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  • 10 Carnival brands

Carnival Carnival Presentation Transcript

  • STRATEGIC PLAN 2013-2015 Undergraduate Student Project Entire Presentation should be prescriptive in nature. Never read anything, not even the mission statement.
  • PRESENTATION OUTLINE I. Company Overview II. Mission/Vision Statement III. Internal Assessment IV. External Assessment V. Strategy Formulation VI. Strategy Implementation VII. Conclusion
  • COMPANY OVERVIEW • HEADQUARTERS: Miami, Florida, and London, England • CRUISE BRANDS: Carnival Cruise Lines (24 ships) Princess Cruises (17 ships) Holland America Line (15 ships) Costa (14 ships) P&O Cruises (7 ships) Cunard (3 ships) Seabourn (6 ships) AIDA (10 ships) P&O Cruises Australia (4 ships) Iberocruceros (3 ships) • TOTAL NUMBER OF SHIPS: 102 • EMPLOYEES WORLDWIDE: Approximately 90,000 • STOCK EXCHANGE: NYSE and LSE (symbol: CCL) • 2012 REVENUES: $15.4 billion • 2012 NET INCOME: $1.5 billion • CRUISING AREAS: Alaska - Bahamas - Baltic – Bermuda- CaribbeanHawaii - Mediterranean – New England - North Cape – Panama Canal -South America - South Pacific and other worldwide destinations
  • VISION STATEMENT Carnival Corporation & PLC: No current vision statement Proposed Vision Statement: Carnival’s vision is to provide the world with the finest and safest vacation experience for our employees and guests.
  • MISSION STATEMENT Our mission is to take the world on vacation and deliver exceptional experiences that appeal to a large variety of consumers, all at an outstanding value. We believe our multi-brand strategy is essential to achieving our mission and maintaining our leadership positions. Our ten unique brands with worldwide sourcing of guests and diverse itinerary options allow us to expand our offerings to our past guests, while continuing to grow our business through the acquisition of new guests in established and emerging markets. Our success also depends on, among other things, our ability to exceed the expectations of our guests by providing them with a wide variety of exceptional vacation experiences. We strive to capture a greater share of consumers’ spending on vacations by providing extraordinary cruise products and services, all at an outstanding value.
  • PROPOSED MISSION STATEMENT Our mission is to provide our valued customers with the ultimate vacation experience through a variety of fabulous food and entertainment (1,2, and 7). We provide state of the art cruise ships all over the world while enhancing technology upgrades (3&4). We follow all maritime regulations to ensure the safety of our employees and passengers while at sea (5&9). We strive to provide affordable vacations for all demographics, while maximizing our shareholder’s profits (8). Our highest priority remains to perform in an ethical manner while serving our guests (6).
  • ROYAL CARIBBEAN : MISSION/VISION Vision Statement: Our vision is to empower and enable our employees to deliver the best vacation experience for our guests, thereby generating superior returns for our shareholders and enhancing the well-being of our communities. Mission Statement: We always provide service with a friendly greeting and a smile. We anticipate the needs of our customers. We make all efforts to exceed our customers’ expectations. We take ownership of any problem that is brought to our attention. We engage in conduct that enhances our corporate reputation and employee morale. We are committed to act in the highest ethical manner and respect the rights and dignity of others. We are loyal to Royal Caribbean and Celebrity and strive for continuous improvement in everything we do.
  • WEBSITE ANALYSIS
  • WEBSITE ANALYSIS
  • Social Media
  • Social Media
  • Internal Assessments
  • RATIO ANALYSIS Carnival Corporation & PLC Royal Caribbean Current Ratio 0.2 0.2 Quick Ratio 0.2 0.2 Long Term Debt to Equity 0.3 0.8 Inventory Turnover 39.4 52.7 Total Assets Turnover 0.4 0.4 Accounts Receivable Turnover 21.1 27.4 Average Collection Period 17.3 13.3 Gross Profit Margin 0.9 0.9 Net Profit Margin 0.1 0 0 0 0.1 0 Return on Total Assets (ROA) Return on Equity (ROE)
  • CURRENT ORGANIZATIONAL CHART Chairman of the Board/ CEO Vice Chairman of the Board/COO CFO Director Director Director Director Director Director Director Director CAO Director Director Director Director
  • RECOMMENDED ORGANIZATIONAL CHART Board of Directors CEO CIO HRM President of the North American Market President of Carnival President of Princess CFO COO President of the Australian Market President of Holland President of Seabourn President of P&O Australia CAO CMO CSO President of the Spain and Brazil Market President of the European Market President of Costa President of P&O President of Cunard President of AIDA President of Ibero
  • MARKET POSITIONING MAP High Price Royal Caribbean Good Customer Service Bad Customer Service Carnival Corporation & PLC Low Price
  • COMPANY WORTH ANALYSIS Carnival Corporation and PLC Stockholders' Equity Net Income x 5 (Share Price/EPS) x Net Income Number of Shares Outstanding x Share Price Method Average $19,414 $6,490 $24,117 $28,942 $19,741 Royal Caribbean Stockholders' Equity Net Income x 5 (Share Price/EPS) x Net Income Number of Shares Outstanding x Share Price Method Average $7,876 $92 $1,999 $8,157 $4,531
  • INTERNAL STRENGTHS 1. Carnival Corporation and PLC is the largest cruise company in the world, having 48.4% of worldwide market share in passengers. 2. Passenger Capacity has increased over the last 4 years at an average rate of 3.59%. 3. Fuel consumption has been reduced 21% since 2007, with a projection to reduce fuel consumption by another 5% per unit. 4. The Holland America line has the highest rate of repeat customers in the cruise industry. 5. Seabourn Yachts have a service ratio of one staff member to one guest. 6. P&O Cruises is the leading Australian cruise line, with 300,000 passengers annually. P&O Cruises (Australia) carried almost half of all Australia and New Zealand cruise passengers in 2012. 7. In 2012, our North America brand represented 61% of our total passenger capacity. 8. Carnival Corp & PLC owns 40% interest in Grand Bahamas Shipyard, LTG, which is the largest cruise ship dry- dock repair facility in the world. 9. Carnival Cruise Line operates from 19 homeports in North America, which is more than our competitors. Carnival Cruise Lines and PLC serves 8.5 million guests a year and has 10 distinct cruise lines under 10. ownership.
  • INTERNAL WEAKNESSES 1. The net income was $1,298 in FY2012, a decrease of 6% as compared to 2011 2. Revenues declined $410 million in 2012 3. Protecting the health, safety, and security of our guests, employees and all others working on behalf of the company since Costa Concordia tragedy. 4. Carnival Corporation &PLC accounts for 30% of disapperances of guests at sea since 2000. 5. Communicating with passengers and employees, if in crisis mode while sailing. (Costa Concordia tragedy) 6. During 2012, $28 million was spent for ship incident- related expenses that were not covered by insurance. 7. Sales of cruises mainly booked through travel agents cost 10% of sales fees and additional commissions. 8. Cash can only be used in the gaming area of the boat Full brand recovery from Costa Concorida tragedy will take 2-3 years, extra marketing would come in three areas: funds directed at travel agents, including cooperative advertising; social media; and possibly more TV ads. 9. Loyalty program was recently expanded to six tiers from two, downgrading some members to lower 10. membership level and taking away perks.
  • IFE MATRIX Internal Factor Evaluation Matrix (IFE) Strengths 1. Carnival Corporation and PLC is the largest cruise company in the world, having 48.4% of worldwide market share in passengers. 2. Passenger Capacity has increased over the last 4 years at an average rate of 3.59%. 3. Fuel consumption has been reduced 21% since 2007, with a projection to reduce fuel consumption by another 5% per unit. 4. The Holland America line has the highest rate of repeat customers in the cruise industry. 5. Seabourn Yachts have a service ratio of one staff member to one guest. Weight Rating Weighted Score 0.08 4 0.32 0.05 3 0.15 0.06 3 0.18 0.05 3 0.15 0.04 3 0.12 0.04 4 0.16 0.06 4 0.24 0.07 3 0.21 0.05 4 0.20 0.06 4 0.24 6. P&O Cruises is the leading Australian cruise line, with 300,000 passengers annually. P&O Cruises (Australia) carried almost half of all Australia and New Zealand cruise passengers in 2012. 7. In 2012, our North America brand represented 61% of our total passenger capacity. 8. Carnival Corp & PLC owns 40% interest in Grand Bahamas Shipyard, LTG, which is the largest cruise ship dry- dock repair facility in the world. 9. Carnival Cruise Line operates from 19 homeports in North America, which is more than our competitors. 10. Carnival Cruise Lines and PLC serves 8.5 million guests a year and has 10 distinct cruise lines under ownership.
  • IFE MATRIX CONTINUED Weaknesses 1. The net income was $1,298 in FY2012, a decrease of 6% as compared to 2011 2. Revenues declined $410 million in 2012 3. Protecting the health, safety, and security of our guests, employees and all Weigh t Rating Weighted Score 0.05 1 0.05 0.04 1 0.04 0.07 1 0.07 0.05 2 0.10 0.05 2 0.10 0.06 1 0.06 0.02 2 0.04 0.01 2 0.02 extra marketing would come in three areas: funds directed at travel agents, 0.06 including cooperative advertising; social media; and possibly more TV ads. 1 0.06 2 0.06 others working on behalf of the company since Costa Concordia tragedy. 4. Carnival Corporation &PLC accounts for 30% of disapperances of guests at sea since 2000. 5. Communicating with passengers and employees, if in crisis mode while sailing. (Costa Concordia tragedy) 6. During 2012, $28 million was spent for ship incident- related expenses that were not covered by insurance. 7. Sales of cruises mainly booked through travel agents cost 10% of sales fees and additional commissions. 8. Cash can only be used in the gaming area of the boat 9. Full brand recovery from Costa Concorida tragedy will take 2-3 years, 10. Loyalty program was recently expanded to six tiers from two, downgrading some members to lower membership level and taking away perks. TOTALS 0.03 1.00 2.57
  • External Assessments
  • COMPETITIVE PROFILE MATRIX Carnival Critical Success Factors A dvertising Market Penetration Customer Service Store Locations R& D Employee Dedication Financial Profit Customer Loyalty Market Share Product Quality Top Management Price Competitiveness Total Weight 0.11 0.07 0.09 0.09 0.07 0.06 0.09 0.08 0.10 0.08 0.06 0.10 1 Rating 4 3 3 4 3 2 4 2 4 2 3 4 Score 0.44 0.21 0.27 0.36 0.21 0.12 0.36 0.16 0.40 0.16 0.18 0.10 2 .9 7 Royal Caribbean Disney Cruises Rating 3 2 2 3 2 1 2 3 3 3 2 3 Score 0.33 0.14 0.18 0.27 0.14 0.06 0.18 0.24 0.30 0.24 0.12 0.30 2 .5 0 Rating 2 4 4 1 4 4 3 4 1 4 4 1 Score 0.22 0.28 0.36 0.09 0.28 0.24 0.27 0.32 0.10 0.32 0.24 0.10 2 .8 2
  • EXTERNAL OPPORTUNITIES 1. Long term expansion in Asian Vacation Markets due to increased prosperity and size of Asian countries (2012: 8% and 2013: 10%) 2. Worldwide, the cruise industry has an annual passenger compound annual growth rate of 7% from 1990 – 2017. 3. Unveiling of nine cruise ships through March 2016. (Note, this is a Strength, not Opportunity) 4. The UK Provides the largest number of cruise passengers sourced in Europe; 1.8 million are estimated to have cruised in 2012. 5. Europeans and Australians have significantly more vacation days a year than North Americans (4 weeks paid vacation) 6. The age group of 45 years and older is expected to grow by 13% in US and Canada and 11% in the major Western European countries by 2022. 7. The global travel and tourism industry is expected to grow approximately 2.8% during 2012 8. Almost 60% of the cruise passengers in the world are sourced from the North American region, where Carnival Corporation has 19 US ports. 9. Demand for technology growing on cruise ships; In the past five years, Internet logins on the MTN network almost doubled from approximately 15 million to 27 million per year Cruising is about five percent of the overall vacation market and is the fastest growing segment of the travel 10. industry
  • EXTERNAL THREATS 1. A 6.3% increase in fuel prices, since February 2013. (Fuel accounts for 20% of cruise ticket price) 2. The Costa Concordia and European sovereign debt crisis impacted all cruise line revenues by about -5.1% 3. Increasing cost of ship building; In 1990 it cost $250 million to build a ship, where as in 2012 it cost $740 million. 4. Safety and security of travel- terrorism, drug attacks, vessel seizures 5. Royal Caribbean passengers carried increased 0.3% last year 6. Currency risk- the US dollar decreased 0.3% in Feb. 2013 7. 8. The United States unemployment rate is currently still high at 7.40% Trend toward healthy eating and lifestyles; 1 in 4 Americans are currently on a diet, which is 25% of US Americans. 9. Global warming is causing the oceans to absorb a great deal of extra heat (up to 90%). 10. Increase of corporate tax
  • EFE MATRIX External Factor Evaluation Matrix (EFE) Opportunities Weight Rating 1. Long term expansion in Asian Vacation Markets due to increased prosperity and 0.05 3 size of Asian countries (2012: 8% and 2013: 10%) 2. Worldwide, the cruise industry has an annual passenger compound annual 0.07 4 growth rate of 7% from 1990 – 2017. 3. Unveiling of nine cruise ships through March 2016. 0.05 4 4. The UK Provides the largest number of cruise passengers sourced in Europe; 0.04 3 1.8 million are estimated to have cruised in 2012. 5. Europeans and Australians have significantly more vacation days a year than 0.05 3 North Americans (4 weeks paid vacation) 6. The age group of 45 years and older is expected to grow by 13% in US and 0.05 3 Canada and 11% in the major Western European countries by 2022. Weighted Score 0.15 0.28 0.20 0.12 0.15 0.15 7. The global travel and tourism industry is expected to grow approximately 2.8% during 2012 8. Almost 60% of the cruise passengers in the world are sourced from the North American region, where Carnival Corporation has 19 US ports. 0.07 3 0.21 0.06 4 0.24 9. Demand for technology growing on cruise ships; In the past five years, Internet logins on the MTN network almost doubled from approximately 15 million to 27 million per year 10. Cruising is about five percent of the overall vacation market and is the fastest growing segment of the travel industry 0.04 2 0.08 0.06 3 0.18
  • EFE MATRIX CONTINTUED Threats 1. A 6.3% increase in fuel prices, since February 2013. (Fuel accounts for 20% of cruise ticket price) 2. The Costa Concordia and European sovereign debt crisis impacted all cruise line revenues by about -5.1% 3. Increasing cost of ship building; In 1990 it cost $250 million to build a ship, where as in 2012 it cost $740 million. 4. Safety and security of travel- terrorism, drug attacks, vessel seizures 5. Royal Caribbean passengers carried increased 0.3% last year 6. Currency risk- the US dollar decreased 0.3% in Feb. 2013 7. The United States unemployment rate is currently still high at 7.40% 8. Trend toward healthy eating and lifestyles; 1 in 4 Americans are currently on a diet, which is 25% of US Americans. 9. Global warming is causing the oceans to absorb a great deal of extra heat (up to 90%). 10. Increase of corporate tax TOTALS Weighted Weight Rating Score 0.06 2 0.12 0.05 3 0.15 0.05 3 0.15 0.08 1 0.08 0.05 2 0.10 0.06 3 0.18 0.03 4 0.12 0.04 3 0.12 0.02 2 0.04 0.02 1 0.02 1.00 2.84
  • Strategy Formulation
  • SWOT MATRIX SO Strategies 1 Expand P&O Cruise Line (Australia) by 2 ships by 2016 (S6,O5) 2 Expand Costa Cruise Line (Asia) by 2 ships by 2016 (S1, O1) 3 Increase technology advancements on 50% of our fleets by 2014 (S2, O9) 4 Increase number of cruises available by 25% (S10, O10) ST Strategies 1 Continue cost saving fuel energy practices by installing energy reduction techonologies on our ships. (S3,T1) 2 Offer departing specials from 8 homeports in North America. (S9,T5) 3 Custom prepared healthy meals for guests on our Seabourn Yachts (S5,T8) Increase safety and security awarness on all 10 cruise lines, by offering special advertising reassurance to travel on CCL 4 (S10,T4) WO Strategies 1 Launch four new vessels by 2014 (W2, O3) 2 Create marketing campagin for "baby boomer" generation to revamp our brand on safety/security . (W9,O6) 3 Upgrade Carnival's Website Services for online booking/questions (W7,O7) 4 Promote loyalty membership program on all luxury fleets to secure brand loyalty. (W10, O10) WT Strategies Add 1 employee per 100 guests to inform them of any safety or security issues while on board any Carnival Cruse Line Ships 1 (W5,T4) 2 Raise ticket price by 10% (W1,T10) 3 Create a new employee division to oversee and maintain all maintance on cruise ships (W6,T7,T2) 4 Renovate five ships with solar powered technology to reduce cost (W1,W2,T1)
  • SPACE MATRIX DATA Internal Analysis: Financial Position (FP) Return on Investment (ROI) Leverage Liquidity Working Capital Cash Flow Financial Position (FP) Average Internal Analysis: Competitive Position (CP) Market Share Product Quality Customer Loyalty Technological know-how Control over Suppliers and Distributors Competitive Position (CP) Average 6 5 3 3 5 4.4 -1 -3 -2 -4 -1 External Analysis: Stability Position (SP) Rate of Inflation Technological Changes Price Elasticity of Demand Competitive Pressure Barriers to Entry into Market Stability Position (SP) Average External Analysis: Industry Position (IP) Growth Potential Financial Stability Ease of Entry into Market Resource Utilization Profit Potential -2.2 Industry Position (IP) Average -2 -3 -5 -3 -4 -3.4 5 5 6 5 7 5.6
  • SPACE MATRIX FP Conservative Aggressive 7 6 5 4 3 2 1 CP -7 -6 -5 -4 -3 -2 -1 1 2 3 4 -1 -2 -3 -4 -5 -6 -7 Defensive SP Competitive 5 6 7 IP
  • BCG MATRIX High 1.0 Medium .50 High +20 Low 0.0 Star Question Mark NA EAA Industry Sales Growth Medium 0 Rate (Percentage) Low CS Cash Cow Dog -20 North America Cruise Brands EAA Cruise Brands Cruise Support Profit $ 9,364 $ 5,827 $ 86 Remaining Profits $ 5,913 $ 9,450 $ 15,191
  • IE MATRIX (Note, the EFE and IFE scores possibly do not match the position of the The Total IFE Weighted Scores divisions) Strong Average Weak 4.0 to 3.0 4.0 2.99 to 2.0 II I High 1.99 to 1.0 III EAA NA 3.0 IV The EFE Total Medium Weighted Scores 2.0 Low 1.0 V VI VIII IX CS VII
  • GRAND STRATEGY MATRIX Rapid Market Growth Quadrant II Quadrant I Weak Competitive Position Strong Competitive Position Carnival Corporation Quadrant III Quadrant IV Slow Market Growth
  • QSPM Convert safety and security procedures Expand Costa on all 10 Carnival Cruise Lines(Asia) and PLC cruise by 2 ships in 2016. lines. Opportunities Weight 1. Long term expansion in Asian Vacation Markets due to increased 0.05 prosperity and size of Asian countries (2012: 8% and 2013: 10%) 2. Worldwide, the cruise industry has an annual passenger compound 0.07 annual growth rate of 7% from 1990 – 2017. 3. Unveiling of nine cruise ships through March 2016. 0.05 4. The UK Provides the largest number of cruise passengers sourced in 0.04 Europe; 1.8 million are estimated to have cruised in 2012. 5. Europeans and Australians have significantly more vacation days a year 0.05 than North Americans (4 weeks paid vacation) 6. The age group of 45 years and older is expected to grow by 13% in US 0.05 and Canada and 11% in the major Western European countries by 2022. 7. The global travel and tourism industry is expected to grow approximately 0.07 2.8% during 2012 8. Almost 60% of the cruise passengers in the world are sourced from the 0.06 North American region, where Carnival Corporation has 19 US ports. 9. Demand for technology growing on cruise ships; In the past five years, Internet logins on the MTN network almost doubled from approximately 15 0.04 million to 27 million per year 10. Cruising is about five percent of the overall vacation market and is the 0.06 fastest growing segment of the travel industry AS TAS AS TAS 4 0.20 2 0.10 2 0.14 3 0.21 0 0.00 0 0.00 2 0.08 1 0.04 0 0.00 0 0.00 0 0.00 0 0.00 3 0.21 2 0.14 0 0.00 0 0.00 4 0.16 2 0.08 3 0.18 4 0.24
  • QSPM CONTINUED Convert safety and Expand Costa security procedures Cruise Lines(Asia) on all 10 Carnival and by 2 ships in 2016. PLC cruise lines. Threats Weight 1. A 6.3% increase in fuel prices, since February 2013. (Fuel accounts for 0.06 20% of cruise ticket price) 2. The Costa Concordia and European sovereign debt crisis impacted all 0.05 cruise line revenues by about -5.1% 3. Increasing cost of ship building; In 1990 it cost $250 million to build a ship, 0.05 where as in 2012 it cost $740 million. 4. Safety and security of travel- terrorism, drug attacks, vessel seizures 0.08 5. Royal Carribean passengers carried increased 0.3% last year 6. Currency risk- the US dollar decreased 0.3% in Feb. 2013 7. The United States unemployment rate is currently still high at 7.40% 8. Trend toward healthy eating and lifestyles; 1 in 4 Americans are currently on a diet, which is 25% of US Americans. 9. Global warming is causing the oceans to absorb a great deal of extra heat (up to 90%). 10. Increase of corporate tax AS TAS AS TAS 0 0.00 0 0.00 4 0.20 1 0.05 1 0.05 2 0.10 3 0.24 2 0.16 0.05 0 0.00 0 0.00 0.06 0 0.00 0 0.00 0.03 0 0.00 0 0.00 0.04 0 0.00 0 0.00 0.02 0 0.00 0 0.00 0.02 0 0.00 0 0.00
  • QSPM CONTINUED Convert safety and security procedures Expand Costa on all 10 Carnival Cruise Lines(Asia) and PLC cruise by 2 ships in 2016. lines. Strengths Weight 1. Carnival Corporation and PLC is the largest cruise company in the world, 0.08 having 48.4% of worldwide market share in passengers. 2. Passenger Capacity has increased over the last 4 years at an average rate of 0.05 3.59%. 3. Fuel consumption has been reduced 21% since 2007, with a projection to 0.06 reduce fuel consumption by another 5% per unit. 4. The Holland America line has the highest rate of repeat customers in the 0.05 cruise industry. 5. Seabourn Yachts have a service ratio of one staff member to one guest. 0.04 6. P&O Cruises is the leading Australian cruise line, with 300,000 passengers annually. P&O Cruises (Australia) carried almost half of all Australia and New 0.04 Zealand cruise passengers in 2012. 7. In 2012, our North America brand represented 61% of our total passenger 0.06 capacity. 8. Carnival Corp & PLC owns 40% interest in Grand Bahamas Shipyard, LTG, 0.07 which is the largest cruise ship dry- dock repair facility in the world. 9. Carnival Cruise Line operates from 19 homeports in North America, which is more than our competitors. 10. Carnival Cruise Lines and PLC serves 8.5 million guests a year and has 10 distinct cruise lines under ownership. AS TAS AS TAS 4 0.32 3 0.24 3 0.15 4 0.20 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 3 0.18 2 0.12 0 0.00 0 0.00 0.05 0 0.00 0 0.00 0.06 3 0.18 2 0.12
  • QSPM CONTINUED Convert safety and Expand Costa security procedures Cruise Lines(Asia) on all 10 Carnival and by 2 ships in 2016. PLC cruise lines. AS TAS 0.15 1 0.05 4 0.16 3 0.12 0 0.00 0 0.00 0.05 4 0.20 2 0.10 0.05 3 0.15 2 0.10 0.06 4 0.24 1 0.06 0.02 0 0.00 0 0.00 0.01 0 0.00 0 0.00 0.06 0 0.00 0 0.00 0.03 0 0.00 0 0.00 Weaknesses Weight 1. The net income was $1,298 in FY2012, a decrease of 6% as compared to 0.05 2011 2. Revenues declined $410 million in 2012 0.04 3. Protecting the health, safety, and security of our guests, employees and all 0.07 others working on behalf of the company since Costa Concordia tragedy. 4. Carnival Corporation &PLC accounts for 30% of disapperances of guests at sea since 2000. 5. Communicating with passengers and employees, if in crisis mode while sailing. (Costa Concordia tragedy) 6. During 2012, $28 million was spent for ship incident- related expenses that were not covered by insurance. 7. Sales of cruises mainly booked through travel agents cost 10% of sales fees and additional commissions. 8. Cash can only be used in the gaming area of the boat 9. Full brand recovery from Costa Concorida tragedy will take 2-3 years, extra marketing would come in three areas: funds directed at travel agents, including cooperative advertising; social media; and possibly more TV ads. 10. Loyalty program was recently expanded to six tiers from two, downgrading some members to lower membership level and taking away perks. TOTALS AS TAS 3 3.19 2.23
  • Strategy Implementation
  • RECOMMENDATIONS Recommendations Amount 1 Appoint a "Chief Safety Officer" in each Carnival & PLC Cruise Brand $ 3,000,000 2 Unveil six ships (North American, EAA, UK, Costa) $ 2,843,000,000 3 Reconcile Concorida legal litigation $ 585,000,000 4 World-wide advertising campaign on safety $ 100,000,000 5 Employee procedures and training programs $ 1,200,000 6 Donate to Coral Reef Alliance $ 1,000,000 7 Install security devices throughout on all vessels $ 10,100,000 8 Offer additional support to guests and travel agents via telephone and email $ 250,000 9 Install scrubber technology $ 180,000,000 10 Build a smartphone application for passengers- "Carnival In-touch" $ 125,000 Total $ 3,723,675,000 See Appendix I for explanation
  • EPS/EPIT ANALYSIS EBIT Interest EBT Taxes EAT # Shares EPS Common Stock Financing Recession $3,000 $3,400 $3,800 0 0 0 3,000 3,400 3,800 9 10 11 2,991 3,390 3,789 911 911 911 3.28 3.72 4.16 Tax Rate: .003 Interest Rate: .03 Amount Needed : $3,724 (Billon) Number of oustanding shares: 807 $3,000 112 2,888 9 2,880 807 3.57 Debt Financing Recession $3,400 112 3,288 10 3,278 807 4.06 $3,800 112 3,688 11 3,677 807 4.56
  • EPS/EPIT GRAPH EPS-EBIT Graph 5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 $3,000 $3,400 Common Stock Financing $3,800 Debt Financing
  • INCOME STATEMENTS Income Statement (in millions) Total Revenue Cost of Revenue Gross Profit Operating Expenses Research and Development Selling and General Administrative Non-recurring Others Total Operating Expenses 2012 2013 2014 2015 15,382 10,320 5,062 15,350 10,285 5,066 16,203 10,856 5,347 16,987 11,381 5,606 1,720 173 1,527 1,642 33.3 1,917 1 1,527.4 1,587 33.3 2,113 1,527.8 1,673 33.3 2,309 1,528.2 1,735 Total Other Income/Expenses Net Earnings Before Interest and Taxes Interest Expense Income Before Tax Income Tax Expense Net Income (4) 1,638 336 1,302 4 1,298 (6) 1,593 448 1,145 3.5 1,141 2 1,671 560 1,111 3.3 1,108 3 1,732 672 1,060 3.2 1,057 Dividends Retained Earnings 1,168 130 1,168 (27) 1,168 (60) 1,168 (111) See Appendix II for explanation
  • PROJECT BALANCE SHEETS Balance Sheet (millions) 2012 2013 2014 2015 Assets Current Assets Cash and Cash Eqauivalents Short Term Investments Net Receivables Inventory Other Current Assets Total Current Assets Long Term Investments Property Plant and Equipment Goodwill Intangible Assets Other Assets Total Assets 860 830 715 420 2,825 33,148 3,174 1,342 732 41,221 890 920 849 536 3,195 34,159 3,174 1,489 835 42,852 945 975 920 597 3,437 35,170 3,174 1,620 875 44,276 Liabilities Current Liabilties Accounts Payable Short/Current Long Term Debt Other Current Liabilities Total Current Liabilites Long Term Debt Other Liabilties Total Liabilities See Appendix III for explanation 465 730 390 236 1,821 32,137 3,174 1,314 715 39,161 1,977 1,734 3,629 7,340 7,168 724 15,232 2,200 1,786 3,702 7,688 8,409 738 16,835 2,215 1,840 3,776 7,830 9,650 753 18,233 2,243 1,895 3,851 7,989 10,891 768 19,648 Stockholders' Equity Common Stock Additional Paid In Capital Retained Earnings Treasury Stock Other Stockholder Equity Total Stockholder Equity Total Stockholders' Equity and Liabilities 363 8,252 18,479 (2,958) -207 23,929 39,161 363 8,252 18,452 (2,483) -198 24,386 41,221 363 8,252 18,392 (2,213) -175 24,619 42,852 363 8,252 18,281 (2,101) -167 24,628 44,276
  • PROJECTED RATIOS Current Ratio Quick Ratio Long Term Debt to Equity Inventory Turnover Total Assets Turnover Accounts Receivable Turnover Average Collection Period Gross Profit Margin Net Profit Margin Return on Total Assets (ROA) Return on Equity (ROE) 2012 0.25 0.19 0.30 39.44 0.39 21.07 17.32 0.89 0.08 0.03 0.05 2013 0.37 0.27 0.34 21.47 0.37 18.49 19.74 0.90 0.07 0.03 0.05 2014 0.41 0.30 0.39 19.08 0.38 17.61 20.72 0.90 0.07 0.03 0.05 2015 0.43 0.32 0.44 18.46 0.38 17.42 20.95 0.90 0.06 0.02 0.04
  • CONCLUSION As Carnival Corporation and PLC continues to improve the safety and security among our cruise brands throughout the world, we hope our consumers will regain the trust of the cruise industry by cruising with us. The corporation needs to focus on the internal and external factors in an effort to further improve its operation and ultimately the return to the shareholders of the company.
  • APPENDIX I. Recommendation Notes 1- 10 cruise brands/ 10 new safety officers at $100K salary per year for 3 years 2- Due to increasing passengers carried in cruise industry market we believe that unveiling six news ships will help meet the demand of passengers wanting to travel (North American, EAA, UK, Costa) 3- Legal fees/ reimbursing guests costs from Costa Concordia Tragedy 4- Create this marketing campaign similar to BP the marketing campaign after the oil spill; to reassure our consumers of the safety/security measures we are taking on our cruise ships (Quote is from Chernoff/Newman Advertising Agency in Columbia, SC) 5- We are going to offer our employees an online training certificate program in safety and security measures for our ships; offered for one week; you have to take an online test at the end of session to receive certificate 6- Due to the Costa tragedy we will donate $1Million to the Coral Reef Alliance to help our public images and social responsibility. 7- Install safety security devices throughout on all vessels -101 ships at 20 buttons per ship at $5,000 each -Cruise ships are designed and operated in compliance with international and federal regulations specifically designed to maximize the safety of passengers and crew. 101 ships x20= 2020 8- Hiring consultants for customer service, send out brochures, postcards etc. to offer additional support to our guests. 9- Install exhaust gas cleaning technology on 32 ships, making it the first company to use this scrubber technology in restricted spaces on existing ships. 10- Smart Phone App to keep passengers in the loop while traveling with our company; such as what activities are going on and specific times; which our rival firm implemented this a few years ago. II. Notes for Projected Income Statement Total Revenue Decrease: Cost of Revenue: Research and Development: Selling and GA: Non- Recurring: Others: Total Other income/ Expense: Interest Expense: Net Income: Decrease is 2013 due to customer skeptic of cruising because of recent events within the cruise industry (i.e.- cruise wrecks, fires, drowning's, etc.) 67% of revenue Worldwide Advertising Campaign for 3 years @ $100M Includes CSO, Legal Fees, Guest Support, Smart App Donation to Coral Reef Alliance Employee Training (1.2M) Decrease in 2013 due to revenue decrease; increase 14, 15 due to increase revenue Interest Expense from EPS at 112 Reason for decreasing net income, is due to the implementation of recommendations/ strategies for the safety/security of our passengers and employees of Carnival PLC ; advertising campaign; Costa Concordia Debt; New ships Hopefully through our positive feedback and reinforcement from our recommendations, we will see NI begin to increase in 2016 III. Notes for Projected Balance Sheet Property Plant Equipment: Intangibles: Accounts Payable: Short Term Debt: Other Current Liabilities: Long Term Debt: Other Liabilities: Additional Paid in Capital: Treasury Stock: New Ships, Security Device, Scrubber ($5.625M per 32 ships) Increase because of trademarks on six new ships ($84M - 6x$14M trademark cost) Due to increase in ships and procedures 3% increase 2% increase Increase debt 1,241 per year to cover recommendations 100% debt 2% increase unforeseen problems with new ships/programs Using all debt, but could change depending on cash flow Not buying back as much due to trying to implement recommendations