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Final carnival

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  • 1. Brief History  Carnival Cruise Lines is one of the largest and most successful cruise line company in the world. The history of Carnival Cruise Lines started in 1972. The Chairman and CEO, Ted Arison, purchased an ocean liner for $6.5 million. The ocean liner was named Mardi Gras and included in the deal was another ship called the Carnivale. In the beginning, Carnival experienced a deficit due to fuel and ship concerns. With the design of on- board activities, entertainment, an enhanced marketing approach, and travel packages, Carnival began seeing their successes and revenue grow. Carnivals' prices were competitive with other travel packages, which was a major factor in their success. Slowly, Carnival began buying out their competitors and adding more cruise ships to their company. Carnival Cruises became an industry leader with the finalization with Princess Cruises, which allowed Carnival to become a global cruise line. 2
  • 2. Timeline 1970s  1972- Carnival was formed by cruise industry pioneer Ted Arison  1972 – The maiden voyage of Carnival’s first ship, the Mardi Gras, which ran aground on a sandbar outside the Port of Miami  1975 – Carnival purchases Empress of Britain, which enters the service as the Carnivale  1978 – Festivale begins service for Carnival as the largest and fastest vessel sailing from Miami to the Caribbean 3
  • 3. Timeline 1980’s-  1982 – Debut of Tropicale, the first new cruise ship the cruise industry had seen in many years; ship marks the beginning of an industry-wide multi-billion-dollar shipbuilding boom.  1984 – Carnival becomes first cruise line to advertise on network television with the premiere of new advertising campaign starring company spokesperson Kathie Lee Gifford http://www.youtube.com/watch?v=BECwNurBbEQ  1985 – Debut of the Holiday  1986 – Launch of the Jubilee  1987 – The Celebration enters service  1987- Carnival Cruise Line made an initial public offering of 20% of its common stock. This provided capital that allowed the company to begin its expansion through acquisition.  1988- Carnival Cruise Line expanded into charter airlines with the purchase of Pacific Interstate Airlines  1989- Carnival’s first acquisition was Holland America Line 4
  • 4. Timeline1990’s-  1990- The Fantasy enters service as first new ship ever placed on a three and four day Bahamas cruise program from Miami.  1992- Carnival’s second acquisition was Seabourn Cruise Line  1994- Parent company renamed Carnival Corporation to distinguish between it and its flagship brand, Carnival Cruise Lines.  1994- Launches the first passenger vessel to exceed 100,000 tons, Carnival Destiny, at the time it was the world’s largest cruise ship  1997- Carnival’s third acquisition is with Costa Cruises  1997- Carnival’s fourth acquisition is with Celebrity Cruises  1998- Carnival’s fifth acquisition is with the Cunard Line  1998 – Introduces Elation, the first new cruise ship deployed on the West Coast  1998 – Carnival Paradise, enters service. Paradise was the only non- smoking cruise ship in the world. 5
  • 5. Timeline 2000’s  2000 –Carnival Victory is launched  2001 – Introduces a new class with the launch of Carnival Spirit. It was the first new “Fun Ship” ever positioned in the Alaska and Hawaii markets  2002 –Carnival Pride is launched  2002- Carnival Legend enters service  2002- Carnival debuts Carnival Conquest, the largest “Fun Ship” ever constructed at the time  2003- Carnival merged with P&O Princess Cruises to form Carnival Corporation and PLC to become the largest cruise ship company in the world  2005 –Carnival Liberty debuts, operating the line's first ever Mediterranean cruises  2007 – Carnival Freedom debuts  2008 – The Carnival Splendor debuts & Celebration leaves the fleet  2009 – Carnival Dream, the largest "Fun Ship" ever constructed enters service on September 21 and is the largest ship ever built http://www.youtube.com/watch?v=pdgMlBTILq0 6
  • 6. Timeline 2010’s-  2010 – A fire on Carnival Splendor leaves the ship crippled  2011 – Carnival Magic enters service  2012 – Carnival Breeze enters service  2012- Carnival Spirit moved to Sydney, Australia in October 2012, it became the first Fun Ship to sail Australian waters and also became the largest cruise ship in Australia year-round  2012- An accident on Costa Concordia, operated by Carnival brand Costa Cruises, leaves 32 people dead.  2012-Carnival added features to ships, including the Guy Burger Joint, Blue Iguana Cantina Taco Bar, Red Frog Rum Bar and Blue Iguana Bar.  2013- A fire on Carnival Triumph leaves the ship crippled with no power for 5 days 7
  • 7. Mission Statement  "Our mission is to deliver exceptional vacation experiences through the world's best-known cruise brands that cater to a variety of different lifestyle and budgets, all at an outstanding value unrivaled on land or at sea."  Product: Exceptional vacation experiences  Target Groups: Low, medium, and high income groups, vacation travelers, and various lifestyle groups 8
  • 8. Current Performance Objectives Carnival is currently expanding and focusing on the European and Asian markets. 9
  • 9. Historical Corporate Strategy  Concentration  Vertical Integration (Internal): In 2007, Carnival expanded their cruises with expanded water parks, adult- only areas and resort styled pools. In 2012, Carnival now has 90,000 employees. They have increasingly adding employees to their company to further assist their customers. In 2013, Carnival further developed safety training and management training after the Concordia tragedy.  Horizontal Integration (External): In 1988, Carnival Cruise acquired Holland American Line. The deal included two Holland America subsidiaries, Windstar Sail Cruises, and Holland America Westours. This acquisition allowed an aggressive building campaign. In 1992, Carnival acquired 50% of Seabourn. This acquisition allowed for additional cruise operations in South America, the Mediterranean, Southeast Asia, and the Baltic. In 1997, Carnival merged with Celebrity. The merged resulted in 17 ships and 30,000 berths. 10
  • 10. Historical Corporate Strategy  Diversification  Concentric (Internal) : Carnival Cruise Lines owns cruise ships and has developed many other travel necessities for their customers. Carnival has hotels, motor homes, and rail cars. Carnival owns 12 hotels, 300 motor coaches, and 20 domed rail cars. All these transportation products relate to developing travel and vacations.  Conglomerate (Internal): Carnival experienced risk with the purchase of Riviera Towers. The hotel consisted of 692 rooms. In 1991, Carnival reached a settlement to surrender the hotel project and settle their debt with the Bahamian government. In the late 1980's, Carnival invested into the Airline industry to transport their guests. In 1997, Pan Am Corp purchased Carnival Air Line as most of their revenue came from the Carnival Cruise Corporation. By terminating these travel industry companies, Carnival reduced their debt, which allowed for a greater focus on dominating the global cruise line industry. 11
  • 11. Stability of Carnival  Carnival Cruises has ambition for profit stability.  In 1988, Carnival acquired Holland American Line.  In 1992, Carnival gained 50% of the Seabourn Cruise Lines.  In 1997, the purchase of Costa. Carnival Cruises continued more acquisitions and mergers to become a global cruise line. 12
  • 12. Retrenchment  Turn Around  Divestment : In 1997, Carnival Corporation finalized an agreement with Pan Am Corp for their airline. The airline did not produce high profits, which allowed for a divestment and acquisition of the airline. 13
  • 13. Historical Competitive Strategies For Each Strategic Business Unit Within the Corporation  Cost Leadership  Broad Market: In the 1970's, Carnival Cruise had competitive packages with other travel packages.  Differentiation  Broad Market: In 1972, the company attracted customers with planned activities, a casino, discos, and other forms of entertainment. Carnival used a lot marketing to differentiate themselves from the competition, but the market is now more narrow as many cruise lines are following their ideas. 14
  • 14. Historical Functional Strategies  Nature of Market  Consumer  Breadth of Product Lines  Full  Degree of Customization  Standard  Custom  Number of Distribution Channels:  Multiple  Nature of Multiple Distribution Channels:  Complimentary  Distribution form :  Direct Selling to End-users  Direct Selling to Retailers 15
  • 15. Geographic Coverage  International coverage  (United States, Australia, Pacific Islands, Caribbean Islands, Europe, Russia, Scandinavia, South America and Italy)  22 departure ports  (Baltimore, Boston, Charleston, Fort Lauderdale, Jacksonville, Miami, New York, Norfolk Virginia, Port Canaveral, Tampa, Galveston, New Orleans, Seattle, Vancouver, Venice, Barcelona, Barbados, Sydney, Pacific Islands, St. Peterburg in Russia, San Juan in Puerto Rico and Los Angeles) 16
  • 16. Sailing Calendar 17
  • 17. Destinations  Baltimore: Grand Turk and Bahamas  Boston: Grand Turk and Bahamas  Charleston: Grand Turk and Bahamas  Fort Lauderdale: Grand Turk, Bahamas, Mexico, and Cayman Islands  Jacksonville: Bahamas, Jamaica, Caribbean Islands, Dominican Republic, British Virgin Islands, Antigua, Mexico, Puerto Rico, Key West and Grand Turk  Miami: Key West, Mexico, Bahamas, Cayman Islands, Grand Turk, Costa Rica, Caribbean Islands, Isla Roaton, Belize, Panama, Columbia  New York: Canada, Bahamas, Caribbean Islands, Puerto Rico, Grand Turk, Tampa, Curacao, Jamaica, and Cayman Islands  Norfolk, Virginia: The Bahamas  Port Canaveral (Orlando), FL: The Bahamas, Key West, Belize, Puerto Rico, Caribbean Islands, Grand Turk, Mexico, and Isla Roatan  Sydney, Australia: Pacific Islands and Australia cities  St. Petersburg: Amsterdam, Denmark, England, Finland and Belgium 18
  • 18. Destinations  Tampa: Mexico, Cayman Islands, Panama Canal, Columbia, Long Beach, Belize, and Costa Rica  Galveston, TX: Mexico, Belize, Belize, Jamaica, The Bahamas, Key West, Isla Roatan and Cayman Islands  New Orleans: Mexico, Cayman Islands, Belize, Jamaica, British Virgin Islands, The Caribbean Islands, Puerto Rico, Grand Turk, and Key West  Los Angeles: Mexico cities, Catalina, Hawaii, Tahiti and Fiji Islands  Seattle: Alaska and Canada  Vancouver, BC: Canada and Alaska  London: Ireland, Scotland, Greenland, New York, and Canada  Barcelona: Spain, New Orleans, Grand Turk, and Canary Islands  Barbados: The Caribbean Islands  San Juan, Puerto Rico: The Caribbean Islands, Grand Turk, and Miami 19
  • 19. Historical Functional Strategies  Degree of Selectivity of Channels  Low (not selective/ intensive distribution)  Pricing Level  Competitive  Advertising media  Print  Radio TV  Movies  Billboards  Promotion emphasis  Push (The company uses many aspects to promote their packages to travel agencies and suppliers. They also use lowest guaranteed price on their website.)  Pull (They rely on word-of-mouth, advertising promotions, sales promotions, and social media.) 20
  • 20. Carnival: Source of Funds 21 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 2008 2009 2010 2011 2012 Carnival Cruise Short Term Liabilities Long Term Liabilities Retained Earnings Net Stocks
  • 21. Royal Caribbean: Source of Funds 22 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 2008 2009 2010 2011 2012 Royal Caribbean Cruises Short Term Liabilities Long Term Liabilities Retained Earnings Net Stocks
  • 22. Norwegian Cruises: Source of Funds 23 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 2008 2009 2010 2011 2012 Norwegian Cruises Short Term Liabilities Long Term Liabilities Retained Earnings Net Stocks
  • 23. Dividend Payment vs. Competitors 24 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2008 2009 2010 2011 2012 Dividend Payment Royal Carnival Cruises Norwegian Cruises
  • 24. Inventory Turnover vs. Competitors 25 0 10 20 30 40 50 60 2008 2009 2010 2011 2012 Inventory Turnover Royal Carnival Cruises Norwegian Cruises
  • 25. II. Historical Review of the Corporate Actual Performance Carnivals Biggest Competitors: -Royal Caribbean Cruise Line -Norwegian Cruise Line 26
  • 26. Stock Performance  Stock performance is the measurement of a stock's ability to increase or decrease the wealth of its shareholders. Performance is typically measured by its fluctuation in price. When the stock price increases, the stock shows good performance. Conversely, a decrease in price is a poor performance. 27
  • 27. Stock Performance Ticker Symbols:  Carnival: CCL  Royal Caribbean: RCL  Norwegian Cruise Line: NCLH 28
  • 28. Stock Performance of CCL 29
  • 29. Market Share  The percentage of an industry or market's total sales that is earned by a particular company over a specified time period. Market share is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period. This metric is used to give a general idea of the size of a company to its market and its competitors.  Formula: Sales revenue over a specified time/total sales of the industry over the same period 30
  • 30. Market Share of the Companies in 2008 54% 7.70% 24% 2008 Market Share Carnival Norwegian Royal Caribbean 31
  • 31. Market Share of the Companies in 2009 49.8% 6.69% 21.50% Market Share in 2009 Carnival Norwegian Royal Caribbean 32
  • 32. Market Share of the Companies in 2010 53.9% 8.20% 25.00% Market Share in 2010 Carnival Norwegian Royal Caribbean 33
  • 33. Market Share of the Companies in 2011 34 53.7% 7.50% 25.60% Market Share in 2011 Carnival Norwegian Royal Caribbean
  • 34. Market Shares of the Companies in 2012 42.4%6.20% 21.20% Market Share in 2012 Carnival Norwegian Royal Caribbean 35
  • 35. Overall Market Share of the Industry from 2008-2012 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 2012 2011 2010 2009 2008 Carnival Norwegian Royal Caribbean 36
  • 36. Net Income Net income is a company's total earnings. Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses. This number is important measure of how profitable the company is over a period of time. Formula:  Net income = net revenue - expenses  Net revenue = gross revenue - cost of goods sold 37
  • 37. Net Income from 2008-2012 $(500,000,000.00) $- $500,000,000.00 $1,000,000,000.00 $1,500,000,000.00 $2,000,000,000.00 $2,500,000,000.00 2008 2009 2010 2011 2012 Net Income Norwegian Royal Caribbean Carnival 38
  • 38. Net Sales  Net sales is the amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any discounts allowed.  Formula: Net Sales = Gross Sales - Returns and Allowances 39
  • 39. $(1,000,000,000.00) $- $1,000,000,000.00 $2,000,000,000.00 $3,000,000,000.00 $4,000,000,000.00 $5,000,000,000.00 Norwegian Carnival Royal Caribbean 2008 2009 2010 2011 2012 40 Net Sales from 2008-2012
  • 40. Number of Employees vs. Competitors 0 10000 20000 30000 40000 50000 60000 70000 80000 90000 100000 Norwegian Carnival Royal Caribbean 2008 2009 2010 2011 2012 41
  • 41. Number of Cruise Ships Per Cruise Line Carnival: 102 ships Norwegian: 12 ships Royal Caribbean: 21 ships 42
  • 42. Chart of Cruise Ships for each Cruise Line 0 20 40 60 80 100 120 Carnival Royal Caribbean Norwegian Number of Ships 43
  • 43. Profitability Ratios  A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses during a specific period of time.  The 3 Formulas that will be used: Gross Profit Margin: Revenue-COGS/Revenue Operating Profit Margin: Operating Income/Net Sales Net Profit Margin: Net Income/Sales 44
  • 44. Gross Profit Margin  A financial metric used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. 45
  • 45. Gross Profit Margin in 2008 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% Carnival Norwegian Royal Caribbean Gross Profit Margin in 2008 2008 46 Cruise Line 2008 Carnival 38.20% Norwegian 25% Royal Caribbean 32.50%
  • 46. Gross Profit Margin in 2009 Cruise Line 2009 Carnival 37.50% Norwegian 30% Royal Caribbean 30.80% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% Carnival Norwegian Royal Caribbean Gross Profit Margin in 2009 2009 47
  • 47. Gross Profit Margin in 2010 30.00% 31.00% 32.00% 33.00% 34.00% 35.00% 36.00% 37.00% 38.00% Carnival Norwegian Royal Caribbean Gross Profit Margin 2010 2010 48 Cruise Line 2010 Carnival 37.10% Norwegian 33% Royal Caribbean 33.90%
  • 48. Gross Profit Margin in 2011 33.50% 33.60% 33.70% 33.80% 33.90% 34.00% 34.10% 34.20% 34.30% 34.40% 34.50% Carnival Norwegian Royal Caribbean Gross Profit Margin in 2011 2011 Cruise Line 2011 Carnival 34.00% Norwegian 33.8% Royal Caribbean 34.40% 49
  • 49. Gross Profit Margin in 2012 30.50% 31.00% 31.50% 32.00% 32.50% 33.00% 33.50% 34.00% 34.50% 35.00% 35.50% Carnival Norwegian Royal Caribbean Gross Profit Margin 2012 2012 Cruise Line 2012 Carnival 32.00% Norwegian 35.0% Royal Caribbean 32.90% 50
  • 50. Operating Profit Margin  Operating profit margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages and raw materials. A healthy operating margin is required for a company to be able to pay for its fixed costs. The higher the operating profit margin, the better. 51
  • 51. Operating Profit Margin 2008 -5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% Carnival Norwegian Royal Caribbean Operating Profit Margin 2008 2008 Cruise Line 2008 Carnival 19.60% Norwegian -3.0% Royal Caribbean 12.70% 52
  • 52. Operating Profit Margin 2009 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% Carnival Norwegian Royal Caribbean Operating Profit Margin 2009 2009 Cruise Line 2009 Carnival 21.50% Norwegian 9.2% Royal Caribbean 8.20% 53
  • 53. Operating Profit Margin 2010 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% Carnival Norwegian Royal Caribbean Operating Profit Margin 2010 2010 Cruise Line 2010 Carnival 16.20% Norwegian 11.4% Royal Caribbean 11.80% 54
  • 54. Operating Profit Margin 2011 11.00% 11.50% 12.00% 12.50% 13.00% 13.50% 14.00% 14.50% Carnival Norwegian Royal Caribbean Operating Profit Margin 2011 2011 Cruise Line 2011 Carnival 14.20% Norwegian 14.2% Royal Caribbean 12.35% 55
  • 55. Operating Profit Margin 2012 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% Carnival Norwegian Royal Caribbean Operating Profit Margin 2012 2012 Cruise Line 2012 Carnival 10.60% Norwegian 15.6% Royal Caribbean 5.20% 56
  • 56. Net Profit Margin  Net profit margin measures how much out of every dollar of sales a company actually keeps in earnings. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. 57
  • 57. Net Profit Margin 2008 -15.00% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00% Carnival Norwegian Royal Caribbean Net Profit Margin 2008 2008 Cruise Line 2008 Carnival 15.90% Norwegian -10.0% Royal Caribbean 8.70% 58
  • 58. Net Profit Margin 2009 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% Carnival Norwegian Royal Caribbean Net Profit Margin 2009 2009 Cruise Line 2009 Carnival 13.20% Norwegian 3.6% Royal Caribbean 2.70% 59
  • 59. Net Profit Margin 2010 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% Carnival Norwegian Royal Caribbean Net Profit Margin 2010 2010 Cruise Line 2010 Carnival 13.60% Norwegian 1.1% Royal Caribbean 7.60% 60
  • 60. Net Profit Margin 2011 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% Carnival Norwegian Royal Caribbean Net Profit Margin 2011 2011 Cruise Line 2011 Carnival 12.10% Norwegian 5.7% Royal Caribbean 8.00% 61
  • 61. Net Profit Margin 2012 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% Carnival Norwegian Royal Caribbean Net Profit Margin 2012 2012 Cruise Line 2012 Carnival 8.40% Norwegian 7.4% Royal Caribbean 0.20% 62
  • 62. Common Sized Income Statements  This type of financial statement can be used to allow for easy analysis between companies or between time periods of a company. 63
  • 63. Common Sized Income Statements for 2008 64 Common Sized Income Statements for 2008 Percentages Total Revenue 100% Cost of Revenue 67% Gross Profit 32% Selling & Admin Exp. 9% Depreciation Exp. 9% Special Income 1% Operating Expenses 22% Operating Income 10% Net Interest -2% Other Income -0.9% Pretax Income 8% Net Income 8%
  • 64. Common Sized Income Statements for 2009 65 Common Sized Income Statements for 2009 Percentages Total Revenue 100% Cost of Revenue 65% Gross Profit 34% Selling & Admin Exp. 11% Depreciation Exp. 9% Special Income - Operating Expenses 20% Operating Income 14% Net Interest -2% Other Income 0.6% Pretax Income 12% Net Income 12%
  • 65. Common Sized Income Statements for 2010 66 Common Sized Income Statements for 2010 Percentages Total Revenue 100% Cost of Revenue 62% Gross Profit 37% Selling & Admin Exp. 11% Depreciation Exp. 9% Special Income - Operating Expenses 20% Operating Income 16% Net Interest -2% Other Income -0.1% Pretax Income 13% Net Income 13%
  • 66. Common Size Income Statements for 2011 67 Common Sized Income Statements for 2011 Percentage s Total Revenue 100% Cost of Revenue 62% Gross Profit 37% Selling & Admin Exp. 11% Depreciation Exp. 9% Special Income - Operating Expenses 21% Operating Income 16% Net Interest -2% Other Income -0.1% Pretax Income 13% Net Income 13%
  • 67. Common Size Income Statements for 2012 68 Common Sized Income Statements for 2012 Percentages Total Revenue 100% Cost of Revenue 62% Gross Profit 38% Selling & Admin Exp. 11% Depreciation Exp. 8% Special Income - Operating Expenses 19% Operating Income 18% Net Interest -2% Other Income -0.1% Pretax Income 16% Net Income 15%
  • 68. Carnival’s Current Performance  Carnival’s current performance is above satisfactory. Carnival has a significant market share in the cruise industry and twice as much net income as the second largest cruise line, Royal Caribbean. 69
  • 69. III. Examination of the Corporate Top Decision Makers 70
  • 70. Board of Directors  The responsibility of the directors is to exercise their business judgment to act in what they reasonably believe to be in the best interests of Carnival and their shareholders. The directors are authorized to operate and carry into effect the agreements. 71
  • 71. Internal vs. External  Internal directors: Affiliated with company  External directors: Not engaged with company  Carnival Cruises Board of Directors:  4 internal directors  7 external directors 72
  • 72. External Board Members (7) 1. Sir Jonathon Band  63 years old  Born in United Kingdom  British  Bachelors Degree in Social Science from Exeter University  Salary from Carnival: $440,408 in 2011  Stock ownership: 27,454 shares as of 2013  First Sea Lord & Navy’s most senior serving officer  Married with two daughters 73
  • 73. 2. Richard J. Glasier  67 years old  American  Bachelors Degree in Economics from Cornell College and MBA in Finance from Southern Methodist University  President and CEO Officer of Argosy. Former CFO and Executive Vice President of Royal Caribbean Cruises. Has 20 years experience in hotels, gaming, and cruises.  Carnival Cruise Salary: $525,298 in 2011  Ownership of stock: 44,050 shares in 2013 74
  • 74. 3. Stuart Subotnick  71 years old  Bachelor’s Degree in Business Administration at Baruch College, Master of Law Degree from Brooklyn Law School, and Juris Doctorate degree from New York University.  President and CEO of Metromedia Company. He is also member of the board of directors of Above.net  Director since 1987  Carnival Cruise Salary: $518,928 in 2011  Stock ownership: 54,408 shares in 2013 75
  • 75. 4. Debra Kelly-Ennis  56 years old  American  Bachelors Degree from University of Texas and MBA from University of Houston.  Completed executive Leadership program at Harvard Business School.  Former President and CEO at Diageo, Canada. She served as Chief Operating Officer at Saab. She was General Manager of Oldsmobile.  She joined the board of directors on May 15, 2013. 76
  • 76. 5. Laura Weil  55 years old  American  Bachelor’s Degree in Art History and Government from Smith College and MBA Degree in Finance and Marketing from Columbia University.  Chief Operating Officer of New York and Company. Former CEO of Ashley Stewart, CEO of Urban Brands, and CFO of American Eagle Outfitters.  Carnival Cruise Salary: $488,428 in 2011  Stock ownership: 52,738 shares in 2013 77
  • 77. 6. Sir John Parker  71 years old  Born in Ireland; Irish  Doctor of Science in Engineering from Queen’s University  President of Royal Academy of Engineering and Vice President of Engineering Employers’ Federation  Director of the board since 2000  Carnival Cruise Salary: $482,928 in 2011  Stock ownership: 52,008 shares in 2013  Married with two children 78
  • 78. 7. Randall J. Weisenburger  54 years old  American  Bachelor's Degree in Finance and Accounting from Virginia Tech. He has a Master's degree in Business Administration from the University of Pennsylvania's Wharton School of Business.  He is the Chief Financial Officer and Executive Vice President of Omnicom Group Inc. He is also on the board of director for Valero Energy Corporation.  Carnival Cruise Salary: $448,928 in 2011  Stock ownership: 156,954 shares in 2013 79
  • 79. Internal Board Members (4) Micky Arison o Son of Carnival Cruise founder, Ted Arison o Chairman of the Board o 64 years old o Born in Israel o Jewish o Attended the University of Miami but dropped out o 1979-2013 CEO of Carnival Corporation o Owner of Miami Heat basketball team 80
  • 80. Howard Frank o VP of the Board & CEO of Carnival Corporation o 72 years old o Vice Chairman of the board of directors since 1993 o Joined Carnival as senior VP finance & Chief Operating Officer in 1989 o Chairman of the Executive Committee of The Cruise Lines International Association 81
  • 81. Arnold Donald o President & CEO of Carnival Corporation o 58 years old o Bachelors Degree in Economics o Masters Degree in Mechanical Engineering o Board of Director of Carnival since 2001 o Chairman of the Board of Merisant Company from 2000-2005 82
  • 82. Pier Luigi Foschi o Chairman & CEO Carnival Asia and Chairman Costa Crociere o 66 years old o Italian o Chairman of Costa Crociere since 2000 o Appointed Chairman and CEO of Carnival Asia in 2012 83
  • 83. Executive Committee  Micky Arison (Chairperson)  Howard S. Frank  Stuart Subotnick  2 internal & 1 external 84
  • 84. Audit Committee  The purpose of the Audit Committee is to assist the Boards' oversight of the integrity of the Companies’ financial statements, the Companies’ compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence, the performance of the Companies’ internal audit functions and independent auditors, and relevant elements of the Companies’ risk management programs. 85
  • 85. Members of the Audit Committee  Richard Glasier (Chairperson)  Laura Weil  Stuart Subotnick  Randall Weisenburger  (All external members) 86
  • 86. Compensation Committee  The Compensation Committee has overall responsibility for approving and evaluating the director and officer compensation plans, policies and programs of Carnival, including annual base salary, annual incentives, long-term incentives, stock options, terms of employment agreements and severance arrangements. 87
  • 87. Members of the Compensation Committee  Richard Galsier  Randall Weisenburger (Chairperson)  Laura Weil  (All external members) 88
  • 88. Nominating and Governance Committee  The purpose of the Nominating & Governance Committee is to develop and recommend to the Boards a set of Corporate Governance Guidelines applicable to the Companies. They also assist the Boards by identifying individuals qualified to become Board members and to recommend to the Boards the director nominees for the next annual meeting of shareholders. 89
  • 89. Members of the Nominating and Governance Committee  Sir John Parker  Stuart Subotnick (Chairperson)  Richard Glasier  Randall Weisenburger  (All external members) 90
  • 90. Health, Environmental, Safety & Security Committee  The purpose is to assist the Boards in fulfilling their responsibility to supervise and monitor health, environmental, safety and security policies, programs, initiatives at sea and onshore, and compliance with health, environmental, safety and security legal and regulatory requirements. 91
  • 91. Members of Health, Environmental, Safety & Security Committee  Sir John Parker (Chairperson)  Sir Jonathon Band  Debra Kelly-Ennis  (All external members) 92
  • 92. Prior Decisions  On November 15, 2012, the Boards of Directors declared a special dividend to holders of Carnival Corporation common stock and Carnival plc ordinary shares of $0.50 per share.  In September 2007, the Boards of Directors authorized the repurchase of up to an aggregate of $1 billion of Carnival Corporation common stock and Carnival plc ordinary shares. 93
  • 93. Management Team for Carnival  Micky Arison- Chairman of Board  Howard Frank- VP of Board & Chief Operating Officer  Arnold Donald- President & CEO  David Bernstein- Senior VP & CFO  Richard Ames- Senior VP Shared Services  Arnaldo Perez- Senior VP, General Counsel & Secetary  Larry Freedman- Chief Accounting Officer & VP Controller 94
  • 94. Other Top Management  Management AIDA:  Michael Ungerer- President  Management Carnival Cruise:  Gerald Cahill- President & CEO  Management Carnival Australia:  Ann Sherry- CEO  Management Carnival UK:  David Dingle- CEO 95
  • 95. 96  Management Holland America:  Stein Kruse (President & CEO)  Management Princess Cruise:  Alan Buckelew (President & CEO)  Management Seabourn:  Rick Meadows (President)  Management Costa Crociere:  Pier Luigi Foschi- Chairman  Michael Thamm- CEO Other Top Management
  • 96. Top Management Involved with Board of Directors  Micky Arison  Arnold Donald  Pier Luigi Foschi  Howard Frank 97
  • 97. Management Style  Chairman Micky Arison is known for being less hands on than most. Micky is said to have a hands- on, but provides an open-door management style. He gives great independence and authority to his executive teams who operate Carnival and Carnival brand ships. 98
  • 98. Management’s Compensation 99
  • 99. Management Efficiency Ratios/Activity  Receivables Turnover  Indicates the number of times that accounts receivables are cycled during the period (usually a year)  Formula = Annual credit sales/Accounts receivables  Average Collection Period  Indicates the average length of time in days that a company must wait to collect a sale after making it; may be compared to the credit terms offered by the company to its customers  Formula = Accounts receivable/(Sales for year/365)
  • 100. Management Efficiency Ratios/Activity  Inventory Turnover  Measures the number of times that average inventory of finished goods was turned over or sold during a period of time, usually a year.  Formula = Net sales/Inventory  Days of Inventory  Measures the number of one day’s worth of inventory that a company has on hand at any given time  Formula = Inventory/(Cost of goods sold/365)
  • 101. Management Efficiency Ratios/Activity  Fixed Asset Turnover  Measures the utilization of the company’s fixed assets (i.e., plant and equipment); measures how many sales are generated by each dollar of fixed assets.  Formula = Sales/Fixed assets  Total Asset Turnover  Measures the utilization of all the company’s assets; measures how many sales are generated by each dollar of assets.  Formula = Sales/Total Assets
  • 102. Management Efficiency Ratios/Activity 2012 Ratios Carnival Royal Caribbean Norwegian Cruise Accounts receivable Turnover 56.97 27.32 151.13 Average Collection Period Ratio 6.41 13.36 2.42 Inventory Turnover 26.5 35.3 37.3 Days of Inventory 13.8 10.4 9.8 Fixed Asset Turnover 0.48 0.44 0.46 Total Asset Turnover 0.39 0.3 0.38 0 50 100 150 200 Accounts receivable Turnover Average Collection Period Ratio Inventory Turnover Days of Inventory Fixed Asset Turnover Total Asset Turnover Carnival Royal Caribbean Norwegian Cruise
  • 103. Management Efficiency Ratios/Activity 2011 Ratios Carnival Royal Caribbean Norwegian Cruise Accounts receivable Turnover 60.05 25.77 272.01 Average Collection Period Ratio 6.08 14.16 1.34 Inventory Turnover 27.5 34.2 40.5 Days of Inventory 13.3 10.7 9 Fixed Asset Turnover 0.49 0.45 0.48 Total Asset Turnover 0.41 0.38 0.4 0.00 50.00 100.00 150.00 200.00 250.00 300.00 Accounts receivable Turnover Average Collection Period Ratio Inventory Turnover Days of Inventory Fixed Asset Turnover Total Asset Turnover Carnival Royal Caribbean Norwegian Cruise
  • 104. Management Efficiency Ratios/Activity 2010 Ratios Carnival Royal Caribbean Norwegian Cruise Accounts receivable Turnover 58.34 25.32 255.38 Average Collection Period Ratio 6.26 14.42 1.43 Inventory Turnover 28.4 35.2 41.4 Days of Inventory 12.8 10.4 8.9 Fixed Asset Turnover 0.47 0.40 0.43 Total Asset Turnover 0.39 0.34 0.36 0.00 50.00 100.00 150.00 200.00 250.00 300.00 Accounts receivable Turnover Average Collection Period Ratio Inventory Turnover Days of Inventory Fixed Asset Turnover Total Asset Turnover Carnival Royal Caribbean Norwegian Cruise
  • 105. Management Efficiency Ratios/Activity 2009 Ratios Carnival Royal Caribbean Norwegian Cruise Accounts receivable Turnover 37.18 17.38 235.79 Average Collection Period Ratio 9.82 21.00 1.55 Inventory Turnover 25.3 37.7 44.7 Days of Inventory 14.4 9.7 8.2 Fixed Asset Turnover 0.45 0.39 0.48 Total Asset Turnover 0.36 0.32 0.39 0.00 50.00 100.00 150.00 200.00 250.00 Accounts receivable Turnover Average Collection Period Ratio Inventory Turnover Days of Inventory Fixed Asset Turnover Total Asset Turnover Carnival Royal Caribbean Norwegian Cruise
  • 106. Management Efficiency Ratios/Activity 2008 Ratios Carnival Royal Caribbean Norwegian Cruise Accounts receivable Turnover 35.76 24.08 348.34 Average Collection Period Ratio 10.21 15.16 1.05 Inventory Turnover 28.7 45.8 53.5 Days of Inventory 12.7 8 6.8 Fixed Asset Turnover 0.56 0.47 0.51 Total Asset Turnover 0.44 0.4 0.42 0.00 100.00 200.00 300.00 400.00 Accounts receivable TurnoverAverage Collection Period RatioInventory TurnoverDays of InventoryFixed Asset TurnoverTotal Asset Turnover Carnival Royal Caribbean Norwegian Cruise
  • 107. IV. Examination of Internal Environment of the Company 108
  • 108. Corporate Culture  Maintain friendly, family-like atmosphere in their ships and in their work environment 109
  • 109. Corporate Structure  Carnival Cruise is one of 10 subsidiary companies owned by Carnival Corporation & PLC  Within Carnival Cruise, an ‘Open Door’ policy is advocated  Employees have the freedom and flexibility to express their ideas in working toward solutions that benefit the company.  “Promote from Within” advancement strategy 110
  • 110. Common Size Balance Sheet 2012 Carnival Royal Caribbean Norwegian Cruise Total Current Asset 5% 4% 3% Property and Equipment, Net 82% 88% 84% Goodwill 8% 2% 10% Other Assets 5% 5% 3% Total Assets 100% 100% 100% Current Liabilities 19% 21% 16% Long-Term Debt 18% 35% 47% Other long-term liabilities 2% 2% 3% Shareholders Equity 61% 42% 34% Total Liabilities and Shareholder Equity 100% 100% 100% 111
  • 111. Common Size Balance Sheet 2011 Carnival Royal Caribbean Norwegian Cruise Total Current Asset 3% 5% 3% Property and Equipment, Net 83% 86% 83% Goodwill 9% 4% 11% Other Assets 5% 6% 3% Total Assets 100% 100% 100% Current Liabilities 16% 15% 15% Long-Term Debt 21% 40% 51% Other long-term liabilities 2% 2% 1% Shareholders Equity 62% 42% 33% Total Liabilities and Shareholder Equity 100% 100% 100%112
  • 112. Common Size Balance Sheet 2010 Carnival Royal Caribbean Norwegian Cruise Total Current Asset 3% 5% 2% Property and Equipment, Net 83% 85% 83% Goodwill 9% 4% 11% Other Assets 6% 6% 3% Total Assets 100% 100% 100% Current Liabilities 15% 17% 12% Long-Term Debt 21% 40% 56% Other long-term liabilities 2% 2% 1% Shareholders Equity 61% 40% 31% Total Liabilities and Shareholder Equity 100% 100% 100% 113
  • 113. Common Size Balance Sheet 2009 Carnival Royal Caribbean Norwegian Cruise Total Current Asset 4% 6% 3% Property and Equipment, Net 81% 84% 80% Goodwill 9% 4% 13% Other Assets 6% 6% 5% Total Assets 100% 100% 100% Current Liabilities 13% 15% 10% Long-Term Debt 25% 42% 53% Other long-term liabilities 2% 2% 1% Shareholders Equity 60% 41% 35% Total Liabilities and Shareholder Equity 100% 100% 100% 114
  • 114. Common Size Balance Sheet 2008 Carnival Royal Caribbean Norwegian Cruise Total Current Asset 5% 6% 5% Property and Equipment, Net 79% 84% 82% Goodwill 10% 5% 12% Other Assets 6% 5% 1% Total Assets 100% 100% 100% Current Liabilities 17% 16% 20% Long-Term Debt 23% 40% 49% Other long-term liabilities 2% 3% 1% Shareholders Equity 57% 41% 31% Total Liabilities and Shareholder Equity 100% 100% 100% 115
  • 115. Information Systems  In the early 2000’s, 95% of sales were made through travel agents  Now, individuals can purchase tickets through online services and the telephone. The website is carnivalcruise.com and 1-800-Carnival.  Entire ship carries onboard Wi-Fi  Electronic-access control system  Plastic card that allows in and out access, room key, and on-board credit card. 116
  • 116. Marketing Product  Carnival Cruise markets their cruise-based vacation products with many different mediums.  Current slogan: “Fun for all. All for fun” Carnival emphases on the word ‘Fun’  Example of copyrighted words: Carnival, The Fun Ship, and all their ship names. 117
  • 117. Marketing Promotions  In 2013, Carnival launched a first ever sweepstakes contest. For a week, any customer who booked a vacation were automatically entered into a contest to win over 1,000 prizes.  Current promotions and offers from their website: 118
  • 118. Price Guarantee  Prices range depending on the length, destination, and amenities.  Currently, Carnival Cruise advertises on their website with “Price Guarantee”  “If you find a better Carnival advertised deal somewhere else within two days of booking your cruise, we'll not only be very surprised — we'll give you 110% of the difference in onboard credit.” 119
  • 119. Marketing Advertisements 120
  • 120. Human Resources  Carnival has a Shipboard Human Resources Department  Divided into two tiers: Staff Admin and Training  The department is responsible for Employee relations, Employee Communication, Training and Development, Staff Administration, Coaching and Counseling, Quality of Life and Leadership Training  The crew training centers have over 400 learning resources including e-learning courses, books, tapes, DVD’s, management courses and language resources  This team also conducts fun and informative training programs including regulatory/ safety training, Team Carnival Orientation, English Classes, Hospitality Training, Sales Training and other department-specific training  This department is also responsible for overseeing the star employee of the month program, the service award program and the Crew Recreation Committee which is responsible for all crew activities and FUN on board 121
  • 121. V. Examination of the External Environment of the company 122
  • 122. Competitors  North America: Royal Caribbean, Disney Cruise Line, and Norwegian Cruise Line  Southern Europe: Mediterranean Shipping Cruises, Louis Cruise Line, Festival Cruises, and Spanish Cruise Line  Germany: Festival Cruises, Hapag-Lloyd, Peter Deilmann, Phoenix Reisen, and Tranocean  United Kingdom: My Travel's Sun Cruises, Fred Olsen, Saga and Thomson 123
  • 123. Barriers to Entry 1. Competition 2. High start-up costs 3. Use of ports and facilities 4. Reputation and establishment 124
  • 124. Substitute Product/Services  High substitute product/services  Other cruise ship competitors -Royal Caribbean -Norwegian Cruise Line, etc.  Other forms of transportation -Airplane -Car -Train 125
  • 125. Customers  Low bargaining power for customers  Low bargaining power is due to fixed prices by: -Travel agents -Website booking 126
  • 126. Suppliers  Low bargaining power for Carnival Cruise  Low bargaining power is due to: -Competitive prices from suppliers around the world -But Carnival does use a limited number of suppliers for their fuel and port facility services. 127
  • 127. Societal Environment  Socio-cultural: Age (mostly older demographic), and Attitudes (think its expensive & will get sea sick)  Legal/political: Pollution and energy guidelines. Also safety concerns with falling off ships, terrorist attacks and potential wars with other countries  Technological: Wireless internet and cell phone use  Economic: Fuel price concerns, fluctuating economy and interest rate risks 128
  • 128. SWOT Analysis Strengths:  Largest cruise line in the world  Higher market shares than competitors  Acquired several companies in the cruise line industry  Global and International presence  Strong consumer demand in Europe  High value entertainment on ships  Cost advantages over most of their competitors  High customer satisfaction  Affordable vacation packages for families 129
  • 129. SWOT Analysis Weaknesses:  Poor safety record  Bad publicity  Many people think cruises are too expensive  Need to advertise low “average” prices 130
  • 130. SWOT Analysis Opportunities:  Cruise industry appeals to large demographic  More destination route locations  Asian and African markets  Advertising with different medias 131
  • 131. SWOT Analysis Threats:  Diseases  Weather  Tight competition with other cruise companies  Environment regulations  Increasing fuel prices  Cheaper vacation packages through competition with hotels, airline travel, and car driving 132
  • 132. VI: Recommended Plan of Action 133
  • 133. Mission/Objective  Mission: Continue to make customers feel appreciated by giving them great customer service. Customers who feel appreciated and have a fun time will tell their friends, co-workers and family about the wonderful experience they had.  Objectives: Attract customers by having promotional campaigns. Carnival also needs to make it aware to customers how a cruise vacation is affordable in a time where money can be scarce. 134
  • 134. Recommended Strategies for Environmental Concerns  Support environmental issues and laws  Improve cruise ships to become even more environmentally friendly  Fuel technology advancements  Solar technology advancements 135
  • 135. Recommended Strategies for Opportunities  Offer special discounts for repeat customers  Continue building relationships with travel booking companies, especially online companies.  Expanding on social media marketing  Sending promotional emails  Continue to add more entertainment activities  Offer more destination spots to attract customers who want to travel to different countries  Create a Referral Program  Create an alliance with an airline company 136
  • 136. Program Development  Make enhancements to emergency power capabilities, additional emergency generators and new fire safety technology.  Carnival also needs to create procedures to communicate quicker with passengers to let them know what is happening.  Create solar paneling on ships 137
  • 137. Feedback Implementation  Send customers who went on a cruise an email survey rating their satisfaction and experience. As a reward, give them a free drink ticket for any future cruises. 138