Final SAOR

Grace Marcy and Skye Thebo
Norwegian Cruise Line Holdings Ltd.
Strategic Analysis of an Organization Report
HTM 495 – Professor Rood

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TABLE OF CONTENTS
Section 1: Executive Summary.................................................................................................................. 3
Section 2: Organization Mission and Values...................................................................................... 5
Section 3: Analysis of the External Environment............................................................................ 7
Section 4: Analysis of Competitive Position..................................................................................... 12
Section 5: Recommendations for Strategic Action........................................................................ 16
Section 6: References................................................................................................................................. 21
Section 7: Appendixes............................................................................................................................... 23

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Section 1: Executive Summary
Norwegian Cruise Lines Holdings Ltd was established in 1966 as a small, economy cruise
line and has since grown to serve multiple ports and regions. The company is knows for its
three distinct cruise line brands: Norwegian Cruise Lines, Oceania Cruises, and Regent Seven
Seas Cruises. Each brand serves a unique purpose: Norwegian Cruise Line services the
economy traveler, Oceania Cruises serves as a middle class cruise line, and Regent Seven
Seas Cruises appeals to those who are more interested in an all inclusive, luxurious
experience.
The company is driven to deliver the best experience to each traveler, no matter their
budget. They believe strongly that integrity, fairness, honesty, and accountability are key
characteristics in any NCLH employee, and use these same values as principles when
carrying out their day-to-day activities. Overall, the culture of NCLH is to provide a custom,
extraordinary experience to all the travelers who choose to take a voyage on one of their
vessels.
NCLH is part of an extremely large tourism industry and competes specifically with other
cruise lines within that industry. The markets they participate within include luxury,
contemporary, and premium cruise models. They do see a lot of competition, however
there are three other brands that they closely compete with which will be discussed in
further detail later. This is not expected to grow because the threat of entry into this
industry is almost non-existent. This being said, new competitors are not likely to appear
in the near future. The threat of entry is so low because the capital requirements required
to start a cruise line from the group up are exponential.
The three main competitors of NCLH are Royal Caribbean Cruise Ltd., Carnival Corporation,
and Holland American Line Inc. Of the three, Carnival offers the most destinations are the
world and many cruise ship options. Sometimes, this does give them the upper hand when
it comes to brand loyalty, because their sailing options are larger than those with NCLH.
Technological trends are growing within the cruise industry, and in order to remain
competitive, NCLH must start looking into faster internet with less expensive service
providers. They also will want to look into mobile calling capabilities, because this is a
growing want of cruise line travelers.
Many individuals have a genuine interest in the financial well being of NCLH. These
individuals include those hold positions within the company, those who have invested
financially in the company, and those who frequently travel aboard NCLH ships. These
people can be considered key stakeholders in the company and will remain invested in the
company for long-term periods of time.
The main capability NCLH has over its competitors would be the three distinct brands it
offers. With these, they appeal to many different people and can service anyone looking for
a seaside vacation.

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Within the cruise industry, the amount of ships and brands held by a company can be a
large indicator and differentiator of overall success. For example, the more brands, the
more brand recognition, the more interest, and finally, the more money made.
This being said, there are multiple ways the brand could improve itself and continue to
grow. The first way would be to penetrate the Asian market. Asia is a fast growing market
in the cruise industry, and as of right now, not many cruise lines service Asian territory.
The second way would be to implement environmentally friendly tactics in their
operations. Many individuals are becoming increasingly concerned with the environment,
and not many cruise lines have taken the initiative to “green” their ships. The third way
would be to increase in social responsibility. Many people are becoming more interested in
companies that have good morals and work for good causes. If NCLH were to support or
partner with a charity or organization, this would “tug on the heart strings” of those who
live to help others, pulling them to NCLH cruise lines over others.

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Section 2: Organization Mission and Values
Company Overview
Norwegian Cruise Line Holdings Ltd., or NCLH for short, was established in 1966 and
started as a small cruise line that only serviced the Caribbean areas. Since then, it has
grown and now serves as the “industry’s most dynamic diversified cruise operator with
three distinct brands” (Rio, 2015). The three brands, Norwegian Cruise Lines, Oceania
Cruises, and Regent Seven Seas Cruises all represent three different classes of luxury, and
therefore all stand unique in their own brand.
Norwegian Cruise Line serves as more of an “economy” cruise line, giving freedom and
flexibility to its travelers. Norwegian Cruise Line focuses on the ship itself, saying the “ship
is as important as the destination (Rio, 2015). Oceania Cruises serves as a middle class
cruise line, giving its travelers outstanding service and great value. Oceania Cruises
believes the “destination is key, but [the] choice of ship is relevant” (Rio, 2015). Regent
Seven Seas Cruises represent the most luxurious brand of the three, offering the most
inclusive luxury experience. With Regent, the “destination is paramount. All inclusive ultra
luxury experience on every vessel” (Rio, 2015). NCLH demonstrates social responsibility in
a moral way, by teaching their employees to live by their well thought out core values.
Mission Statements and Core Values
While researching the mission statement of Norwegian Cruise Line Holdings Ltd., we found
something rather unique about the company. Not only do they have an “umbrella” mission
statement for the entire company, they also have a mission statement specific to each of the
3 brands they represent: Norwegian Cruise Lines, Oceania Cruises, and Regent Seven Seas
Cruises.
The mission statement for NCLH, is “Maintaining each brand’s core proposition and
product offering while taking full advantage of cost-saving scale opportunities is key to the
success of the combination.” As a full company, their core values include integrity, fairness,
honesty, and accountability (Rio, 2015).
The mission statement for Norwegian Cruise Lines is to be a “leading global cruise line
operator, offering cruise experiences for travelers with a wide variety of itineraries… with
the goal of providing our customers the highest levels of overall satisfaction on their cruise
experience…” (Lacorte, 2013). This shows that although they provide a less expensive
cruise option, they still focus on creating memorable experiences for all guests who travel
aboard their vessels.
According the Oceania Cruises webpage, the mission statement for Oceania Cruises
explains they “will provide the highest quality cruise product for mature and discerning
travelers by offering the finest culinary experience at sea, authentic destination
experiences, and a warm and luxurious ambiance on every voyage. Combining a casually

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sophisticated onboard experience with the most alluring destinations around the world, we
provide our guests with a truly extraordinary travel experience. Oceania Cruises also states
their core values are to “do things the R.I.T.E. Way - Respect, Integrity, Trust and Excellence
are the foundation of all our actions, everyday, in everything we do.”
Regent Seven Seas Cruises also has their own mission statement. Consistent with the
Regent promise of providing luxury, their mission is to “provide an ultra luxury experience
in all corners of the world” (About Regent, 2016). Regent Seven Seas Cruises share the
same core values as Oceania Cruises - to do things the R.I.T.E. way.
Culture
Overall, the culture of NCLH is to provide a custom, extraordinary experience to all the
travelers who choose to take a voyage on one of their vessels. With three different brands
that cater to the individual needs to multiple travelers, NCLH proves to successfully service
each type of person. They believe in luxury and exceptional service and also strive to
create a unique experience for each guest.

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Section 3: Analysis of the External Environment
Industry Segment and Market
NCLH is part of the large tourism industry and competes specifically within the cruise
segment of that industry. Since NCLH holds three specific brands, they are able to
participate within three separate market structures within this segment. Those brands, as
previously mentioned, consist of Regent Seven Seas Cruises, Oceania Cruises, and
Norwegian Cruise Line. According to NCLH’s current CEO, Frank Del Rio, “our combined
portfolio covers every market segment from entry-level contemporary to all-inclusive ultra
luxury” (Rio, 2015).
The markets that they participate within include luxury, contemporary, and premium
cruise models. In this way, NCLH can provide “freedom and flexibility”, “service and
outstanding value”, and “the most inclusive luxury experience” to attract different target
markets to their brand (Rio, 2015). By creating three distinctive brands, NCLH is able to
broaden its reach in the cruise line market segment.
Attractiveness of Segment
After evaluating NCLH with Porter’s Five Forces Analysis tool, it is clear that the cruise line
industry falls directly between an attractive and yet surprisingly unattractive market.
[Please reference Figure 1 in the Appendix to view NCLH’s Five Forces Analysis chart.]
The nature of competitive rivalry and overall rivalry threat is high for NCLH with only three
other main competitors and with very little differentiation between products and services.
In addition, the sizes of each rival company are very uneven as far as ownership of brands
and ships, as well as numbers of destinations and ports. Further differences and
competitive advantages for each rival will be discussed in the following section.
In addition, the threat of industry substitutes is relatively high as well. Consumers can
choose many other tourism options for their vacations throughout the world. For example,
all-inclusive resorts and destination hotels offer a far more secure and comfortable option
for many tourism consumers. Even large theme parks, such as Disney or Universal Studios,
can pull consumers away from the cruise industry. These alternative options can seem
more approachable to many consumers who may be unfamiliar with the cruise line
industry and afraid to spend a large amount of savings on a trip if they are unsure whether
it will be enjoyable or not.
Oppositely, the threat of entry into this industry is quite low. While it is typical to see
growth with new ships and brands underneath a corporate cruise line holdings company, it
is not typical to see a new cruise industry corporation itself appear in the market. There are
really no advantages due to scale of the company, as building new ships will not decrease

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expenses for the corporation even if the fleets continue to grow. Expenses will typically
remain proportionate to the size of the company.
The capital requirements to join this industry are astronomical, as building a ship can mean
very high sunk costs, and that’s just for one ship, not a whole fleet. For example, it cost
about $1.24 billion to build the largest cruise ship as of 2010: Oasis of the Seas (Oaisis, n.d.).
If the tourism industry took a large hit due to the economy, war, or any other variables,
putting forth the capital expenditure to build a cruise ship can be a huge risk.
Supplier power is relatively low in the industry segment. This is due to the fact that there
are many alternative suppliers to cruise lines. These can be manufacturing suppliers,
building suppliers, and even suppliers of amenities such as soaps or towels for the cruise
ships. Buyer power, however, is at more of a medium level because even though there are
many alternative buyers, those buyers have access to full information on the industry and
have low switching costs if they choose to purchase from another brand or company.
Competition Analysis
Due to the low threat of corporate entry within the cruise industry, it is reasonable to
assume that the list of NCLH’s competitors is rather short. [Please reference Figure 2 in the
Appendix to view the Competitive Analysis.]
Those amongst the competition include; Royal Caribbean Cruise Ltd., Carnival Corporation,
and Holland America Line Inc. (Norwegian Cruise, n.d.). According to Yahoo! Finance,
Carnival Corporation has the largest revenue at $15.71 billion. NCLH takes third place at
less than a third of Carnival Corporation with $4.1 billion in revenue (Direct, 2016).
According to each competitor’s corporate website, Carnival operates with 10 cruise brands
and over 100 total ships, Royal Caribbean has 6 brands with 38 total ships, Norwegian has
3 brands with 22 total ships, and Holland America falls last with only the 1 brand and a
total of 15 ships under that brand.
Each brand competes based on their unique competitive positions within the industry.
Although many of the offerings amongst the corporations are similar, each still has a strong
competitive advantage against the others. NCLH offers a great variety of cruise style
options for consumers to choose between that endorse freedom and flexibility, immense
luxury and destination options, or even great value (Rio, 2015).
Royal Caribbean Cruises (RCC) is unique due to their innovative on-ship activities built in
for cruise guests to use at their leisure. Some of these unique attractions include ice rinks,
large waterslides, Flow Riders, full size rock walls, and even zip lines. It gives cruise
attendees fun options to participate in during full days at sea in between port destinations.
Carnival Corporation offers consumers the most destinations around the world to choose
from as well as the most cruise ship options. This can give them the competitive edge when

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it comes to brand loyalty because consumers can stick to the same brand, yet still
experience hundreds of different vacation experiences.
Lastly, Holland America Line Inc. has the unique opportunity in their competitive position
of being a privately held company (Direct, 2016). “Privately held companies are not
required to disclose details about their operations that could potentially benefit
competitors” (Dorward, n.d.). Additionally, owners of privately held companies have
complete authority over organizational decision-making and do not have to worry about
loss of control to “shareholder expectations and interference” (Dorward, n.d.).
Industry Structure
The consumer desire for freestyle cruising has caused a major change in the cruise industry
structure. What once was the style of a cruise full of required itineraries, time schedules,
and dress codes has now turned into a more flexible and unique experience for every
traveler. The industry as a whole responded to the wants and needs of the consumers and
has produced a more “compelling and differentiated cruise experience” as a result.
According to Frank Del Rio, NCLH’s current CEO, freestyle cruising is designed for
“championing individual freedom to explore deeper, richer experiences and [to] create
your own best vacation ever” (Rio, 2015).
While individual cruise market segments with divisions in luxury and value are still in
demand by the consumer, it seems that the shift towards a more flexible cruise experience
will not be changing anytime soon.
Environmental Analysis
The cruise industry, as well as any global industry, will be continuously affected by
environmental factors that will shape the direction of the industry. It is important for
companies to pay close attention to the environmental conditions surrounding their
respective industries because it will ultimately affect the way your business is run. If
analyzed and used properly, an environmental analysis chart can help a business be
proactive instead of reactive and prepare their company for the things that cannot be
controlled.
A major demographic trend that will be altering the way cruise lines advertise and position
themselves towards certain target markets will be the fact that the general population is
aging with the “Baby Boomers” generation. It is anticipated that this generation will retire
around age 65 and remain retired for longer than many previous generations (10 Ways,
2010). This trend could influence buyer power within the Five Forces Analysis because this
new target market will be a gold mine for cruise lines to take advantage of in the upcoming
years. Retired couples are apt to spend their savings on vacations once they have a good
balance of free time and money.

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The high demand for variety in cruise options, such as shorter cruise periods, and flexibility
mark a growing sociocultural trend. This trend was touched on when discussing the
changing industry structure and is an extremely relevant trend for companies to recognize.
At this stage, I believe most cruise companies are aware of this growing demand for unique
and less structured experiences.
Technological trends are of growing importance to follow. Many cruise lines are increasing
efforts to update onboard communication infrastructure as a result of the growing demand
for consumers to have easy access to social media and more. Cruise lines should work to
provide guests with more reliable, less expensive, and faster Internet and mobile calling
capabilities (Cruise Critic, 2014). This could potentially affect the supplier power in the
Five Forces Analysis because there are typically fewer suppliers available to choose from
when innovative technology is concerned.
Macroeconomic trends include market volatility due to wars and terrorism threats. With
the increasing threats from ISIS and similar terrorist organizations, many consumers are
becoming less apt to travel and the international tourism industry has decreased in
popularity. This also trails into global trends, as the issuance of US Travel Warnings as a
result of war and terrorism has severely affected travel demand.
Lastly, Maritime laws and regulations control international port access and routes which
falls under political-legal trends. This severely affects where a cruise line can travel to
under which route and also which ports they are allowed to dock in. An additional political-
legal trend with the US is the pressure for bans on smoking within a ship’s public areas and
even now in private guest rooms (Cruise Critic, 2014). While some cruise companies have
been slow to take on the bans, it has been an increasingly popular decision to put in place
amongst many cruises.
Competitive Life Cycle Analysis
The cruise industry is continuously evolving and as a result, it is imperative to track NCLH’s
position with the Competitive Life Cycle to determine the nature of competition within the
market. [Please reference Figure 4 in the Appendix to view the Competitive Life Cycle
chart.] After analyzing the current stages of the company, it is shown that NCLH is
presently located in the “growth” stage of the cycle.
According to The Strategist’s Toolkit, “business focus typically shifts from development to
scaling” and a “greater emphasis is placed on replication and expanding to meeting
growing demand” during the growth stage (Harris, 2013).
An article in Cruise Industry News online states that “Norwegian Cruise Line’s deployment
is expanding for 2017, as the Norwegian Getaway will sail from May through September
from Copenhagen” (Norwegian Building, 2016). In addition to the expansion in Denmark,
NCLH is also making adjustments to create destinations within Western Europe, Norway,
Iceland, Scotland, and the Mediterranean.

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In another article written by Susan Young, called “Cruising into 2016”, she writes that
“eight of ten travel agencies are projecting increased cruise sales in 2016, according to the
Cruise Lines International Association’s ‘Cruise Industry Outlook’ released this month”
(Young, 2016). This shows a growth in the cruise industry, as well as growth potential for
NCLH for the upcoming years.
Yet another example of expansion comes from an article in “Amandala”, one of Belize’s
leading newspapers. According to the article, “there is [currently] only one port for cruise
tourists in Belize – that is the Belize City port operated by the Belize Tourism Village, but a
second port is due to be added in southern Belize, possibly in late 2016 or 2017, by
Norwegian Cruise Lines at Harvest Caye” (Ramos, 2016). This is a different type of growth
for the company because it shows expansion in ports to exclusive destinations, which will
ultimately be a useful competitive advantage for NCLH against tough rivals.
Overall, it is clear that NCLH is placing their energy towards developing the scale of their
company in terms of fleet size, number of ports, and even destination countries. This can
largely be attributed to the fact that the cruise industry itself is expecting a large spike in
consumer interest and revenue for cruise companies during 2016 and years to follow.
There is no impending anticipation of a decline in growth and movement towards the
maturity phase in either the cruise industry or for NCLH itself, thus creating many
opportunities for the company to continue its growth.

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Section 4: Analysis of Competitive Position
Stakeholder Analysis
While analyzing the stakeholders invested in NCLH, we discovered that there are three
main categories of stakeholders. The first category would be those who hold positions
within the company. For example, each employee is invested in the success of the
company. Without NCLH, nearly 10,000 employees worldwide would suddenly be
unemployed (Hcareers, 2016). Their main interest in the company is the fact that they
provide employment. They have a personal interest in the wellbeing of the company.
Aside from that, the owners and CEO’s of the company also have a large amount of interest
in how well the company performs.
The second category of stakeholders would be those who have invested in the company
and purchased their stock. Recently, NCLH decided to go public and make stock available
for others to purchase. Naturally, those who have purchased the stock will be interested in
how well the company performs. The main interests of the stakeholders have been
analyzed in Figure 8.
The third category of stakeholders would be those who frequently travel aboard NCLH
ships. NCLH offers a rewards program to its frequent passengers which allows them to
accumulate points and use them for free voyages. These people would be interested in the
well being of the company to ensure their preferred cruise line is not only remaining
consistent, but performing well enough to improve and grow, giving them more travel
options. The interests of each stakeholder has been described in Figure 8. NCLH has been
very great about keeping the best interest of their stakeholders in mind, especially since
going public. There are no current alternatives available that would better the business.
It is clear that although each group is important, the employees and shareholders hold the
most importance. These are people that are counting on NCLH to feed their families and
earn a living. Without NCLH, or with the failure of NCLH, these people would be struggling
to make ends meet. Although the decision to go public recently was not expected, it does
coincide with the company’s values and has offered many great opportunities in the growth
of NCLH.
Capabilities analysis
The value chain, seen in Figure 9, is based on the needs and wants of both the employees
and the guests above the ship.
The number of ships available is important to the employees because it directly impacts
how many jobs are available. It is also important to the shareholders because the more
ships there are, the more opportunity for investment. Similarly, the number of destinations
served also directly impacts employment opportunities and serves as a broad base for

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potential guests. NCLH provides a few ports of destination that other cruise lines do not
offer. Because of this, they appeal to a wider group of voyagers. The rewards program
benefits mostly appeals to those who are customers of NCLH. Customers are highly
invested in rewards program opportunities and benefits, and many times, chose their
destination based on what their preferred cruise line offers. This ties into number of
destinations served, because they will then have the opportunity to visit many places… an
incentive for customers to chose NCLH. The economic impact is important to everyone
involved in NCLH. Being economically conservative is a huge trend in tourism, and
companies are not only recognized, but praised for choosing to be economically
sustainable.
The main core capability NCLH holds over its competitors would be the number of
destinations it serves and the three distinct brands it offers – economy, median, and luxury.
This is difficult to imitate successfully. Many cruise lines serve independently and appeal
only to certain economic classes. NCLH appeals to many different people because of the
variety of experiences it offers. Figure 10 explains the capabilities in more depth.
The people, processes, and systems seen in Figure 10 align remarkably. These definitely
serve as a good fit with the insights of the customers they appeal to. Internally, the
employees and customers fit with these systems because they are appreciative of the
opportunities offered aboard NCLH. Externally, the shareholders interests also coincide
with what NCLH has to offer.
As far as sustainability, the competitive advantage can be affected by two general forces:
Imitation and durability. The competitive advantage NCLH holds in terms of number of
destinations served is not easily imitated. Many cruise lines have expanded, but the
process of adding a port can be quite lengthy. NCLH holds a major advantage in this aspect.
As far as offering three separate brands to fit the needs of every customer, NCLH excels.
While other cruise lines offer multiple types of ships, they are not as distinctive in defining
the difference between brands. NCLH specifically identifies each brand and the services
that brand will offer to those aboard. This will allow them to sustain their competitive
advantage in these two categories.
Likewise, their durability holds very strong. Although other cruise lines offer similar
experiences, it is the guest who makes the final decision on which cruise line they prefer.
With NCLH offering many different types of ships and many different destinations, they
hold durable in the market.
Strategy Maps
Within the cruise industry, the amount of ships and brands held by a company can be a
large indicator and differentiator of overall success. The larger amount of established
brands a company has in this industry, the better they seem to be doing in revenue
numbers and market shares. [Please reference Figure 5 in the Appendix to view the
Strategy Map.]

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The chart in Figure 5 provides specific numerical values that have been evaluated further
in the graph beneath it. We have demonstrated NCLH’s industry positioning on a three-
dimensional strategy map representing number of ships, number of company brands, and
the overall 2015 year-end revenues of all four competitors. The relative size of the circles
represents the revenues, and the x and y-axis are labeled to represent the other two
dimensions.
Carnival Corporation and Royal Caribbean Cruises, Inc. still have the most attractive
competitive position within the market. Holland America Line Inc. sits in the least
attractive competitive position with such small numbers and only one brand. While NCLH
seems to be running a consistent third in the market, they still are in a sustainable position
against the competition because they are steadily growing as the cruise industry gains
more and more popularity with travelers. The most difficult part of entering the cruise
industry is the high level of barriers of entry and high sunk costs, as mentioned in the prior
Five Forces Analysis. Since NCLH has already surpassed that challenge of entry, they can
enjoy the low threat of new major competitors to the cruise market. Their sustainability is
thus reassured as long as the cruise industry continues to grow as it historically has been.
NCLH’s potential alone gives their competitive position attractiveness in the industry,
however, we still would say that their top competitors are so far ahead of their market
shares right now that catching up to their size levels and revenues would take many years,
if it will even happen at all.
Portfolio and Diversification
NCLH can easily be broken down into its three brand subcategories: Norwegian Cruise
Line, Oceania Cruises, and Regent Seven Seas Cruises. We can consider these brands to be
NCLH’s company portfolio. This portfolio of product offerings spans all the market
segments within the cruise industry. According to the President and CEO, Frank Del Rio,
NCLH is one of the industry’s most dynamic diversified cruise operators and the combined
portfolio works well because none of the three brands overlap each other in the market
(Rio, 2015). The three brands work together to provide relevance at each stage in the
consumer life cycle. While each brand does work together to produce the common goal of
increased revenue for NCLH, there are some major differences with performance between
each brand in the portfolio.
NCLH, as a parent company, is performing especially well in the industry and is expecting
large growth numbers for the upcoming year. According to Nasdaq research, the P/E
growth rate of 29.95% in 2015 is predicted to rise to 39.44% in 2016 (Forecast, 2016).
Each individual brand in the portfolio reined in a considerable percentage of the market
share of worldwide passengers and revenue in the most recently released numbers of
2015. [Please reference Figure 6 in the Appendix to view the Market Share chart.]

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Although NCLH is clearly the third highest in revenues and passengers, they still are doing
very well for such a small fleet of ships in comparison. NCLH earned 12.4% of the overall
market share revenue in the cruise industry and 10.4% in passengers market share (World
Wide, 2016). The market share for each individual brand is then broken down further from
the total. Norwegian Cruise Line received 8.7% of the revenue market share, which is
actually higher than most of its competition in its respective market segment. Royal
Caribbean is the only major competitor in that segment that really surpassed Norwegian at
a market share revenue of 14.2% (World Wide, 2016). These contemporary brands have
the highest berth percentage of the North American Market at 74.9% overall. This explains
why these large brands would draw in some of the higher numbers for both percentage of
passengers and revenues in the cruise industry (Rio, 2015).
For the premium and luxury brands of Oceania and Regent, they seem to be right on
average with the rest of those market segment brands. They typically offer smaller ship
sizes, averaging around 400 to 1,200 berths, whereas their competitors typically have ships
with 1,300 to over 5,000 berths. This is evident in the extremely low percent of passengers
numbers of .3% and .6% overall. Oceania still managed to grasp 2.3% of the market share
in percent of revenues, and Regent had just below its sister brand at 1.5% of revenues
(World Wide, 2016).
In order to better evaluate the success of each specific brand in the NCLH portfolio, it is
necessary to analyze the market shares and growth rates in the commonly used BCG
Matrix. [Please reference Figure 7 in the Appendix to view the BCG Matrix.] Norwegian
Cruise Line is easily labeled as a star for NCLH due to its competitive market share as
previously mentioned. In addition, Norwegian Cruise Line has four 4,200 berth new-builds
on order beginning in 2015 and ending in 2019 (Rio, 2015). This shows very positive and
aggressive growth rates for the contemporary brand. Oceania Cruises also falls in the star
category with Norwegian, however it is not quite as shining. While the market share in
revenue percentage was a great number for a brand with only 5 ships, they do have a
significantly lower growth rate than the Norwegian brand. NCLH intends to expand the
brand by a 684-berth ship this year in 2016 (Rio, 2015). This allowed Oceania to remain in
the Star category, but much closer to the center of the matrix.
Although surprising to consider the whole portfolio as stars for NCLH, we have also placed
Regent Seven Seas Cruises in that same category as well. While their market share in
revenue seemed lower than most, it is competitive for the luxury segment when compared
to the other high competitors. Regent is also expanding its fleet from three ships to four
with a 750 berth new-build in 2016. This increases the brand’s percentage of its fleet by
25%. According to the CEO, this ship is intended to be “The Most Luxurious Cruise Ship
Ever Built” (Rio, 2015). NCLH’s brand portfolio BCG Matrix may seem optimistic to many,
but they have such a diversified array of brands that they are able to nurture the growth of
each separately without harming the other brands. In addition, NCLH is in the growth stage
as a parent company, so its investment towards new ships for all the brands is really
powering each brand’s individual successes. For many of the competitors, they have so
many brands fighting for market share in the same market segments that it may turn some
of the brands into dogs, cash cows, or question marks from the steep internal competition.

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Section 5: Recommendations for Strategic Action
After a careful analysis of the competition and cruise industry environment, we have
decided upon three recommendations for Norwegian Cruise Line Holdings Ltd. to follow in
order to improve their competitive position and increase overall revenue. We suggest that
NCLH takes advantage of the potential within the Asian market as soon as possible, make
any newbuilds centered on being technologically advanced and environmentally friendly,
and take a bigger part in social responsibility and charity causes to give back to
communities and create a better image for the company. Each recommendation will be
further explained and supported by industry statistics in the sections below. We believe
that with careful implementation of each of our suggestions, NCLH will bring itself closer to
the size and competitive level of both Royal Caribbean Cruises Ltd. and Carnival Corp. and
make it that much more difficult for new competitors to jump ahead in the industry.
Penetrate the Asian Market
Asia is a fast growing market for the cruise industry, and it is important to recognize this
environmental industry opportunity and become a strong leader in the market before
competitors all rush in together. “Asia has overtaken Northern Europe as the third biggest
region in terms of passenger capacity, according to independent date from the 2015-2016
Cruise Industry News Annual Report” (Asia, 2015). According to another article on Cruise
Industry News, Asia is predicted to grow by 20%, which will account for over 2.2 million
passengers and 69 ships sailing in that region alone. Currently Star Cruises remains the
largest operator in the Asian market; however, Royal Caribbean Cruises Ltd. is closing the
gap by adding nearly 200,000 more passengers to its regional capacity year over year (Asia,
2015). It is clear that Royal Caribbean has recognized the potential of the Asian market and
has already begun the push to increase capacity in that region.
If Norwegian waits too long to see if this is a smart move, Carnival Corp. and other
competitors will jump on the opportunity first and make it extremely difficult for NCLH to
squeeze into the region and collect any additional revenues. To put it into perspective,
“Asia capacity now accounts for just over 10 percent of the global cruise industry, trailing
only the Caribbean and Mediterranean” (Asia, 2015).
We have noticed NCLH beginning to make efforts to tap into this regional market, however,
none of their publically expressed plans seem to be of a solid nature. According to another
article in Cruise Industry News, “despite an announced 2016-2017 season in the Caribbean,
the Norwegian Star is booked into a berth in Hong Kong on Monday, January 16, 2017, as
noted on the Kai Tak Cruise Terminal website” (Norwegian Star, 2015). This shows some
strategy to move current ships to new ports in Asia, but the website lists this information
as a transit stop. This means that the Norwegian Star could plan to go anywhere else in the
region, even a worldwide cruise, but it could also just be reserving a “spot” in case a re-
deployment decision comes along before then (Norwegian Star, 2015).

17
According to the CEO of NCLH, his plan is to wait for the Chinese market to mature (Rio,
2015). This may have been a good decision a few years back, but now we have analyzed
data regarding the potential of Asia and we truly believe the time to push that market is as
quickly as possible within reason. Royal Caribbean Cruises Ltd. has already penetrated the
market with its fairly new ship called Quantum. “After cruising the Caribbean for six
months it goes to China where it will be based indefinitely reflecting the global shift in
cruise demand and where passengers are prepared to pay top prices to travel” (Bradley,
2014). According to an article regarding the launch of this new ship, “mature cruise
markets, particularly the Caribbean, are saturated and passengers have become
accustomed to aggressive discounting” (Bradley, 2014). With this theory in mind, it may be
best to pull some ships primarily focused on the Caribbean and move them to ports within
the Asian market and earn a higher per diem rate for the same ship. It may even be a great
market to introduce a new Regent Seven Seas ship to because of the demand for luxury and
the demographic ability to pay top price for quality experiences.
Even the CEO, Frank Del Rio, said himself that “currently about 3% of the U.S. population
has cruised [and] if 0.3% of the population of China (1/10th of U.S. penetration) were to
cruise, the industry would need 100 additional ships to meet the demand” (Rio, 2015). It is
clear that there needs to be a strong movement into this market opportunity.
Environmentally Friendly Initiative
Environmentally responsible businesses seem to draw in a broad spectrum of today’s
markets because there is a large push and trend for the environmentally conscientious
company. Perhaps this is because it shows a company doesn’t just put its profits first, but
focuses on achieving the triple bottom line: people, planet, and profit. We recommend that
NCLH make any newbuilds or remodels of ships to be environmentally friendly using
modern technologically advanced systems to achieve this goal. The following points are
basic guidelines to keep a cruise ship eco-friendly, or at least less of a negative impact on
the environment:
- Energy consumption that minimizes atmospheric emissions
- Water consumption aimed at minimizing the quantity of wastewater
- Waste management to minimize the quantity of waste and to recycle or sort waste
- Using chemicals in ways that reduce the number of products as much as possible
and employing correct dosages (environmentally friendly alternatives are
prioritized over cheaper, more harmful options)
- Avoiding disposable (single-use) products or those with short service lives
According to recent news, there is a new competitor emerging in the cruise industry in the
very near future. Virgin Cruises are set to sail from Miami in 2020, which is pretty close for
an industry as difficult to join as the cruise industry. Their competitive edge is staying on
top of new technology and being environmentally friendly throughout their fleet of ships to
be introduced slowly throughout the next decade. NCLH should have the primary goal of
not letting this new competitor have this niche competitive advantage. With so much

18
capital already circulating within NCLH, they should be introducing new ships at a faster
pace that can compete with the new brand or else they will become a similarly positioned
competitor rather quickly.
Norwegian Cruise Line should be the front liner brand to adapt this new image as quickly
as possible. With the luxury brands, it may be less necessary to immediately carry out such
a plan as they have so many fewer ships anyhow and that type of consumer is more than
likely concerned with quality and luxury rather than the effects on the environment. We
suggest this new breed of ships be docked within the strong markets of China and the
Caribbean to begin. Eventually we would like to see all of NCLH’s fleet reconfigured to be
more eco-friendly. According to a prepared statement from the Leeds Metropolitan
University, “...more must be done by the cruise industry in terms of the environmental
impact of cruise ship’s discharges, as cruises usually operate in highly valued costal water
and marine ecosystems” (Research, 2014).
One way to improve efficiency while considering the environment is the use of liquefied
natural gas. “LNG ensures that the vessel is among the most environmentally friendly ships,
with substantially reduced emissions compared to ships with engines and propulsion
systems that run on traditional heavy fuel oil. Nitrogen oxides (NOx) emissions are cut by
92 percent. Sulfur emissions are eliminated altogether, and particle emissions are being
reduced by 98 percent. On top of that, the technology allows for a 22 percent net reduction
of CO2” (Technical, 2013). This is all reported by a released statement and interview from
Norway’s Fjord Line. It is also important to take considerations within the spa, restaurants,
and kitchens, all of which are areas known to create large amounts of waste.
Another leader in the eco-initiative is a smaller company called the Viking Line. One of their
ships, called the Viking Grace, has been applauded for their advancements with the use of a
hydrodynamic hull that minimizes swells and also the use of LNG that radically reduces
their ship’s emissions. Overall, the added recognition for being environmentally friendly is
bonus enough, but it will also allow for an improved moral standing within the cruise
industry that already hosts a “bad-rap” for the ecological damage cruise ships can cause.
This new initiative should be intertwined with a new marketing advantage to promote the
work being done by NCLH and should also be proudly displayed on the corporate website.
Increase in Social Responsibility
“New research published by Leeds Metropolitan University claims that the cruise industry
is ignoring their corporate social responsibility towards the environment, society and the
destinations they visit. The study, published this month in the journal Tourism
Management, analyzes what it calls the industry’s lack of corporate social disclosure, and
ranks companies on their corporate social responsibility reports and websites to provide
the first cruise sector sustainability reporting index” (Research, 2014). NCLH has not taken
any care to promote their charitable efforts, and we have decided that this is most likely
because they are not actually a part of many socially responsible causes or charities.

19
After a heavy search online, we only managed to find one article even mentioning a bond
between NCLH and a charitable organization. It dated all the way back to 2010. The article,
titled Norwegian Epic Celebrates Earth Day by Supporting Sea Life, states that “in an effort to
further support the environment and the regions in which the ship will sail, Norwegian is
saluting the Office Snook Water Pollution Program/Youth Environmental Programs Inc.'s
sea turtle release event and donating $5 for every deposited booking made on April 22 for
any of Norwegian Epic’s scheduled sailings through April 7, 2012” (Norwegian Epic, 2010).
While this was a great initiative, doing one good act on a single day will not ensure NCLH a
free pass for the years to follow. They must either rekindle new initiatives with the
aforementioned organization, or start new relationships with other causes.
We have no specific recommendations as to which charities to support, as that could be
attributed to personal reasons from the CEO or other corporate decision makers, but we do
suggest that NCLH picks an organization or cause to support soon with either a fundraising
initiative or continual donation of some kind. Once this charity bond is established, it would
be highly beneficial for NCLH to have a Public Relations employee work hard to get the
word out. It needs to be placed directly on the NCLH website as well as a new and
improved mission statement that points out the company’s desire to be socially
responsible.
In a huge article on the USA Today website, NCLH missed a crucial opportunity to be on the
large list of “do-gooders” in the cruise industry. As a result, the company missed out on a
prime free advertising opportunity and really looked bad by not having any noteworthy
cause worth writing about. Among the ten cruises listed were: Crystal Cruises, MSC Cruises,
Royal Caribbean, Celebrity Cruises, Seabourn, Lindblad expeditions – National Geographic,
Holland America Lines, Princess Cruises, and Blount Small Ship Adventures. If even the
smallest of cruise lines, such as Crystal Cruises and Blount, managed to make the cut for
this list, how is it possible that NCLH couldn’t even land one brand a spot in the article?
Some of the charities supported from this list include orphanages, voluntourism
opportunities with excursions, UNICEF, Make-A-Wish, Breast Cancer Research Foundation,
UNESCO (safeguarding of World Heritage sites), sustainable tourism efforts, St. Jude
Children’s Research Hospital, and Susan G. Komen for the Cure (Golden, 2014). The causes
don’t need to have any relation to the cruise industry, they just have to mean something to
the company or be known to many around the world.
Furthermore, the aforementioned university released in its report that “sixty five percent
of 80 cruise companies worldwide which were analyzed do not mention corporate social
responsibility on their websites, and only 12 brands publish corporate social reports-
belonging to only four companies: Carnival Corporation, Royal Caribbean International, TUI
and Disney Cruises, according to the study” (Research, 2014). They point out that
companies mostly report on the corporate mission or strategy and any credentials, but they
deeply fail to provide actual performance data on social responsibility with environmental
and socio-economic matters.

20
This is honestly a missed opportunity for NCLH and makes them look weak in comparison
to their tough competitors: Royal Caribbean International and Carnival Corporation. If
NCLH’s strongest competitors ensure to publish corporate social reports that are very
easily assessable from their corporate websites, then it is clear that NCLH is missing both
an opportunity to compete on another level and also moral obligation to the very
consumers that keep NCLH in business. “Not one of the 80 companies reports on the
sustainability of the resources consumed or biodiversity actions, and few disclose their
positive social or economic impact on destinations” (Research, 2014). If you ask us, this is
the perfect way for NCLH to stand out amongst the competition by publicly displaying the
good they do for the world. And if they do not have enough positive information to disclose,
we highly suggest NCLH works to improve their position with social responsibility.

21
Section 6: References
10 Ways Baby Boomers Will Reinvent Retirement (2010, February 16). In U.S. News &
World Report: Money.
2015 World Wide Market Share (2015). In Cruise Market Watch.
About Regent. (2016). In Regent Seven Seas Cruises. Retrieved February 1, 2016,.
Asia Now Third Biggest Cruise Market (2015, March 10). In Cruise Industry News.
Bradley, G. (2014, September 13). Making Megaships - how the biggest cruise ships are
built. In Business Herald.
Cruise Critic's Top 14 Cruise Trends for 2014 (2014, January 15). In Cruise Critic.
Direct Competitor Comparison (2016, February 2). In Yahoo! Finance. Retrieved February
2, 2016.
Dorward, L. (n.d.). The Advantages of Being a Privately Owned Company. In Chron.
Forecast P/E Growth Rates (2016). In Nasdaq.
Golden, F. (2014, July 31). Charity cruises: enjoy yourself while giving back. In USA Today:
Travel Experience Cruise.
Harris, J. D., & Lenox, M. J. (2013). The Strategist's Toolkit. Charlottesville, VA: Darden
Business Publishing.
Hcareers. (2016, February). Norwegian Cruise Line Careers. In Norwegian Cruise Line.
Retrieved February 18, 2016.
Lacorte, V. L. (2013). Norwegian Cruises. In Tuck School Of Business at Dartmouth.
Retrieved February 1, 2016,.
Norwegian Building Up Europe in 2017, Getaway to Northern Europe (2016, January 25). In
Cruise Industry News.
NORWEGIAN CRUISE LINE HOLDINGS LTD. Competition (n.d.). In Hoovers.
Norwegian Epic Celebrates Earth Day by Supporting Sea Life (2010, April). In Cruise Industry
News.
Norwegian Star Heading for Asia? (2015, July 15). In Cruise Industry News.

22
Oceania Cruises. (2016). Company Information. In Oceania Cruises: Your World. Your Way..
Retrieved February 1, 2016,.
Oasis of the Seas Luxury Cruise Liner (n.d.). In Ship-Technology.
Ramos, A. (2016, January 30). Cruise port exclusivity in Belize - a thing of the past. In
Amandala.
Research Claims Industry Fails to Take Sustainability Seriously (2014, April 3). In Cruise
Industry News.
Rio, F. D. (2015, May 20). NCLH 2015 Annual Shareholder Meeting. In NCLH Shareholders.
Technical: Environmentally Friendly (2013, October 13). In Cruise Industry News.
Viking Grace - Environmental Pioneer (2012, August 28). In Cruise Industry News.
Young, S. J. (2015). CRUISING INTO 2016. Travel Agent, 347(3), 28-30.

23
Section 7: Appendixes
Figure 1 (Five Forces Analysis):

24
Figure 2 (Competitor Analysis):

25
Figure 3 (Environmental Analysis):

26
Figure 4 (Competitive Life Cycle Analysis):
Norwegian
Cruise Line
Holdings Ltd.

27
Figure 5 (Strategy Map):
Number of
Company
Brands (x-axis)
Number of
Ships (y-axis)
Revenues
(Circle Size)
Norwegian
Cruise Line
HoldingsLtd.
3 22 4.10 B
Royal
Caribbean
CruisesLtd.
6 38 8.21 B
Carnival
Corporation
10 101 15.71 B
Holland
AmericaLine
Inc.
1 15 163.10 M
Number of Company Brands
NumberofShips
100
90
80
70
60
40
30
20
10
0
1 2 3 4 5 6 7 8 9 10
Carnival Corp.
Royal
Caribbean
Norwegian
Holland
America

30
Figure 8 (Stakeholder Analysis):
Employees Customers Shareholders
Product Safety 1 1 3
Job Fulfillment 1 5 5
Financial Returns 3 3 1
Impact on
Environment
3 3 5
1 = Critical importance to stakeholder
3 = Some what important to stakeholder
5 = Not very important to stakeholder

31
Figure 9 (Progression Chart):
Number of
Destinations
Served
Number of
Ships
Available
Rewards
Program
Benefits
Economic
Impact

32
Figure 10 (Capabilities Analysis):
Number of Destinations
Served
Distinct Brands
Processes  Many more
destinations than
other cruise lines
 Branded 3 separate
entities that appeal to
all kinds of people
People (Skills)  Allows room for
higher employment
and more space for
guests
 Allows multiple kinds
of people to work and
play aboard the ships
Systems/Technology  Many ports available  Allows each ship to
build its technology
based on the brand
(for example,
luxurious cruises will
implement more
technology systems)
Alignment  Aligns with interests
of guests
 Aligns with interests
of guests
Sustainability  Hard to imitate: holds
much sustainability.
 Hard to imitate: holds
much sustainability

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