1. What is a data warehouse and why is REI building one? A data warehouse can be described as a “database that stores current and historical data of potential interest to decision makers throughout a company. The data originate in many core operational transaction systems, such as systems for sales, customer accounts, and manufacturing, and may include data from Web site transactions. 1” REI is building a data warehouse to improve the company and to meet the needs of the customers.
REI’s data warehouse will allow the company to view current and past data on sales, products, and customer information.
The data warehouse will allow for the company to get to know the customers better and help in seeing which products are selling. The data warehouse will allow REI to become closer to the consumer and tailor goods to the needs of the consumer.
2. What are some of the disadvantages of consumer cooperatives compared to ‘traditional firms’? Consumer cooperatives have some disadvantages in comparison to traditional firms.
Consumer cooperatives require a high level of organization. Because the consumers are helping to make many decisions there are more legal responsibilities for the company. The company must listen to the consumers and also provide rules that the consumer cooperative must follow as a whole. While it is great for the consumers to be so involved, traditional firms have less of a hassle and don’t need to take so many extra steps when making decisions.
3. Describe some of the marketing strategies that REI’s data warehouse will allow them to use.
Would these have been possible before the data warehouse was built? REI’s data warehouse will allow them to create more marketing strategies, specifically on their online shopping Website. With the use of the data warehouse, REI’s website will be able to recognize customers when they log on to the Website. By doing this, REI can tailor products or information to the customer each time they log on. If REI knows, “for example, that the member lives in Seattle and likes to hike, then REI can make recommendations about trails in the area.
And they can suggest local environmental stewardship activities such as an REI-hosted trail maintenance project on National Trails Day. 2” Understanding customers in this way would probably not be possible without the data warehouse. The data warehouse is able to store all of this information about a customer and then allow REI to make the recommendations. The data warehouse is a vital part of this customer relationship that REI is trying to create.
4. What are some of the risks or concerns surrounding the creation of a data warehouse?
There are definitely some risks and concerns surrounding the creation of a data warehouse. One risk would be security. Creating a data warehouse with customer information or credit card information needs to be protected. Any type of computer holding this data could be hacked into, so measures need to be taken to protect the data on various levels. Also, creating a data warehouse poses risk for employees simply having resistance. The employees who use the data will need to understand how the data is stored and how to use it properly.
REI has probably used a method that the employees are trained on and are comfortable with. Employees will need to be willing to learn about the new data warehouse and how to properly use the data to create success.
5. Why do you think REI chose to work with IBM’s data warehouse technology? I think IBM is a well-known company that has experience and is willing to try new things. IBM worked very closely with REI to master the creation of a unique data warehouse that fits the needs and wants of REI’s vision.
Some companies wouldn’t take the time to do that, but IBM was dedicated at helping REI achieve its goal. I think REI ultimately chose IBM because they knew it was the kind of company that truly cared and would deliver an excellent solution.
1. Laudon, J. P. & Laudon, K. C. (2010). Essentials of Management Information Systems. Page 170.
2. REI. Retrieved March 22, 2011 from the World Wide Web: http://www-01. ibm. com/software/info/ Television/html/F759128C6694J62. html