This document provides a brief history of Carnival Cruise Lines from 1972 to present day. It discusses key events and acquisitions that allowed Carnival to become the largest cruise line company in the world, including purchasing its first ship in 1972, experiencing early deficits that were later overcome through competitive pricing and onboard activities/entertainment, and acquiring other cruise lines like Holland America, Seabourn, Costa Cruises, and Celebrity Cruises to expand globally. The document also reviews Carnival's mission statement, current performance objectives, historical corporate strategies of integration, diversification, and retrenchment, as well as its main competitors of Royal Caribbean and Norwegian Cruise Lines.

1. Kimberly Bak
Kristen Bak
Gerald Lee

2. 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

3. Brief History
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

4. Brief History
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

5. Brief History
1990’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

6. Brief History
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

7. Brief History
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

8. 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

9. Current Performance
Objectives
◦ Carnival is currently
expanding and focusing on the
European market.
9

10. Historical Corporate Strategy
 Concentration
 Vertical Integration (External): Carnival Cruise Lines
purchased fuel and port facility services at some of its
ports of call. The company also performed major dry-dock
and ship improvement work at dry-dock facilities.
 Vertical Integration (Internal): In 2012, Carnival now has
90,000 employees. They have increasingly adding
employees to their company.
 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

11. 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

12. 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

13. 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

14. 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
 Narrow and 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

15. 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
 Whole Sellers
15

16. 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

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
17

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
18

19. Historical Functional
Strategies
◦ Degree of Selectivity of Channels
 Low (not selective/ intensive distribution)
 Medium (selective distribution)
 High (exclusive distribution)
◦ Pricing Level
 Competitive
 Overprice (premium pricing)
◦ 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.) 19

20. Carnival: Source of Funds
20
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
21
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
22
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
23
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
24
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
25

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.
26

27. Stock Performance
Ticker Symbols:
 Carnival: CCL
 Royal Caribbean: RCL
 Norwegian Cruise Line: NCLH
27

28. Stock Performance of CCL
28

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
29

30. Market Share of the Companies in
2008
30
54%
7.70%
24%
2008 Market Share
Carnival
Norwegian
Royal Caribbean

31. Market Share of the Companies in
2009
31
49.8%
6.69%
21.50%
Market Share in 2009
Carnival
Norwegian
Royal Caribbean

32. Market Share of the Companies
in 2010
32
53.9%
8.20%
25.00%
Market Share in 2010
Carnival
Norwegian
Royal Caribbean

33. Market Share of the Companies
in 2011
33
53.7%
7.50%
25.60%
Market Share in 2011
Carnival
Norwegian
Royal Caribbean

34. Market Shares of the Companies
in 2012
34
42.4%6.20%
21.20%
Market Share in 2012
Carnival
Norwegian
Royal Caribbean

35. Overall Market Share of the
Industry from 2008-2012
35
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
2012 2011 2010 2009 2008
Carnival
Norwegian
Royal Caribbean

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.
36
Formula:
Net income = net revenue - expenses
Net revenue = gross revenue - cost of
goods sold

37. Net Income from 2008-2012
37
$(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. 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
38

39. Net Sales from 2008-2012
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. Number of
Employees vs. Competitors
40
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
Norwegian Carnival Royal Caribbean
2008
2009
2010
2011
2012

41. Number of Cruise Ships
Per Cruise Line
41
Carnival: 102 ships
Norwegian: 12 ships
Royal Caribbean: 21
ships

42. Chart of Cruise Ships for each
Cruise Line
42
0
20
40
60
80
100
120
Carnival Royal Caribbean Norwegian
Number of Ships

43. Profitability Ratios
43
 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. 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.
44

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
45
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%
46
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. Gross Profit Margin in 2010
47
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
Cruise Line 2010
Carnival 37.10%
Norwegian 33%
Royal
Caribbean 33.90%

48. Gross Profit Margin in 2011
Cruise Line 2011
Carnival 34.00%
Norwegian 33.8%
Royal
Caribbean 34.40%
48
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

49. Gross Profit Margin in 2012
Cruise Line 2012
Carnival 32.00%
Norwegian 35.0%
Royal
Caribbean 32.90%
49
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

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.
50

51. Operating Profit Margin 2008
Cruise Line 2008
Carnival 19.60%
Norwegian -3.0%
Royal
Caribbean 12.70%
51
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Carnival Norwegian Royal
Caribbean
Operating Profit Margin 2008
2008

52. Operating Profit Margin 2009
Cruise Line 2009
Carnival 21.50%
Norwegian 9.2%
Royal
Caribbean 8.20%
52
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Carnival Norwegian Royal
Caribbean
Operating Profit Margin 2009
2009

53. Operating Profit Margin 2010
Cruise Line 2010
Carnival 16.20%
Norwegian 11.4%
Royal
Caribbean 11.80%
53
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

54. Operating Profit Margin 2011
Cruise Line 2011
Carnival 14.20%
Norwegian 14.2%
Royal
Caribbean 12.35%
54
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

55. Operating Profit Margin 2012
Cruise Line 2012
Carnival 10.60%
Norwegian 15.6%
Royal
Caribbean 5.20%
55
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

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.
56

57. Net Profit Margin 2008
Cruise Line 2008
Carnival 15.90%
Norwegian -10.0%
Royal
Caribbean 8.70%
57
-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

58. Net Profit Margin 2009
Cruise Line 2009
Carnival 13.20%
Norwegian 3.6%
Royal
Caribbean 2.70%
58
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

59. Net Profit Margin 2010
Cruise Line 2010
Carnival 13.60%
Norwegian 1.1%
Royal
Caribbean 7.60%
59
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

60. Net Profit Margin 2011
Cruise Line 2011
Carnival 12.10%
Norwegian 5.7%
Royal
Caribbean 8.00%
60
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

61. Net Profit Margin 2012
Cruise Line 2012
Carnival 8.40%
Norwegian 7.4%
Royal
Caribbean 0.20%
61
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

62. Common Sized Income
Statements
62
 This type of financial statement can be
used to allow for easy analysis
between companies or between time
periods of a company.

63. Common Sized Income
Statements for 2008
63
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
64
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
65
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
66
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
67
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.
68

69. III. Examination of the
Corporate Top Decision
Makers
69

70. Board of Directors
70
 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. 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
71

72. Internal Board of Directors
 Micky Arison- Chairman of the Board
(Son of Carnival founder Ted Arison)
 Arnold Donald- President & CEO
Carnival Corporation
 Pier Luigi Foschi- Chairman & CEO
Carnival Asia & Chairman of Costa
Crociere
 Howard Frank- VP of the Board &
CEO of Carnival Corporation
72

73. 1. Micky Arison
 Son of Carnival founder Ted Arison
 64 years old
 Born in Israel
 Jewish
 1979-2013 CEO of Carnival Corporation
 Owner of Miami Heat basketball team
73

74. 2. Howard Frank
 VP of the Board & CEO of Carnival Corporation
 72 years old
 Vice Chairman of the board of directors since
1993
 Joined Carnival as senior VP finance & Chief
Operating Officer in 1989
 Chairman of the Executive Committee of The
Cruise Lines International Association
74

75. 3. Arnold Donald
 President & CEO of Carnival Corporation
 58 years old
 Bachelors Degree in Economics
 Masters Degree in Mechanical Engineering
 Board of Director of Carnival since 2001
 Chairman of the Board of Merisant Company
from 2000-2005
75

76. 4. Pier Luigi Foschi
 Chairman & CEO Carnival Asia and Chairman
Costa Crociere
 66 years old
 Italian
 Chairman of Costa Crociere since 2000
 Appointed Chairman and CEO of Carnival Asia in
2012
76

77. External Board Members (7)
77
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

78. 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
78

79. 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
79

80. 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.
80

81. 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
81

82. 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
82

83. 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
83

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.
84

85. Members of the Audit Committee
 Richard Glasier
 Laura Weil
 Stuart Subotnick
 Randall
Weisenburger
 (All external members)
85

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.
86

87. Members of the Compensation
Committee
 Richard Galsier
 Randall Weisenburger
 Laura Weil
 (All external members)
87

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.
88

89. Members of the Nominating and
Governance Committee
 Sir John Parker
 Stuart Subotnick
 Richard Glasier
 Randall Weisenburger
 (All external members)
89

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.
90

91. Members of Health, Environmental,
Safety & Security Committee
 Sir John Parker
 Sir Jonathon Band
 Debra Kelly-Ennis
 (All external members)
91

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.
92

93. Inventory Turnover Ratio
93
0
10
20
30
40
50
60
2008 2009 2010 2011 2012
Inventory Turnover
Royal
Carnival Cruises
Norwegian Cruises

94. Days of Inventory Ratio
94
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2008 2009 2010 2011 2012
Days of Inventory
Royal
Carnival Cruises
Norwegian Cruises

95. Total Assets Turnover Ratio
95
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
2008 2009 2010 2011 2012
Total Assets Turnover
Royal
Carnival Cruises
Norwegian Cruises

96. Inventory Turnover vs.
Competitors
96
0
10
20
30
40
50
60
2008 2009 2010 2011 2012
Inventory Turnover
Royal
Carnival Cruises
Norwegian Cruises

97. 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
97

98. Management: Carnival
Australia
 Michael Ungerer- President
98
Management: Carnival Cruise
 Gerald Cahill- President & CEO
Management: AIDA
 Ann Sherry- CEO
Management: Carnival UK
 David Dingle- CEO

99. Management: Costa Crociere
 Pier Luigi Foschi- Chairman
 Michael Thamm- CEO
99
Management: Holland
America Stein Kruse- President & CEO
Management: Princess Cruise
 Alan Buckelew- President & CEO
Management: Seabourn
 Rick Meadows- President

100. Top Management Involved with
Board of Directors
 Micky Arison
 Arnold Donald
 Pier Luigi Foschi
 Howard Frank
100

101. Management Style
 Chairman Micky Arison is known for
being less hands on than most. He
gives great independence and
authority to his executive teams who
operate Carnival and Carnival brand
ships.
101

102. Management’s Compensation
102

103. IV. Examination of
External Environment
of the Company
(GERALD STARTS)
103

104. V. Examination of the
External Environment of the
company
104

105. 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
105

106. Barriers to Entry
1. Competition
2. High start-up costs
3. Use of ports and facilities
4. Reputation and establishment
106

107. Substitute Product/Services
 High substitute product/services
 Other cruise ship competitors
-Royal Caribbean
-Norwegian Cruise Line, etc.
 Other forms of transportation
-Airplane
-Car
-Train
107

108. Customers
 Low bargaining power for customers
 Low bargaining power is due to fixed
prices by:
-Travel agents
-Website booking
108

109. 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.
109

110. IV. Examination of the
External Environment of
the Company
110

111. 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
111

112. 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
112

113. SWOT Analysis
Weaknesses:
 Poor safety record
 Bad publicity
 Many people think cruises are too
expensive
 Need to advertise low “average” prices
113

114. SWOT Analysis
Opportunities:
 Cruise industry appeals to large
demographic
 Offer more destination route locations
 Expand to Asian and African markets
 Expand advertising by using different
medias
114

115. 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
115

116. VI: Recommended
Plan of Action
116

117. 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.
117

118. Recommended Strategies for
Environmental Concerns
 Support Environmental Issues
 Fuel Technology
118

119. 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
119

120. 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
120

121. 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.
121