Pandora Case Reflection

Re: How to fix our “leaky faucet”?

Good Afternoon All,

            This email is in regards to an issue we have been facing lately that has become our main roadblock to success. Last week we had our consultants come in to help us examine our options on a way to fix this issue. Fortunately we have been growing at a tremendous pace and this is good. Unfortunately, these “free” users have no concern whether their app is left on or not. They do not take into consideration that webcasters such as us have to pay royalties every time a song is played or skipped through. I was very pleased with the option presented to us and to be honest, could not sleep much trying to convince myself to pick one. I think this should be a collective decision based on what each one of us think.

            At first glance, I was very inclined to go with a hybrid approach to this. I thought to myself, option 1 is most likely a surefire way to increase revenue to help cover our costs. We could offer local advertising that would be available based off a users data entered at the time of sign-up. The downfall I saw to this situation which was mentioned by Ed was that we would slowly push away customers because too much intrusive advertising would push away users. This is where I got the idea of this hybrid model. We push for advertising to increase revenue but at the same time we incorporate the “freemium” model. In order for customers to avoid the annoying commercials, they could pay a premium and become a super-user. I was sold that this was the best method until I did some brainstorming and thought maybe we should take a different approach to this.

            Let’s think about this from a different angle. Majority of users that listen to Pandora are most likely listening to the music from their iPhone or iDevice which allows it to play. It is safe to say that the rapid growth of apple users can also be credited to some of the rapid growth of Pandora users. That’s when it dawned on me that maybe the best idea is to have Apple and Pandora work in tandem with one another. It would have potential where Pandora users would have the option to buy a song from the iTunes store. Apple users would be inclined to register to Pandora and Pandora users would be inclined to purchase a song from the iTunes store if they liked it. This would be a win-win situation because advertising from both sides would increase revenues allowing both sides to prosper. Please feel free to add to any of my arguements to help strengthen this side or if you feel differently, we are all ears.

-Alexander Slavtchev

Harrah's Case Reflection

Re: How to leverage business analytics/intelligence programs?

Good afternoon All,

            I would like to review what we went over last week during our consultation meeting with Aces consulting. They did a good analysis on our operations and IT infrastructure while showing us how our decisions thus far have helped us become one of the leading casino competitors in the industry. This email is, more or less, geared towards our interpretation of their suggestions on how we should leverage our future business analytics decisions and intelligence programs. As mentioned earlier, we have had great success but are on the fence about moving forward with further expansion. I want to give my opinion and then I am looking forward to reading the responses from the rest of you.

            Aces consulting have suggested that we move forward with option #2 which involves us continuing the path of aggressive IT investment & Business analytics. I, for one, disagree with this decision and am more inclined to continue what we were doing and maintain alternative #1 which is remain at status quo. Since our inception of our new business strategy in 1997 we have reaped enormous returns like a 72% increase in the number of returning players to one of our properties and a 62% IRR based on our IT investments. Our strategy is to get to know our players and tend to their needs. We have exhausted most valuable, non invasive, IT systems to do this. Our numbers show this so I think that dumping millions of dollars into further expanding this would not yield a positive NPV for the investment. Alternative #1 is the best option because I do however feel that we could and should concentrate on Customer Service as an area that could bring back more customers. We already have the information to bring customers in, our next step is to continue to focus on ensuring a pleasurable gaming experience while they are here. According to destinationcrm.com, if a customer had an enjoyable time at Harrah’s, gambling spending would increase by 24 percent. If they did not, it would decline by 10 percent. With this in mind, we should consider our focus on Customer Service as our option to grow. I look forward to hearing all of your opinions.

- Alexander Slavtchev

IT Investment Exercise

1.    Strategic Assessment

a.     Competitors – Excel Emailed

b.     SWOT – Excel emailed

c.      5 Forces  - Excel emailed

d.     Montclair Computer is a small local company. It seems as if though they only offer a limited amount of products.  Product differentiation would be a great generic strategy because it would offer potential revenue growth in addition to attracting a broader market segment and demographics.

2.    Strategy Analysis of Options

a.     It could be argues that either of the proposed options overpowers the other in terms of significance to company well-being and growth.  It is clear that Internet sales paired with the product diversification strategy, success for this company can provide a potential booming growth. The second option that includes postponing the website and implementing an ERP. This option is surely a great one and would provide large value in the business model that a company the size of MC needs at their current state.

b.     Benefits and drawbacks

                                               i.     Online Store

1.     Benefits

a.      Broader market segment

b.     Increased sales

c.      Possible strategy to diversify products to increase product listing

2.     Drawbacks

a.     Difficult to gain recognition against competitors

b.     Entry into large player market is difficult

c.      Must improve their departments before moving forward to have full and accurate information to run smoothly.

                                              ii.     ERP

1.     Benefits

a.     Finance, manufacturing, and customer relationship mgmt will help CM gain a competitive edge over competition.

2.     Drawbacks

a.     2 year minimum implementation

b.     High cost investment

c.      Based on the above analysis I would recommend for MC to first create a website based off the estimated time frame. It would only take several months to create and implement in addition to being a very cheap investment relative to that of the ERP. Once the Website is up and running, they could work on tweaking the options as they begin the ERP implementation process.

d.     My overall recommendation remains the same as before. I think the best way to reap the cost benefits is by first implementing a web site. The investment analysis further upholds my previous decision. We could see that the ROI and NPV are greater for project 1.  Once the website is running, the ERP project will come next in line to help expand this wonderful company.

3.     Schedule Analysis

a.     See below Charts

b.     The critical path I ran was in the 2 year time frame.

c.      E2 was not in the critical path of the project so it is OK to delay some time without delaying the project as a whole.

d.     E1 is in the critical path so it was not OK to delay this project more then a few days without compromising the expected time frame.

4.     Investment Analysis

a.     See spreadsheet

b.     See spreadsheet

Harrah's Case Prep

Problems/Issue Statement

What is the problem?

 Knowing what your employees want, identifying top performers, gathering data for the benefit of the Casino and customer that benefits both, etc. will ensure highest productivity and in turn allow success. How Harrah’s should leverage their business analytics and intelligence programs to further increase customer retention, especially of high rollers is more of a concept they could look into to further expand their revenues and profits rather then a problem.

Situation Assessment

What are the decision criteria?

In order for the ideas to be considered, we must consider what areas have they not touched on that could be helpful? Harrah’s Total Rewards program is very unique because they rank #1 as far as profits as a percentage of revenues are concerned. It works very well for them but I think there could be more added. They currently combine advanced technology with innovative marketing to gather all the information. There are still some methods of that could be applied to perfect the system which I am not sure that they use.

 

Recommendation

What is a quality recommendation?

As a loyal and avid Harrah’s customer, I do witness many of what was mentioned in the article. However, I think there are some metrics that would be gathered to further enhance the likeliness of someone returning. In gambling, people believe in luck and following the same things could bring the same success back. Maybe they could extend their analytical approach to people decisions. If a customer’s could be recommended play at their favorite table, or maybe favorite dealer, it would entice them to come back more often. This would be data that could easily be queried as the dealer is punched in at the table. I have had several dealers with whom I have a very nice rapport with. I often go look for them when looking to play a table game and if I can’t find them, sometimes am discouraged to play at all. Another suggestion since the first is impractical at times is to ensure the employees are always nice to customers. There are many instances where a dealer is coming off shift in the following 15-20 minutes and they constantly look at their watch or rush through the cards with no respect for the customers. The analytics of staff, in a way, matter most because happier employees create better-satisfied guests.  

Pandora Case Prep

Problem/Issue Statement

•   What is the problem?

   Pandora was facing an issue that was mainly due to the method of bringing in revenue and reducing costs. Pandora had virtually no marketing budget allocated so they relied solely on word of mouth. This method saved them millions of dollars but at the same time, the explosive growth costs them a lot. The users, who listened to Pandora the most, were costing them the most. The main problem essentially was a “leaky faucet”. Pandora had to pay royalties on a per song basis, so since I can listen to Pandora for free and have no care for it, I would not pay much attention if I left the program running and playing songs. The non-stop carefree streaming was costing Pandora a lot of money, which would not allow the company to go into the green.

Situation Assessment

•   What are the decision criteria?

The decision criteria achieve a sustainable business model that would cover the high royalty fee costs and limit the users negligence during play which is the reason for the high royalty fees incurred.  

List of Plausible Alternative Courses of Action

•   What are the alternative courses of action?

Although Pandora would love to have the perfect business model, it was not likely to happen. They came up several directions:

1.    Add more advertising. By using information obtained from the registration process, they could provide target marketing as well as local marketing.

2.   A “freemium” model that would provide a limited service to all users that would be free. They would, however, give the option to pay and have a premium-priced membership for “super-users”. This option was voted the most popular business model among web-based startups.

3.   A subscription model that would spread the costs among the millions of users. This would make the costs very small. Pandora was thinking somewhere along the lines of $3

4.   The final option was the most logical way and has the highest chance of success. In a sense it would be like a virtual tip jar. The amount of hours available to stream would be set at 40 hours. Once you reach that threshold, they would ask you to pay 99 cents to continue on. Music listeners usually pay 99 cents for ONE download. The 40 hours of music provides you with basically 600 songs.

Evaluation of Alternatives

•   How does the evaluation relate to the decision criteria developed?

All the alternatives provide a way to increase revenue. The main concern it for Pandora to start making money without pushing their customers away. Previous attempts at charging left them in the dark.

Recommendation

•   What is a quality recommendation?

A quality recommendation would be to attempt to increase revenue from marketing. This would not upset the listeners and everything would remain virtually the same. However, this way is not guaranteed to produce different result eventually.

·       What is a logical recommendation?

The logical and personal recommendation would be to go with the “tip jar” option. Users have shown to really like the app and I know that when they think about it, 99 cents will surely seem like a fair tradeoff for 40 hours or 600 songs of music that they normally would have to pay a lot more for.

Bombardier Case Reflection

Dear fellow colleagues,

            As we all know our first attempt to institute an ERP system in 2000 was a failure. Strategic and Structural factors were the leading cause of our downfall. Our main concern was to attack our problems related with technology that included process delays, lack of integration, multiple bills of material, sequential activities. The ERP integration the first time around did not incorporate the new business focuses we took on after ERP was employed. The ERP system was not fully relevant to those needs and unaligned with those objectives we were concerned with. This project ended up costing us nearly $130 Million. Our friends over at Prestige IT Solutions have come to show us what we did wrong in the first roll out and provided us with some future suggestions to help with our successful second rollout. I urge you to consider some of the suggestions and take the necessary measures to implement any changes to your department accordingly.

            They say 3^rd times a charm but in our case, it’s more like the 2^nd times a charm. I guess we should all see our mistakes as a lesson and learn from them. That is why I felt it was a good idea to hire consultants to further dissect our implementation and give their opinion. The main reason we were successful the second time around was the amount of effort and initiative that was given from all levels of the ladder. We made sure that the strategy we had was in line with what the corporate direction was. Involvement from all functions and departments was crucial and we took the training sessions more seriously. Thanks to our successful implementation we are now leaders in market share for turboprop manufacturing and rank the highest in profitability with an approximate 6-8% EBIT margin.

Two things I would like to consider for our follow-up meeting is the areas of improvement mentioned by P.I.S:

-         Knowledge transfer among team members

-         Expand scope of future projects.

In maximizing full use of any technology, its benefit is only as good as the performance, or knowledge, of the user. I like the suggestion from PIS for us to consider cross training sessions or mentoring. We could have quarterly or semi-annually meetings with appropriate departments to exchange knowledge between us to help improve performance and also save time by eliminating the need to track down certain information which could waste time. This is something we need to really look into because I feel this improvement can lead to even greater future success. Yes, we might have to close the office for a half-day or a full day every few months to get the training done. Or we might need to write a check to an off-site venue where we will send employees for additional training. But the benefits are numerous. We can save thousands a year because we won't use temp agencies for example.  Most importantly, it boosts a team-orientated environment.The other suggestion works off of our failure the first time around. We need to concentrate on having large blue-prints that will incorporate many aspects of the business functions in order to limit any possible gaps that would allow failure.

MS Project: Dialogue

Alex: I really think it’s time we start thinking into acquiring software that would help with the management of projects deadlines. What do you think, John?

John: Alex, I tried several times to talk with the Boss but he just does not see the value.  I would love to be able to see how long we planned for the WaterCycle Project this year and how much time we currently are into it. He is just very set in his old ways. Last time I came him to him with a suggestion he came at me with the following:

         Boss: John, we need to be able to handle large projects. I don’t want my PM’s juggling multiple files to handle one project. In addition, Microsoft is keen on becoming progressively advanced and requiring a high level of expertise on the software to use it. I don’t want to have to spend weeks training my guys how to use this. We charge clients on average $150/hr. If I have you guys out training for a couple weeks that’s over $10,000 in revenue lost.

Alex: It seems like there are only a couple things bothering him. Let me see if I can change his mind. 

Alex: Boss, I think we should take another look at implementing MS project into our workflow to help with project management. Although you see some cons with this software, please consider, every action has pro’s and con’s. The main thing to consider is if the pro’s outweigh the con’s and in this case I think it is very clear they do. Several of the benefits will enhance productivity dramatically.  This tool helps keep everything organized from beginning to end.  MS project allows us to gain visibility. This visibility will be streamlined through the centralized web based project updates. This eliminates the wonder of who starts which phase next or what is left or who is in charge. Another wonderful fact is that we eliminate double work. See, there are many benefits to having a controlled and unified project management software. In the long run we will see a return on investment due to a reduction in project variances that result from over-billing from lack of control. Customers are constantly complaining that we overrun the budget and our analysis shows that this is mainly due to poor planning and control. This is really crucial to the growth of our business. Last year we had 16 projects running consecutively and 4 of them ran 10% over budget. Needless to say they were not pleased. 

Boss: Alex, you do bring up some valuable information and I did think that maybe we could try to fix this just by manually trying to do a better job overlooking our control. I guess the best way to do this is by moving to the next step and maybe requesting a demo and getting the ball rolling. Set up a phone conference with a representative and we'll go from there. 

Alex: John, what did I tell you. You just have to present the facts and they listen. You cant avoid the truth.