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1 Case Summary
U.S. largest consumer cooperative business REI (Recreational Equipment Inc.) owned by its
customers that sells outdoor recreation gears sporting stuffs via internet and almost !" stores in
!# states. $eing cooperative business REI sells quality goods and services at the lowest cost to
its customers though in some cases traditional firms and the way REI operates business are ali%e.
&aving lifetime membership of REI by paying '!" once( members can have annual dividend
chec% that is equal to ") of what they spent at REI in the prior year.(www.rei.com) *o better
serve customers REI wants to build a data warehouse in where all %inds of customer information
will be available. +s warehouse REI chose renowned I$, to wor% with so that REI can be able
to identify and recogni-e all customers. interactions with company such as what they bought
online or outlets even whether they attended in training sessions for equipment and outdoor
activities and many more customers. related information. ,embers getting logged in at REI.s
official website members will be recogni-ed automatically. *o better run mar%eting campaigns
REI already developed I$,.s # viper technology.
1.2.1 Question-1: What is data warehousing and why is REI ui!ding one"
/ata warehousing means repository for an entire organi-ations historical data (not 0ust mar%eting
data) designed specifically to support analysis necessary for decision ma%ing. $roadly( data
warehousing is a special type of database that is used to store large amounts of data such as
analytic( historical or customer data and then build large reports. 1inally data warehousing is a
methodology approach for organi-ing managing enterprise data to provide a trustworthy(
consistent( integrated data foundation for an enterprise data2driven application.
3hy is REI building /ata 3arehouse4
Every business finds the importance of getting the best tool that will equip their business towards
success. /ata warehousing is a important tool for any business. REI building data warehousing
to improve the company and to %now the customer needs and wants and meet those needs and
wants. /ata warehouse is must for running an enterprise of any si-e to ma%e intelligent decision.
It will allow company to get competitive advantage. It increases the effectiveness and efficiency
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of business operations. It provides information to ma%e real time decision ma%ing quic% and
accurate. REI.s data warehouse will allow the company to view current and past data on sales(
products( and customer information. *he data warehouse will allow for the company to get to
%now the customers better and help in seeing which products are selling. /ata warehousing will
allow REI to become closer to the customer and produce goods that meet their needs.
1.2.2 Question-2: What are some o# the disad$antages o# consumer coo%erati$es com%ared
to &traditiona! #irms'"
(ecision-)a*ing S%eed
*raditional firms( which centrali-e power into the hands of a comparatively small number of
hands( can often respond quic%ly to abrupt changes in the mar%et or unforeseen internal
crises.5onsumer cooperatives normally employ democratic decision2ma%ing processes. 3hile
this more egalitarian approach does fit with the member2owner business model( it can prove
inefficient when conditions call for fast responses. *raditional firms also tend to face fewer
conflicts of interest in decision2ma%ing due to the reduced numbers of people involved.
Ine##ecti$e +eadershi%
5onsumer cooperatives can suffer from ineffective leadership that stems from a variety of
sources. Either members or management may lac% sufficient or correct business %nowledge to
assess what the cooperative can realistically accomplish. Elected board members or hired
management may abuse their positions for personal gain or ignore responsibilities in favor of
other opportunities. *raditional firms typically employ boards and hire upper management
specifically for their e6pertise in the business( which limits decisions based on misinformation.
7eaders in traditional firms also tend to focus attention to their responsibilities.
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+imited Strategic ,osition
*hese firms often face implicit or e6plicit discriminatory practices on the parts of ban%s and
suppliers. *his can force the cooperatives to depend on limited member capital to fund e6pansion
efforts( slowing the overall growth process. *hese factors can adversely affect the strategic
position of the cooperative in the mar%etplace. $y contrast( traditional firms tend to face far
fewer hurdles in achieving favorable credit terms from ban%s and suppliers( which ma%es
e6pansion easier and enhances their strategic position in the mar%et.
-a!ent (e#icit
5ooperatives often face a talent deficit. 7i%e any new business( a cooperative may need a strong
entrepreneurial personality to get the ball moving( but the limited material returns may function
as a barrier to entrepreneurially2minded individuals. In cooperatives that employ an egalitarian
voting system to determine rewards may drive off highly talented individuals that believe
superior performance warrants a larger return. *raditional firms( by contrast( often use a range of
financial incentives and intangible per%s to attract high2performing talents at every level.
1.2.. Question-. (escrie some o# the mar*eting strategies that REI's data warehouse wi!!
a!!ow it to use. Wou!d these ha$e een %ossi!e e#ore the data warehouse was ui!t"
/ata warehouse is designed specially to support analysis for decision ma%ing .Recreational
Equipment Inc. (REI) use some mar%eting strategies in order to build its data warehouse.
8rovide life time membership9 REI offers life time membership to its customer to build
data warehouse. 5ustomers have to pay '!" at one time for life time membership.
Refund opportunity9 *o hold the customer with the( company( REI provides refund
opportunity for its customer. *his strategy helps the REI to increase the customer contact
which will lead to provide enough dada to build its data warehouse.
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5redit sales9 REI.s also provide credit sales to its customer in order to build profitable
relationship with the customer which will help the REI to get more information about the
customer.
In order to better understand its active co operative members and customers( REI
launched an initiative to build a data warehouse containing many different type of
information about its customers. 3ith the help of I$,( REI helps its data warehouse
will allow them to identify and organi-e all of the ways that each customer will interact
with the company including what they bought online or retail outlet( whether they
attended special training sessions for equipment and outdone activities or items they
return.
REI also deployed I$,.s/$!# viper technology to run REI.s mar%eting campaign.
REI:s site will recogni-e its members when they log in( allowing them to serve up
content customi-ed towards individual users.
,art 2: Wou!d these ha$e een %ossi!e e#ore the data warehouse was ui!t"
REI.s mar%eting strategies for data ware have been impossible before the data warehouse
was built. $ecause the data warehouse need myriad of data about the customers. So at
first( REI should have data warehouse( often that they can use different mar%eting
strategies to collect huge information about the customer attitude( purchase( use and
identify the active customer which will help them to target specific customer.
1.2./ Question-/: What are some o# the ris*s or concerns surrounding the creation o# a data
warehouse"
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/ata warehouses are becoming increasingly large( increasingly comple6 and increasingly
important to the businesses that implement them. *hey are becoming increasingly large and
comple6 because they are drawing more data from a greater number of more diverse sources
across the enterprise to create larger( richer assemblages of both alphanumeric and financial
information. (In#ogi01 2223) $usiness intelligence systems synched with data warehouses
provide meaningful information that helps organi-ations ma%e better business decisions. *he
creation of data warehouse comes with different ris%s and concerns for any company not 0ust co2
op organi-ations li%e REI. &ere are some most important ris% factors9
(i) 7ac% of strong sponsor or sponsor not at high enough level to get people motivated
(ii) /ata warehouse could become too big to the point that the customer or members
e6pectations cannot be met.
(iii) 7ac% of proper s%ills and e6perience is another concern of creating a data warehouse.
,ost people have to go through at least one failure before they understand how
different a data warehouse is from a transaction processing system or small data mart.
;ou can have wonderful logical models( but turning those into an efficient( integrated(
enterprise2wide physical design is a most difficult tas%.
(i$) <ot understanding what the organi-ation needs from a data warehouse and how the
data warehouse helps achieve the strategic ob0ectives of the organi-ation is another
ma0or concern of creating a data warehouse.
($) 7ac% of a data quality pro0ect as an integral part of the data warehouse
implementation. If users don.t have confidence in the answers they get from the data
warehouse( they won.t use it. (4ates12225)
($i) /ata warehousing systems can require a great deal of =maintenance= which many
organi-ations cannot or will not support
1.2.6 Question-6: Why do you thin* REI chose to wor* with I7)8s data warehouse
techno!ogy"
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*o better understand why REI decided to wor% with I,$s data warehouse technology( first we
need to understand what benefits e6actly I$,s /$! # viper technology provides. /$! # >iper is
I$,?s fastest2growing and most successful data server product in more than two decades. 7ess
than a year after its introduction( /$! # has ushered in a new era in data management by
seamlessly and simultaneously managing both @,7 and relational data( regardless of format(
platform or location. >iper brings huge advancements in the mainframe that allows queries at a
rapid speed and provides consumers access to information without constraints. *his allows a less
need for system administration saving money in the future. I$,s /$!2# system will allow
Recreation Equipment Inc. (REI) to %now its customers better. *he data that is gained from I$,
will help REI service their customer better because they will %now what the specific customer
li%es and disli%es are via the historical intelligence provided by /$!2#. +lso with REI %nowing
what customers li%es and disli%es are they can inform them of sales( recalls and special events in
the customer.s area that are coming up. +fter enough data is gathered on a REI customer the data
base will be able to instantly direct the website to what the customer li%es when he or she logs in.
*his type of technology that I$, provides will help REI gain a competitive advantage against its
competitors. I$,s product will also reduce cost associated with database management due to
features such as9 faster data redistribution( automated tuning capabilities and automated
upgrades. *his product also helps to monitor and manage business intelligence applications.
$usiness intelligence is simply the technology used to help REI ma%e better business decisions.
7astly the /$! comes with a wor%load management function which allows REI to manage
wor%loads based off priority( prevent runaway queries and provide real2time performance
monitoring. 3ith this cutting edge technology REI will be a front runner in the ne6t stage of
customer service evolution.
1.. Recommendations
Recreational Equipment Inc. (REI) is already on top and competitive in the outdoor sports and
fitness industry in US+. *here are still some areas if REI can improve( it will help them to
maintain their strong position for the long term in sports and fitness industry.
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. REI have to provide services and products relevant to their coop members. 1or this they
should have attempts to reach further( loo% deeper( and act faster through trac%ing their
customers.
!. REI needs to recruit more highly qualified professionals who can lead the co2op members
to the right direction as the co2ops are the %ey to success for REI.
A. REI needs to create separate customer profiles from data ware house data based on their
purchase( preference etc so each customer.s e6pectations can be met.
B. REI have to provide necessary education and trainings to its employees regarding the
appropriate use of data warehouse.
C. REI should increase the number of staffs in their online and physical stores to help
customers finding the appropriate products and providing product information.
D. REI needs to reduce price for customers for some of their products who didn.t ta%e their
membership.
1./ Conc!usion
/ata warehousing has the ability to save and utili-e truly massive amounts of data( this is helpful
for REI because they are going to need to process tons and tons of data with their goal of
trac%ing sales both online and retail( returns and even class ta%en by their customer so that they
can better serve them. REI could simply not accomplish these goals without the ability of the
warehouse system to store data from multiple inputs such as sales( mar%eting and training
systems all of which could be a different type of data. It is going to allow REI?s 5R, team to
better manage all of the information from customer buying patterns to how much they spend
with REI.
Re#erences:
www.rei.com
Infogi6.( (!""D)( What You Dont Know Does Hurt You: Five Critical Risk Factors in
Data Warehouse Quality ( 3&I*E 8+8ER.( Infogi6( Inc.(p2!
4ates E. (!""#) What are the maor risk !actors in a "ata warehouse #roect
im#lementation$ published on information2management.com available at
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http9FFwww.information2management.comFnewsFGHAC2.html (accessed on Hth +pril
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