining long-term relationships with the organization .

MARKETING

Apart from property development and acquisitions, Harrah’s strong marketing efforts have been driving the company’s performance in the industry to the top. More specifically, their focus on distribution, customer service and market research has paved the way for increasing their market share and setting standards in the US gaming industry.

Distribution

Harrah’s main consideration for their distribution system is referred to as “cross-market play”. Simply put, their casino and gambling facilities are strategically located in key destinations in order to engage their customers in more game play as they travel along different locations throughout the country. This expansion strategy is even more important since the gaming market is slowly but surely moving away from Las Vegas and finding itself in other locations such as Tunica, Biloxi and the so-called “Chicagoland” (collective term used for the area of Illinois, Missouri and Iowa) .

Total Rewards Program

Harrah’s Total Rewards Program was the first of its kind in the gaming industry, and is perhaps the most successful to date. In conjunction with the distribution system being implemented, the program is aimed at capturing their patron’s gaming budget and generating increased same-store revenue .
In the program, customers are provided their own personal cards for their use that is admissible to all Harrah’s gaming establishment. They earn Reward Credits for every game play and redeem corresponding prices or incentives depending on the total amount of points that they have garnered. Customers are classified as either Gold, Platinum, Diamond or Seven Star members, where the members of the higher tier are offered preferential services and offers. That is not to say that non-members of the program are not given the same treatment. However the added perks and bonuses of obtaining more Reward Credits prove to be an incentive for most of their customers to continue to patronize Harrah’s casinos and establishments throughout the US.

Research

Instead of just being a tool for maintaining and rewarding customer loyalty, the Total Rewards Program aids Harrah’s in conducting necessary market research on the behavior and preferences of their customers. Customer data is primarily collected via the Total Rewards Card which records guest activities from the moment they enter the establishment until their exit. Details such as the time of play, the frequency of each game played, the location of the establishment frequented in, the length of the stay and other relevant aspects of gaming play are then stored in a database . The proper management of this data aids the company in enhancing their current customer service and loyalty programs and improving site operations.
Harrah’s outsources various information technology functions to outside experts such as SAS and IBM, and as a result they are able to capitalize on valuable information based on the Total Rewards Cards. The insights gained from these information is then used to generate more specific marketing promotions. For example, Harrah’s can now identify customers who haven’t visited in a long time and offer a better incentive scheme to bring them back to their favorite Harrah’s establishment. It can also base its new games and similar investment decisions depending on the current gaming and entertainment preference of their customers. At present, Harrah’s has already identified at least 80 different customer segments are ths able to target each marketing campaign accordingly .
The system also allows Harrah’s to track the performance of their current projects and receive immediate feedback on the effectiveness of their marketing efforts. In effect this makes the entire organization more responsive to the changing patterns in consumer behavior in their industry.

Customer Service

Essentially, what management wants to do is to enhance customer experience in their casinos, and the information gathered from use of the Total Rewards Program also aids in the over-all customer service of the company. For example, if it is found out that customers who enjoy playing a certain type of game also tends to play another one just as frequently, the establishment can opt to move the locations of the games closer to each other.
In addition to utilizing the benefits derived from the program to customer service, Harrah’s has also made significant investments in automating operations within the company’s contact centers, thus greatly simplifying the interaction between customer service agents and patrons . AS a result, their customer service agents are now more equipped in providing customers with more comprehensive and timely information regarding the availability of properties and services.


HARRAH’S
ENTERTAINMENT
Strengths Weight Rating Score
Has numerous establishments within and outside the US 0.10 4 0.4
Total Rewards System 0.11 4 0.44
Customer-oriented service 0.10 3 0.3
Employee development (thru training, mentoring) 0.09 3 0.27
Engages in market research 0.09 4 0.36
Long-term relationships with local suppliers/partners 0.07 3 0.21
Weaknesses
Relatively weak control for geographically dispersed sites 0.08 2 0.16
Employees union causes management issues 0.07 2 0.14
Little to no product/service diversification compared to others 0.10 1 0.10
Cost control 0.10 1 0.10
Relies heavily on outsourcing impt functions (IT, research) 0.09 1 0.09
Total 1 2.57

references
Harrah’s Entertainment Inc 10-K form [on-line]; available from http://www.sec.gov/Archives/edgar/data/858339/000119312508043934/d10k.htm; Internet; accessed 13 Aug
About Us- Harrah’s Corporate Profile. [on-line]; availablefrom http://www.harrahs.com/harrahs-corporate/diversity-building-communities.html; Internet; accessed 13 Aug 2009.
Customer Perspective: An object Lesson in Customer Service [on-line]; available from http://www.cognos.com/newsletter/business/st_070530_04.html; Internet; accessed 13 Aug 2009
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