Carnival: Executive Summary

Table of Contents
Introduction 3
Mission Statement 4 Current 4 Proposed 4
Vision Statement 4 Current 5 Proposed 5
External Assessment 5 Opportunities 5 Threats 8 External Factor Matrix 11 Table 1 EFE 12 Competitive Profile Matrix 13 Table 2 CPM 14 Internal Assessment 15 Financial Ratios (historical) 15 Table 3 Ratios 16 Line graphs Figure 1 Liquidity 17
Figure 2 Leverage 17
Figure 3 Activities 17
Figure 4 Profitability 18
Figure 5 Growth 18 Comparison to industry & Competitors 19 Table 4 Industry/Competitor Comparison 20 Strengths 21 Figure 6 Organizational Chart 23 Weaknesses 24 Internal Factor Matrix 25 Table 5 IFE Matrix 26

Case Analysis Part 2
Table of Contents
SWOT 27 Table 6 SWOT Matrix 28 SWOT Strategies 29
Quantitative Strategic Planning Matrix 30 Table 7 QSPM 32
Long Term Objectives 34
Recommended Strategies 34 Table 8 Strategies w/ costs 37
Implementation of Recommended Strategies 37 Table 9 EBS /
EBIT Analysis 38
Projected Financial Statements 39 Table 10 Projected Income Statement 40 Table 11 Projected Balance Sheet 41
Annual Objectives 42
Other Implementation Strategies 44
Strategy Review, Evaluation, and Control 45 Figure7 Employee Survey 48 Table 12 Balanced Scorecard 49
Conclusion 50
References 51 Appendix (hard copy only) 56

Introduction
Carnival Corporation & plc is a multi-national cruise company that formed in 1993, however, carnival cruise line started operations in 1972 (Banton, 2011). Carnival Corporation & plc is made up of ten brands that together operate more than 100 ships. The cruise brands cover North America, Europe, Australia and Asia, and consist of Holland American Line, Princess Cruises, Sea Bourn, AIDA Cruises, Costa Cruises, Cunard, Ibero Cruises, TNO Cruises of Australia and the United Kingdom and carnival cruise line being the largest of the brands (Netadvantage, 2013). The company expects delivery of eight ships between the spring of 2014 and fall of 2016. Carnival is the largest leisure company in the world offering customers multiple destination choices including Alaska, Hawaii, the South-Pacific, Bahamas, Mediterranean and the Caribbean. Royal Caribbean is Carnival’s closest competitor operating five brands with forty-one ships (Netadvantage, 2013). Royal Caribbean currently has six ships under construction which is less than Carnival, but Royal and Norwegian cruises tend to be more innovative with onboard ideas (Banton, 2011). As of November 30, 2013, Carnival Corporation was one of the most successful cruise line organizations in the world. This case analysis provides an overview of Carnival Corporation that outlines the company’s successes, history, biggest competitor in Royal Caribbean cruises, and financial statements to provide insights into the assets and liabilities of the company. In addition, the analysis provides an industry overview with discussions on demographics, entry barriers, environmental issues, and some risks faced by the company. The analysis provides a foundation for developing a three year strategic plan.

Mission Statement
The company’s mission statement should answer the question, “what is our business”? The current statement of Carnival appears vague and is lacking certain components that answer the question of what their business is. For example, the world does not clearly identify the company’s customers. The markets also appear vague though they are mentioned. To “deliver exceptional experiences” is a statement that allows employees, who are not recognized, to understand that exceptional experiences for the customers are a major part of their responsibility.
Current Mission Statement. Our mission is to take the world of vacation and deliver exceptional experiences through many of the world’s cruise brands that cater to a variety of different geographic regions and life-styles, all at an outstanding value unrivalled on land or at sea.
The following proposed mission statement is better able to answer the question of what Carnival’s business is. It will address the customers, geographic regions, products and services, the environment, technology, and the company’s employees.
Proposed. Our mission is to evoke an exciting and fun experience for all age groups of leisure travelers with our caring, respectful, and dignified staff while using a variety of unique brands and seafaring vessels that frequent the most exotic places on Earth. We make a difference by promoting local industries, implementing innovative ideas that preserve the environment, and by adopting the latest technology to promote safety and customer satisfaction.
Vision Statement
Carnival Corporation & plc does not currently have a vision statement. Most brands under Carnival Corporation also lack a vision statement, but most do have mission statements and a list of core values in which to follow. Carnival’s CCL careers web site has a vision statement that motivates their employees to focus on hospitality and guest service.
Current Vision Statement from CCLcareers.com. To consistently deliver fun, memorable vacations at a great value.
Proposed vision statement for Carnival. The Carnival brands will become top of the mind for leisure travelers of every age around the world.
External Assessment
Opportunities
The cruise industry is projected to see growth for the next several years meaning Carnival will need to strengthen its position as the number one cruise company in the world. The U.S. offers an opportunity for growth due to its changing demographics. According to O’Donnell (2013), the U.S. population will see an increase of 4.9 percent through 2017 which will give the cruise industry a larger population to seek passengers. In addition, total employment in the U.S. economy is projected to grow 10.8 percent within the next ten years creating a larger working class for the cruise industry to draw passengers (O’Donnell, 2013). According to the U.S. Census Bureau, the U.S. population is getting older. O’Donnell (2013) believes that the key cruising age of fifty-five and up will grow by thirteen percent or by more than ten million people by 2018 which will drive revenues. In addition to the substantial growth in the U.S. market, the worldwide cruise market is estimated to increase three percent per year for the next several years (cruise marketwatch.com, 2014). The cruise capacity will grow to over 454,000 passengers by mid-2014 as Carnival Corporation and other cruise lines add ships to their inventory. Because prices have remained steady for the past ten years, it is believed that growth will come through the addition of the added ship capacity (cruisemarketwatch.com, 2014). The cruise industry needs to seek areas where market penetration is possible, such as the emerging markets in Russia and Asia. Economic growth in Russia slowed in 2013, but the gross domestic product still advanced 1.3 percent (Tanas & Kuznetsov, 2014). The World Bank believes growth for 2014 will remain positive with a 3.1 percent growth rate expected. This growth will create a larger middle class and create more disposable income which in turn provides the cruise industry with a growing market to seek additional revenues. Economic growth in China has also slowed, however, they still seek a seven to eight percent growth rate through 2014 (CNBC, 2014). This continued growth in China will facilitate more disposable income as well as a larger middle class for cruise lines to draw customers. This provides for increased penetration from the growing Asian consumer base. Shanghai is becoming the home port to ships as lines begin repositioning to attract the growing Chinese and Asian market (CNBC, 2014). Brazil, India, and Japan may provide more opportunities for growth provided the cruise industry can meet their needs. Growth within these markets could potentially create larger demand than the current supply.
As the U.S. population, indeed, much of the world becomes more environmentally conscious Carnival may have gained a competitive advantage through innovation. Carnival has received support from the EPA, Transport Canada, and the U.S. Coast Guard to implement breakthrough technology that will reduce air emission. Carnival will spend $180 million on exhaust gas cleaning technology which is a significant advancement in reducing air emissions. Carnival is set to install this new technology on 32 ships which will exceed emission control area standards. In addition to addressing environmental concerns, this technology will help mitigate rising fuel costs. It allows Carnival an exemption which will provide an opportunity to use the fuel source that makes the most economic and environmental sense (source Carnival Corporation & plc, 2013).
To dispel negative perceptions, Carnival and other cruise lines may promote the cruise industry bill of rights that was recently adopted by CLIA. The bill of rights was adopted to inform passengers of the industry’s commitment to their care and comfort (Torres, 2013). The bill includes provisions for the right to transportation to the scheduled port of disembarkation, the right to an emergency power source and a full refund should a cruise be cancelled. The opportunity exists to adopt and expand on the ten provisions already provided that should ease fears consumers may have of taking a cruise. “It could help non-cruisers who are considering a trip feel more confident in their choice and improve perceptions of reliability" (O’Donnell, 2013). In regards to Carnival, it would help relieve concerns and repair brand image that resulted from recent incidents. Hotels and airlines have all but departed from the brick and mortar travel agents; however, cruise lines have maintained a close relationship. Eliminating the travel agent and booking through branded distribution channels will increase revenues. “By focusing on marketing directly to potential customers cruise lines can vastly increase revenues through their branded distribution channels” (O’Donnell, 2013). By making the direct booking process simpler, cruise lines will not only realize more revenues, but will have an opportunity to build customer relationships by gathering information through the booking process. The use of social media has exploded in recent years to the point many organizations have a dedicated individual to monitor these websites. According to (Lieberman, 2013), Carnival is the most talked about cruise ship brand in social media. This provides an avenue for promotion and sales due to the number of customers that can be reached at a much faster pace. Consumers will also talk about their positive experiences of recent cruises. Fifty-three percent of mentions occur on Facebook (Lieberman, 2013). This includes consumers sharing excitement about an upcoming cruise, sharing opinions about cruise ship safety and advice on which cruise to take (Lieberman, 2013). Despite bad incidents, eighty-five percent of discussions are positive meaning an overwhelming number of passengers are satisfied with their experience (Lieberman, 2013). In addition to promotion and sales, Carnival can use these social media sites to improve areas customers express dissatisfaction. According to the latest statistics from the census bureau (2012), the population in the U.S. is becoming more ethnically diverse. According to Impact of Race and Hispanic Origin, (2013), blacks are becoming very enthusiastic cruising demographics in which to target. This demographic favors Carnival cruise lines and offers real growth potential. In addition, Hispanics are a key growth area due to growth rate and the demographic that was least likely to cruise in the past three years (Impact of Race and Hispanic Origin, 2013). Many Hispanics feel cruising is not a good value while blacks are least likely to spend on a cruise, so the cruise industry will have to incorporate messaging that attracts these demographics (Impact of Race and Hispanic Origin, 2013). Both demographics offer potential for growth over the next three years, and marketing efforts that focus on value for the money should attract these markets.
Threats
While economic growth is showing signs of recovery worldwide, unemployment remains high in many countries (IBISWorld , 2013). Forecast for growth is weak meaning per capita disposable income is expected to increase slowly for many countries, and this represents a threat for the industry (IBISWorld , 2013)). The countries with slow growth are mostly European nations such as Italy, Germany, and France which are countries that tend to take cruises. According to many reports, the world price of fuel is expected to increase in 2014 and beyond. This is critical for the cruising industry since ships use significant amount of fuel in day-to-day operations, and industry revenue is very sensitive to fluctuations in fuel prices ((IBISWorld , 2013)). This is representative of a reduction in revenues that cannot be made up through surcharges to consumers since they will seek vacation alternatives (O’Donnell, 2013). Carnival will gain a large advantage through scrubber technology that will offset rising fuel prices and eliminate surcharges. A destinations carrying capacity represents a threat to the industry as destinations show increasing concern due to overcrowding. Venice, Italy, one of the world’s most popular tourist destinations, is an example of a destination that is placing limits on cruise ship traffic. In 2014, Italy will limit large cruise ship traffic to Venice where those over 96,000 gross tons will be band (Rellandini, 2013). More than 650 cruise ships pass through Venice each year making it necessary to cut smaller cruise ship traffic into Venice lagoon by twenty percent (Saltzman, 2013). Many other destinations could follow the Venice example as growing concerns over sustainability and carrying capacity mount. Publicity can be good or bad, however, it is the negative that has a significant effect on cruise industry revenues which represents a real threat. A recent run of bad publicity for the cruise industry began when Costa Concordia hit a rock causing it to cap size killing thirty-two passengers (Deiner, 2012). Another Costa ship hit a peer in Egypt and killed three cruise members (Deiner, 2012). The Carnival Triumph experience an electrical fire leaving the ship stranded at sea for four days without water, lights, food, and working toilets (Griffin, & Bronstein, 2013). A Royal Caribbean cruise saw five hundred sickened from an outbreak and was forced to end the cruise early (Griffin, & Bronstein, 2013). These incidents raise safety, cleanliness, and reliability concerns throughout the cruise industry and had a negative effect on revenues. Carnival Cruise Lines original 2013 revenue estimate was impacted by 5.8 percent due to these incidents (O’Donnell 2013). The continuation of bad publicity will have an effect through fewer passengers booking cruises and the need to drop prices in an attempt to attract more passengers. O’Donnell (2013) believes competition for the core cruise consumers is going to intensify. O’Donnell (2013) also believes that, “premium and luxury lines that have relied on legacy or strong brand equity to drive repeat business may see their clientele considering the lesser tier ships that have stepped up efforts to court more affluent cruisers with ship within a ship concept.” The luxury brands appeal to a certain clientele, so a trend to lesser price ships will reduce revenue and may see luxury brands operate under capacity. River boat and costal cruising is seeing a rapid growth not only in the U.S., but around the world. Those who are less enthusiastic about ocean cruises may want to try river boat or costal cruises due to technical issues that have left larger cruise ships stranded at sea (O’Donnell, 2013). According to USA Today (2013), American Cruise Lines is adding four new river boats by 2015. This is an illustration of a growing popularity of river boat cruising in the U.S. River cruises are not limited to the U.S. market and other regions are also experiencing rapid growth. River cruises to Asia have exploded in popularity in recent years (River Cruise Advisor, 2014). .
Political unrest in Egypt as well as other areas in the gulf region has an adverse effect on brands that frequent these destinations. Demand to Egypt, Syria, and Bahrain, has dropped or disappeared due to civil unrest which causes the cruise lines to redeploy or find alternative ports. Dubai, who saw 410,000 cruise visitors last year are only expecting 300,000 in 2014 (Sahoo, 2014). The impact on revenues will continue as long as cruise passengers are unable to travel to desired destinations and seek alternative vacation choices. Environmental legislation and regulations could increase operating cost. A low sulfur fuel regulation is just one example of an environmental issue that affects the cruise industry. MARPOL specifies requirements for ECA that set forth strict limitations on sulfur emissions. Reduction of sulfur emission on ECA areas should be .1 percent by 2015 (Carnival Corporation& plc form 10 k, 2013). The global limit will be further reduced to .5 percent by 2020. Costs associated with bringing ships in line with these regulations will affect revenues for next two to three years.
EFE matrix
The EFE matrix (see Table 1 below) indicates that Carnival is not handling opportunities and threats very effectively.
A score of 2.62 shows Carnival is slightly higher than the midpoint indicating mediocrity in its handling of opportunities and threats. The opportunity factors given the higher weights are those that offer the best opportunity for growth such as the emerging Asian market and a more ethnically diverse U.S. market. The lower opportunity weights were given in areas mostly involving the internet. Cruise lines have historically maintained close relationships with travel agents and suggest there are advantages in the relationship. Highest weights given to threats are two factors that are related. Bad publicity within the industry has had a direct effect on revenues, which leads to growth in river boat and costal
cruises. Carnival received only three scores of four, which are related to innovative technology and advertising dollars spent to attract the key cruising age of 55 and up. Lower ratings are also related because Carnival has shown an inability to handle bad publicity causing passengers to choose river boat cruising or alternative vacations. The total score of 2.62 percent clearly shows a need to improve handling of external factors, especially in safety and communication. Table 1 External Factor Matr
Competitive Profile
Carnival does an adequate job when compared to the competition. The closest competitors are Royal Caribbean and NCL. The highest weights for the competitive profile metrics (see Table 2) were given for market share, advertising dollars, and financial position due to the relationship between the three. For example, a strong financial position allows for a larger advertising budget. Growth potential, innovation, and customer loyalty were given high weights due to the importance of attracting new customers and retaining past customers. The other weights with the exception of passenger nights are lower because of the belief that cruise lines can compete with one another in regards to brand image, price competitiveness, and service. The ratings given were based on research that shows a dominant position for Carnival Corporation compared to competitors. Due to Carnival’s scale and scope, they lead in many categories like advertising budget, market share, financial position, and passenger nights. Areas that need improvement include brand image, competitive pricing, and service. Carnival’s stream of bad incidents has damaged its image allowing Royal and NCL to gain ground in market share. However, Carnival’s overall score of 3.25 clearly indicates their dominance over the competition. The other scores follow market share and passenger nights which are due to the number of ships each organization owns. Royal and NCL scored 2.5 and 2.35 respectively which illustrates their position in the industry as second and third behind Carnival.

Critical Success Factors
Weight

Rating
Score
Rating
Score
Rating
Score
Brand Image
0.05

2
0.1
3
0.15
3
0.15
Growth Potential
0.1

4
0.4
3
0.3
2
0.2
Price Competitiveness
0.05

1
0.05
1
0.05
1
0.05
Management
0.05

3
0.15
2
0.1
2
0.1
Service
0.05

2
0.1
3
0.15
2
0.1
Advertising Dollars
0.15

4
0.6
3
0.45
3
0.45
Innovation
0.1

3
0.3
2
0.2
4
0.4
Customer Loyalty
0.1

2
0.2
1
0.1
1
0.1
Market Share
0.15

4
0.6
3
0.45
2
0.3
Financial Position
0.15

4
0.6
3
0.45
3
0.45
Passenger Nights
0.05

3
0.15
2
0.1
1
0.05
Total
1

3.25

2.5

2.35
Table 2 Competitive Profile Matrix

Internal Assessment
Financial Ratios
Table 3 and the accompanying graphs (Figures 1-5) show a five year trend analysis of Carnival Corporation where they appear to have remained mostly consistent over the period between 2009 and 2013. Operating profit margin has declined consistently over this span. This means Carnival is not able to pay its operating expenses as effectively as one year ago. The margin has dropped by more than half since 2009. Sales have fluctuated throughout the same time span. A rebound from the economic downturn of 2009 was realized in both 2010 and 2011. However, due to a stream of incidents, sales dropped 2.6 percent in 2012. Thanks in large part to more onboard and excursion spending an increase in revenue occurred in 2013. The net income percentage has also dropped due to more operating expenses and fewer ticket sales. A cash conversion cycle of 5.19 percent in 2013 is a sharp rise over the previous four years. This is an indication that management is doing a poor job using its assets to generate cash. Overall, Carnival appears to have gotten through the economic downturn and stream of incidents to remain financially stable.

Figure 1 Liquidity Ratios

Figure 2 Leverage Ratios

Figure 3 Activity Ratios

Figure 4 Profitability Ratios

Figure 5 Growth Ratios
Comparison
Table 4 compares Carnival’s financial position to its two closest competitors as well as the industry. In terms of being able to meet short-term obligations, Carnival is better than the competition and the industry with the exception being a current ratio lower than the industry. Carnival is well below its competitors and close to the industry average in terms of leverage. This illustrates Carnival’s strong financial position due to low averages meaning the company is able to meet its financial obligation better than the competition. Carnival’s activity ratios are much higher than the industry average and comparable to competitors. Carnival is a little worse than the industry in utilizing its assets to generate revenue. Carnival is lower than competitors and the industry average in profitability. This illustrates the revenue short-fall experienced due to the stream of incidents that have occurred over the last three years. In terms of growth, Carnival is much lower in recent years than both the industry average and its competitors. This indicates that competitors may be growing at a faster rate, but all are well under the industry average.

Table 4 Industry and Competitor Comparison

Liquidity/Financial Health
Carnival
Royal Caribbean
NCL

Industry Ratios
Current Ratio
0.29

0.11
0.17

1.3
Quick Ratio
0.18

0.22
0.07

0.8

Leverage

LT Debt to Equity
0.33

0.74

0.36(1.68)
Debt/Equity
0.39

0.92
1.09

0.36
Financial Leverage
1.63

0.74
2.55

Times interest earned
4.36

2.51
1.89

0.9

Activity Ratio

Total Asset Turnover
0.39

0.4
0.41

0.7
Receivables Turnover
29.27

29.42

5.7
Inventory Turnover
27.81

35.66
39.75

19.8
Accounts Payable Turnover
26.02

21.99

15.03
Fixed Assets Turnover
0.48

0.48

0.45

Profitability Ratios

Operating Margin %
8.7

10.0
15.4

5.96
ROE %
4.45

5.53
4.4

10.28%
ROI %
4.04

4.74

EBITDA Margin %
19.2

19.43
18.38

Gross Margin %
31.3

33.3
35.5

47.36
ROA %
2.72

2.37

5.99% (2.92)
Price-Earnings ratio
27.87

23.5

28.33%

Growth Ratios

Sales
0.48

0.96
0.88

7.36
EPS %
1.39

2.16
0.49

8.7
Net Income %
-16.95

0.04

Dividend Payout Ratio
59.9

Source: mergentonline.com, morningstar.com, Dun & Bradstreet, & Troy

Strengths Leveraging allows Carnival cost advantages which translate into lower break even pricing. “Carnival’s positioning as the largest cruise operator allows it to leverage items like port commissions, marketing, general overhead cost, maintenance efficiencies across the industry’s largest fleet ships” (Katz, 2013). This advantage allows Carnival to pass the savings to its customers through lower ticket pricing. Carnival possesses a dominant market share within the industry. Carnival has more than twice the ships as its closest competitor’s which allows them to compete in every market and segment around the world (Levin, Jones, & Slade, 2012). This translates into Carnival earning 41.8 percent of the cruising revenues and carrying 47.7 percent of passengers (cruisemarketwatch.com, 2014)). This scale and scope makes it easy for Carnival to expand into growing markets. Carnival has a large advertising budget that allows for targeting desired markets, and for market penetration opportunities like the emerging Asian market. While the advertising budget was steady through 2011-2012 at 527 million, the advertising budget increased to 588 million in 2013 with an increase to over 600 million expected in 2014 (Carnival Corporation & plc 2013 Annual Report, 2013). This allows Carnival direct mail, television advertisement, or any other form of advertisement to any market they choose to pursue. More than 40 percent of Carnival’s fuel needs are hedged through fiscal year 2016 (netadvantage.com, 2014). This allows for consistency in fuel costs and fluctuations and allows Carnival to maintain lower ticket prices for customers.
Dependency risks are mitigated by having a significant presence in diverse geographies (Carnival Corporation & plc SWOT Analysis. 2013). Should one market struggle for any reason, Carnival is able to sustain profit due to its operations in North America, Europe, the South-Pacific, or Asian markets. Carnival is also benefitted by having diverse brands that cater to different life-styles and budgets (datamonitor, 2011). The brands are able to target luxury, contemporary, and premium markets. According to the Carnival Corporation’s annual 10k report (2013), they have opened ten new sales offices in Asia to service this emerging market and support expansion to the region. Management is able to seize such opportunities due to many years’ experience within the industry. The chairman has more than thirty years’ experience. Morningstar believes the recent separation of the chairman and CEO roles will promote independence among brands. Four out of the eleven board members are current or former executives of Carnival, which allows them the ability to recognize challenges and opportunities better than other cruise lines (Katz, 2013). (Figure 6)
Figure 6 Organizational structure
CARNIVAL CORPORATION & PLC
Organizational Structure

Micky Arison
Chairman of the Board

Arnold W. Donald
President and Chief Executive Officer

Alan B. Buckelew
Chief Operations Officer

David Bernstein
Chief Financial Officer

Arnaldo Perez
General Counsel and Secretary

Larry Freedman
Chief Accounting Officer and Controller

BRAND EXECUTIVES

AIDA CRUISES
Michael Ungerer
President

CARNIVAL CRUISE LINES
Gerald R. Cahill
President and Chief Executive Officer
CARNIVAL AUSTRALIA
Ann Sherry AO
Chief Executive Officer

CARNIVAL UK
David K. Dingle
Chief Executive Officer

COSTA CROCIERE S.p.A
Michael Thamm
Chief Executive Officer
HOLLAND AMERICA GROUP
Stein Kruse
Chief Executive Officer
PRINCESS CRUISES
Jan Swartz
President

SEABOURN
Rick Meadows
Presidend

Weaknesses
Due to recent incidents, Carnival was forced to lower prices due to fewer passengers booking cruises. Carnival’s operating income fail 19.5 percent while revenue fail .1 percent in 2013 (Soshkin, 2014). According to Carnival’s SEC filings for 2013, 358 million was lost in cruise ticket pricing while another 42 million was due to a decrease in occupancy. Carnival’s safety record is worse than that of other cruise lines in the industry. This has an adverse effect on profits, which was 5.8 percent compared to the projected estimates for 2013 (Levin et al., 2012). Carnival is also giving grounds to Royal Caribbean in market share due to their poor safety record. Levin et al. (2012) believes that Carnival has un-coordinated business operations and need to reduce the number of ships on order to effectively raise ticket prices. “A slower rate of ship building in the industry better matches supply with demand, and supports cruise pricing over the next few years” (Katz, 2013). According to Levin et al. (2012), restricting capacity by the leader does not allow each new order to drive down prices and lower revenue. Recent accidents have damaged Carnival’s brand image. The company’s response and preparedness shows communication inadequacies within the company. Carnival was subject to rumors during the Concordia incident which it failed to address in an appropriate manner (Booton, 2012). Carnival Corporation wishes for its brands to operate independently, however, incidents such as Concordia and the Triumph are delicate matters that require experienced handling to help preserve image. As of November 2013, Carnival Corporation had more than eight billion in long-term debt (Carnival Corporation & plc 2013 Annual Report, 2013). Should any event lead to default under their debt agreement, almost all of the out-standing debt could become payable and lead to possible cancellation of all derivative and debt contracts (Carnival Corporation & plc 2013 Annual Report, 2013). Carnival’s operating cost increased 2.9 percent which are attributed to higher insurance premiums, new market development cost, ship repair and maintenance, and capacity increases (Carnival Corporation& plc form 10 k, 2013). Even with a small increase in revenues, Carnival’s “times interest earned” has dropped three percent three consecutive years.
IFE matrix
Table 5 represents an internal factor evaluation matrix for Carnival Corporation. The higher weights are based on factors that directly provide or detract revenue. Carnival has a large advertising budget that allows the company to target many markets while at the same time having a poor safety record. Carnival’s operating expenses are increasing which affects revenues. Onboard spending is increasing having a positive effect on revenues and deserves a higher rating. Leveraging, new sales offices in Asia, and experienced management received lower ratings due to effectiveness of measurements for these factors. For example, the new sales offices have not proven to be effective in generating revenue. Ship building receive a low rating because some see it as the biggest opportunity for growth, while others believe it lowers ticket prices decreasing revenue. The ratings for this matrix were based on research and ratios that show Carnival a little above average in regards to strengths and weaknesses. Large presence in diverse geographies, market share, and a large advertising budget are areas that Carnival does really well. Their other strengths are minor and show room for improvement. The weaknesses are being dealt with effectively such as its uncoordinated business practices that saw a separation of duties between the CEO and chairman. Areas that need improvement are brand image and Carnival’s safety record which can support each other. Carnival received an overall score of 2.59 indicating they are just above average in handling internal factors and have much room for improvement.

Case Analysis Part II Part two of this case analysis begins with a SWOT analysis (Table 6) of Carnival Corporation’s strengths, weaknesses, opportunities, and threats. The goal is to develop various strategies that will preserve the organization’s success. Strengths are matched with opportunities, weaknesses are matched with opportunities, strengths are matched with threats, and weaknesses are matched with threats. The goal is to minimize threats, overcome weaknesses, and take advantage of strengths and opportunities. The results of matching each of the four quadrants are discussed below.
Table 6 - SWOT Matrix

Strengths and Opportunity Strategies The strengths and opportunities mostly rely on market penetration strategies. The US demographic of fifty and over is growing, allowing Carnival an opportunity to expand its efforts in attracting this key demographic. Other emerging markets include China, Russia, and a growing population of Hispanics and Blacks. The Black and Hispanic market that have the income to travel prefer promotions and coupons, so the cheaper and shorter option of a river cruise will attract this market. A major strength for Carnival is the large advertising budget that will see funds redirected from sluggish economic areas in addition to an additional $70 million designated for the China market and $50 million designated for the Hispanic markets to optimize this opportunity. Implementing scrubber technology on all ship will provide many benefits that include cost savings on ECA requirements, protection of the environment by lowering sulfur emissions, and may provide significant savings in fuel costs.
Weaknesses and Opportunity Strategies Increasing operating cost can be offset by developing methods to increase online bookings, thus saving Carnival travel agent fees. Recent negative publicity contributing to a negative brand image could be reversed by promoting the cruise industry’s newly adapted bill of rights. This would increase confidence in the brand and promote Carnival’s commitment to the safety and security of its passengers. In addition to the benefits mentioned, the scrubber technology could also improve brand image by attracting environmentally conscious cruisers who may be considering a different brand.
Strengths and Threat Strategies Increases in fuel prices are expected to continue. By increasing its hedging percentage by 15 percent by the end of 2016, Carnival can negate these rising fuel prices, thus saving money. Asia is a growing market that will require additional ports of call in order to attract this rapidly expanding market. New sales offices in Asia and Russia will further help attract these markets. The new offices provide a needed resource for those who wish to learn more about potential cruises and provide face-to-face interaction to help close the sell.
Weakness and Threat Strategy With the rapid growth in river and costal cruise market, it would be advantages to gain foothold in the market. This would help negate weaknesses such as the potential effect on revenues by the continuation of ship building. Ships on order should be built on a smaller scale for the river boat and costal cruise market; saving money and increasing revenue through market development.
Quantitative Strategic Planning Matrix The two strategies that are most viable for the continued success of Carnival Corporation are to open new sales offices in Russia and Asia, or enter the river boat and coastal cruise market. The growth rate in Russia and China make them prime for market penetration. Entering the riverboat and costal cruise market would allow Carnival a foothold in this rapidly expanding segment of the cruise industry. Strategies not chosen lean more toward the US market, whereas these two alternatives may be achievable on a more global scale. For instance, the US demographics may choose to take a river cruise in China, the Middle East, or the US which creates more choices for all areas and greater revenue through diversification. The attractiveness scores as shown in Table 7 yield a total attractiveness score of 2.84 for the opening of new sales offices in Russia and China. The attractiveness scores yielded a total attractiveness score of 3.30 for entering the river and costal cruise market making this the most attracting alternative. This indicates that Carnival should enter this market by building ships specific for river cruising, and purchase an existing company with market share in this area.

Open new sales offices in Russia and China
Acquire Avalon River Cruises
Table 7 QSPM
Opportunities
1. Key cruising age of fifty-five and up increasing thirteen percent by 2018.
2. The worldwide cruise industry is expected to increase three percent for the next several years.
3. Total employment in the U.S. economy is expected to grow 10.8 percent over the next ten years.
4. Economic growth in Russia is expected at 3% the next few years creating a larger middle class and more disposable income
5. China is looking for seven to eight percent growth in 2014 and beyond
6. Implementations of breakthrough air emissions technology that will in effect mitigate rising fuel prices, attract the environmentally conscious, and provide a cost savings for ECA requirements.
7. The opportunity to promote and expand on the cruise industries recently adopted bill of rights.
8. Increase online bookings through branded websites to eliminate travel agent fees and increase revenue.
9. Continue to improve the use of social media sites such as twitter and Facebook to offer promotions which in turn will increase.
10. The U.S. is becoming more ethnically diverse so the cruise industry can target Hispanics and blacks.
Threats
1. Unemployment remains high in many countries with a weak forecast for growth meaning per capita disposable income is expected to increase slowly.
2. Ships use a significant amount of fuel, and fuel prices are expected to increase in 2014 and beyond.
3. Venice Italy’s choice to band big ships and limit the number of smaller ships that can enter their harbor with the potential for other destinations to follow.
4. Bad publicity represents a threat due to concerns and fears for consumers who might consider a cruise.
5. Luxury brands may lose business to lesser tier ships who wish to attract more affluent passengers.
6. The rapid growth in river boat cruising in the U.S. and around the world. Perceived as a safer choice as well as more economical for certain markets.
7. Political unrest in areas such as Egypt and other parts of the Middle East having an adverse effect on revenues for brands that frequent these destinations.
8. Environmental regulations for meeting sulfur emissions requirements, which require a cost to implement and vary with fuel prices.

TOTAL

Strengths
1. Ability to leverage items like port commissions, marketing, general overhead, etc.
2. Market share that is twice that of closest competitor.
3. Large advertising budget that will go over 600 million.
4. Forty percent of fuel needs hedged through fiscal year 2016.
5. Large presence in diverse geographies mitigates dependency risk.
6. Ten new sales offices in Asia that cater to this emerging market.
7. Onboard and excursion spending is increasing which is increasing revenues.
8. Experienced management enables them to recognize challenges and opportunities.

Weaknesses
1. Operating income fail 19.5 percent while revenue fail point one percent in 2013.
2. Safety record that is worse than other cruise lines in the industry.
3. Uncoordinated business practices that promote confusion between brands.
4. Ship building and deliveries are affecting revenue.
5. Damaged brand image caused by accidents and ineffective communications.
6. More than eight billion in long-term debt.
7. Carnival’s operating cost increased 2.9 percent and is attributed to capacity increases, ship repair maintenance and higher insurance premium.
8. Times interest earned has dropped three consecutive years. TOTAL
Weight

.07
.03
.03

.1
.1
.12

.02

.04
.02
.08

.06

.06

.02

.09
.02
.08

.03

.03
1.00

.03
.07
.13
.04
.07

.04
.1

.06

.06
.11
.05
.03
.05
.08
.06

.02
1.00
AS

1
2
1

4
4
--

--

1

--
1

3

--

--
--
--

2

--
--

--
3

3

1
3
4
2

--

3
--
--
1
--
--
--
--
TAS

.07
.06
.03
.4
.4

.04

.08

.18

.16

.21

.39

.04
.21
.16
.2

.18

.03

2.84
AS

3
3
2
1
1
--

--

2
--
3

4
--
--
--

--

4
--
--

--
4

4

2
4
3
3
--

4
--
--

4

--
--
--
--
TAS

.21
.09
.06

.1
.1

.08

.24

.24

.24

.28

.52

.08
.28
.12
.3

.
.24

.12

3.30

Long-term Objectives
1. Obtain 15 percent of revenues in markets currently not served or served ineffectively by November 30, 2016.
2. Develop a riverboat and costal cruise market in order to obtain a minimum 15 percent market share by November 30, 2016.
3. Achieve a 20 percent growth in revenues by November 30, 2016.
4. Strengthen reputation for safety and customer service over that of competitors.
5. Reduce sulfur emissions on all ships to standards of .05% to put Carnival Corporation ahead of those set by MARPOL of .05% by the end of 2016.
Recommended Strategies The selected strategies will strengthen Carnival Corporation globally and broaden brand recognition (see complete list with costs in Table 8). In addition, these strategies are vital in achieving long-term objectives. As a result of the QSPM, entering the river boat and costal cruise market is an attractive strategy that may be accomplished by acquiring Avalon Waterway Cruises. Developing this market to gain a 15 percent market share within three years can be achieved partly through the acquisition of Avalon Waterways. Avalon has 18 ships currently operating in Europe, Asia, South-America, and the United States (Avalon.com, 2014). This acquisition would give Carnival immediate market share and a strong foothold within this market. In addition, converting a portion of new ship orders to this market would also increase market share. Each of these strategies would also contribute to other long-term objectives. They would contribute to 15 percent of revenues being generated in markets not currently served, as well as contribute to the annual objective of 6-8 percent growth in revenues each of the next three years. Indirectly it would benefit the objective of building a stronger reputation for Carnival as the perception among many is that river boat cruises are safer and provide more personal service. The cost of acquiring Avalon Waterway is estimated at $1 billion dollars. This is dependent on the type of acquisition that occurs such as a direct buy, merger, or takeover. Building new ships for the new riverboat cruise market is estimated at $250 million dollars per ship with delivery of four ships within the next three years. This would also contribute to a savings in construction cost due to the river vessels being cheaper to produce. Advertising will be vital in attracting new markets in both Russia and China. The goal is to increase advertising dollars to these areas by reducing the amount being spent in slow economic recovering areas, such as Europe. The advertising budget will increase the next three years to reach almost $700 million dollars. China, and to a lesser extent, Russia, has a growing middle class that wants to travel. Effectively attracting these markets will help Carnival obtain its long-term objectives. Increased revenues from these markets will directly contribute to the 15 percent revenue growth in markets not currently being served effectively. It will contribute to the development of river boat market and the desired 15 percent market share. It will contribute to an improved reputation through increase brand awareness. The cost is estimated at $100 million dollars. The cost is in addition to the subtraction of redirected funds from slow economic recovering areas. The idea is to heavily target these underserved areas without neglecting any market. In addition to more advertising in Russia and China, opening new sales offices will be vital in attracting these markets. The cost is estimated at $930,000 and includes rent and labor for the new locations. It will be important for the new sells offices to offer specific packages for these markets. Increasing online bookings to branded websites will reduce travel agent fees resulting in increased revenue. This increase would help achieve the 20 percent increase in revenue by 2017. Online bookings will increase brand awareness and at the same time create an opportunity for Carnival to promote safety and excellent service. The cost is estimated at 500,000 dollars and includes the printing and/or publishing of websites on all Carnival and related brand brochures and other advertising materials. The US market is no less important to the success of Carnival than other markets. Therefore, it is vital that the organization effectively target and attract the growing Hispanic and Black communities within the US. These are growing, willing to travel, markets that can contribute to increased onboard spending and overall revenue growth. These markets are especially susceptible to online promotions and specials. These markets will contribute to the long-term objectives such as a 20 percent growth in revenues by the end of 2016. In addition, these markets will contribute to the development of river boat cruising due to their willingness to travel on shorter vacations than those normally found on ocean going vessels. The cost is estimated at $50 million. The cost includes testing the most effective ways to reach these markets. It also includes the cost of discounts and other promotions needed to attract these markets. MARPOL will require that all ships reach sulfur emissions standards of .1 percent by the end of 2016. Carnival’s new scrubber technology will exceed these standards and should be installed on all ships by the end of 2016. This will result in substantial savings on the installation of technology that is required to reduce sulfur emissions had Carnival not developed this new technology. In addition, it will save on fuel cost because they are not able to use cheaper and more efficient fuel sources. The scrubber technology can build Carnival’s reputation due to a growing perception that they have concern for the environment. All this adds up to a contribution in reaching long-term objectives through cost savings, better image, and a major reduction in sulfur emission. The cost will be $400 million to install scrubber technology on the remaining 72 ships by 2016.
TABLE 8 Recommended Strategies with Estimated Costs
#
Strategy
Type of Strategy
Estimated Cost ($)
1
Increase advertising dollars in Chinese and other Asian markets
Market penetration
70,000,000
2
Construct ships for the river cruise market
Market development
1,500,000,000
3
Acquire Avalon Waterways
Market development
1,000,000,000
4
Increase online bookings and promotions through branded websites
Product development
500,000
5
Increase advertising dollars in the Russian market
Market penetration
3,000,000
6
Target the growing Hispanic and Black markets in the US
Market penetration
50,000,000
7
Open new sales offices in Russia
Market penetration
330,000
8
Open new sales Offices in China and other Asian countries such as Japan and India
Market penetration
600,000
9
Install scrubber technology on all ships by end of year 2016
Product development
400,000,000
Total for 3 years
3,024,430,000

Implementation of Recommended Strategies An Earnings Per Share / Earnings Before Interest and Taxes analysis was conducted to determine whether debt, stock, or a combination of the two is the best alternative for raising capital to implement strategies. The purpose is to determine which of these financing options has the greater impact on earnings per share. The results are shown in Table 9 with a split between debt and stock considered to be the best option.
TABLE 9
EPS / EBIT Analysis
Amount of capital needed $3 Billion
EBIT range $1 to 2 Billion
Interest Rate 3 percent
Tax rate 31 percent
Stock price $38.06
Shares outstanding 1,960

COMMON
STOCK
DEBT
50 / 50 SPLIT

LOW

HIGH

LOW

HIGH

LOW

HIGH

EBIT

1,000,000,000

2,000,000,000

1,000,000,000

2,000,000,000

1,000,000,000

2,000,000,000

INTEREST
Based on 3%

0

0

90,000,000

90,000,000

45,000,000

45,000,000

EBT

1,000,000,000

2,000,000,000

910,000,000

1,910,000,000

985,000,000

1,955,000,000

TAXES
Based at 31 %

310,000,000

620,000,000

282,100,000

592,100,000

305,350,000

606,050,000

EAT

690,000,000

1,380,000,000

627,900,000

1,317,900,000

679,650,000

1,348,950,000

# SHARES

2,038,822,911

2,038,822,911

1,960,000,000

1,960,000,000

1,999,411,456

1,999,411,456

EPS

.338

.677

.32

.672

.34

.675
The best financing option will be a split of 50 % stock and 50% debt, though the all stock option shows an EPS that is almost as high as the split option. The split option is preferred due to the ease the loan portion can be obtained by Carnival. The 100% debt option is the least attractive as is shown by the lower EPS.

Projected Financial Statements The following are projected financial statements for Carnival Corporation through year ending November 30, 2016. These statements include the income statement (Table 10) and balance sheet (Table 11) and are based on the previous list of recommendations and the costs associated with those recommendations. The revenue is a reflection of a slight increase in the tour segment. The majority of the 20 percent revenue increase will come from ticket sales of both the current market and to a lesser extent, at least in the first year, the entrance into the riverboat market. In addition, a slight increase year over year will be realized in growth of onboard spending. Percentages illustrated in the income expense section are based on advertising increases, the opening of new sales offices, intensive ongoing training in safety and customer service, and payroll additions due to the new riverboat market. Other expenses, such as fuel costs and certain commissions, are volatile requiring a projected higher year over year increase. Fuel cost will be dependent on savings that can be realized through the new scrubber technology. The balance sheet projects a large influx of cash by November 30, 2016 which may be used to pay long term debt or for a stock buyback. This results partly from the increase in revenues in each sector including the new riverboat market. The receivables are expected to see a 2 percent growth year over year. Other assets are projected to grow at 4 percent year over year. The 6 percent growth in equipment is mostly a result of the acquisition of Avalon Waterways, and new ship deliveries for the established market as well as the new riverboat market. The increase in additional paid in capital is from the 50 / 50 debt / stock split means of acquiring funds that resulted from the EBS / EBIT analysis.

a. Revenue is reflective of a 7% increase for the year 2014 and 6% for the following years of 2015/16 to reflect 20% increase by Nov 30, 2016.
b. Revenue is figured to include ticket sales for sea going vessels (3% each year) and entrance into the riverboat market (1% 2014, 3% 2015, 4% 2016).
c. Onboard spending is shown as a 1% increase from sea faring vessels and .5 from the new riverboat market consistent for each of the three years.
d. Expenses are shown as a percentage of the previous year with the largest being fuel (uncertainty of the cost savings on fuel from scrubber technology) and payroll (increase in payroll consists of salary for new position of brand president for riverboat market as well as new staff for same market.
e. Expenses include rent and staff for new sales offices in emerging markets.

a. Cash is contingent on the acquisition of Avalon Waterways, but represents approx. 490 million per year for the next three years. Merger would mean that the access cash could be used to reduce long term debt or for a stock buyback.
b. Receivables are shown at an increase of 2% per year for three years.
c. Increase in property and equipment is due to the delivery of new ships for the riverboat market as well as one seafaring vessel per year rather than two.
d. Other assets will increase at 2% per year.
e. Long term debt will increase an average of $500 million per year as a result of implementation of strategies. Note that LTD could be reduced with access capital.
f. Additional paid in capital is the insurance of stock at 38.06 X 13,137,152 shares per year for approx. $499 million or a 6% increase year over year.
Annual Objectives
1. LTO 1 Obtain 15 percent of revenues in markets currently not served or served ineffectively by November 30, 2016.
Annual objectives:
1. Five percent increase in revenue from China, Russia, and ethnically diverse market in the US by November, 2014.
2. Five percent increase in revenue from China, Russia, and ethnically diverse market in the US by November, 2015.
3. Five percent increase in revenue from China, Russia, and ethnically diverse market in the US by November, 2016.
4. Receive 1-2 percent increase in revenue from developing river boat cruise market by November, 2014.
5. Receive 2 -3 percent increase in revenue from developing river boat cruise market by November, 2015.
6. Receive 2 -3 percent increase in revenue from developing river boat cruise market by November, 2016.
2. LTO 2 Develop a riverboat and costal cruise market in order to obtain a minimum 15 percent market share by November 30, 2016.
Annual objectives:
1. Purchase riverboat cruise company by November 30, 2014.
2. Purchase or merge with second riverboat cruise company by November, 2016
3. Increase total revenue by one percent with developing river boat cruise market by November, 2014.
4. Increase total revenue by one percent with developing river boat cruise market by November, 2015.
5. Increase total revenue by one percent with developing river boat cruise market by November, 2016.
6. Release one new ship in this market by November 30, 2014.
7. Release two new ships in this market by November 30, 2015.
8. Release two new ships in this market by November 30, 2016.
3. LTO 3 Achieve a 20 percent growth in revenues by November 30, 2016.
Annual Objectives:
1. Increase ticket sales 3 percent from non-river boat cruises by November 30, 2014.
2. Increase ticket sales 4 percent from non-river boat cruises by November 30, 2015.
3. Increase ticket sales 4 percent from non-river boat cruises by November 30, 2016.
4. Increase revenue from onboard spending by 1 percent by November, 2014.
5. Increase revenue from onboard spending by 1 percent by November, 2015.
6. Increase revenue from onboard spending by 2 percent by November, 2016.
7. Achieve 7 percent more bookings through branded websites by November 30, 2014.
8. Achieve 7 percent more bookings through branded websites by November 30, 2015.
9. Achieve 7 percent more bookings through branded websites by November 30, 2016.
4. LTO 4 Build a stronger reputation for safety and customer service than that of competitors.
Annual Objectives:
1. Increase safety and customer service training expenditures for employees by 1-2 percent by November 30, 2014.
2. Increase safety and customer service training expenditures for employees by another 1-2 percent by November 30, 2015.
3. Increase safety and customer service training expenditures for employees by 1-2 percent by November 30, 2016.
4. Utilize and expand the cruise industry bill of rights by November 30, 2014.
5. Make the bill of rights standard information on all websites and printed materials by November 30, 2015.
6. Implement strategies to monitor the effectiveness of the bill of rights in promoting safety and customer perceptions by November 30, 2016.
5. LTO 5 Reduce sulfur emissions on all ships to standards of .05% to put Carnival Corporation ahead of those set by MARPOL of .1% by the end of 2016.
Annual Objectives:
1. Install scrubber technology and 36 of 72 ships by June, 2015
2. Install scrubber technology on remaining 36 ships by August, 2016.
Other Implementation Procedures to Achieve Annual Objectives
1. Increase advertising dollars by approximately 18 million per year to attract each market listed.
2. Reduce dollars spent in the European market until such time economic growth is prevalent.
3. Open seven new sales offices in Russia, and ten in China and Asia to attract these markets.
4. Initiate a cash offer to purchase Avalon Waterway in order to gain solid ground in the river boat market. The contingency plan for the successful acquisition of the Avalon includes merger and as a last resort, Carnival can initiate a takeover.
5. Develop a new Carnival river boat cruise website to generate online bookings and negate travel agency fees. Create a brand president position for the new Carnival river boat market.
6. Build a minimum of two new ships per year for this market.
7. Increase onboard spending by offering various amenities not currently being offered and reduce promotions.
8. Promote Carnival’s newly expanded bill of rights through brand websites and printed materials.
9. Install scrubber technology on Avalon ships once acquisition is complete. Make scrubber technology standard on all new ships and focus on improvements.
Strategy Review, Evaluation, and Control Strategy review is important in order to understand if the implemented strategies are effective. While the effectiveness of particular strategies may be hard to evaluate, the discovery of significant flaws is vital so that the organization remains profitable. There are three basic activities involved in the evaluation of strategies: compare the expected results to the actual results, take immediate corrective actions to make sure strategies conform to plans, and examine the underlying basis of a particular strategy (David, 2013). The evaluation measures for Carnival to pay particular attention too are sales and productivity increases, profitability, and earnings per share. Carnival has gained a competitive advantage with its scrubber technology, but needs to continually monitor this and other advantages to stay ahead of the competition. One way Carnival can evaluate its strategies is too conduct an IFE and EFE on a periodic basis to see if these factors remain the same. If not it may be necessary to implement new strategies or position resources to other areas. Another method to evaluate strategies is through customer surveys that evaluate employees (Figure 7) or other aspects of the cruise experience. Attitudes of employees have a direct effect on revenues making evaluations of employee performance, as well as management, a necessary requirement. The survey will allow Carnival to evaluate long term objectives that involve improved safety perceptions and customer satisfaction with their overall cruise experience. The challenge will be to get a consistent number of respondents which can be accomplished through room comment cards or through e-mails. Carnival will also use the balanced scorecard (Table 13) to evaluate strategies. It is important to implement a bottom up approach to the balanced scorecard to increase effectiveness. The more input front line employees have, the more likely they are to respond to changes and assist in implementing strategies. The example given in Table 13 would be greatly improved should front line employees have input. This tool allows for the measurement of any type objective such as social responsibility, customers, and financial. The balanced scorecard lists the objectives, a measurement, a time frame, and who is primarily responsible for evaluating and offering corrective advice. Strategies that are deemed ineffective should be dealt with in a decisive and immediate manner. This may mean the revision of an objective or altering strategies. The last aspect is to have contingency plans should a particular strategy fail to meet its objectives. A contingency plan for Carnival is to seek another riverboat acquisition should the Avalon purchase prove unsuccessful. A second contingency plan for these strategies would be to utilize resources in India or Brazil that have been designated for the Russian market. That is if the sanctions imposed by the U.S. have an adverse effect on the economic stability in Russia. All strategies should have some form of contingency plan.
Figure 7 Employee Survey

Table 12 Balanced Scorecard
Area of Objectives
Measure or Target
Time Expectation
Primary Responsibility
Customers
1. Exceed customer expectations
2. Create positive safety perception

3. Increase market share

Customer service / training costs

Growth in riverboat market

Ongoing 3mo - within 3 yrs.

Ongoing 3mo –within 3 yrs.

Continuous

Front line employees

President of riverboat segment
Management / Employees
1. Assessments for continuous improvement

Reviews / Customer survey 1 yr.

All employees / managers
Community / Social Responsibility
1. Install scrubber technology

2. R & D to improve / create new environmental technology

Speed of installation

Effectiveness of current technology / time of new products

2 yrs.

Ongoing

Management

R & D manager and department
Financial
1. Increase revenue

2. Reduce long term debt

3. Maximize cost savings

% mo. After mo. Growth

35 %

Per year savings w/ employee input

1 mo. – 3 yrs.

Within 3 yrs.

1mo – 3 yrs.

All employees

Management

All employees
Conclusion
Carnival is a strong organization that will need to take advantage of each opportunity in order to maintain their current leader position in the cruise market. Carnival is above average in handling both internal and external factors. Carnival can still benefit from some improvement with regards to each factor that has been identified with a focus on emerging markets. In addition, the coastal cruise market will increase revenue and allow Carnival to attract a wider range of customers. An improved safety record with the recommended strategies will see Carnival maintain its leader position.

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