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Undergraduate Student Project
Entire Presentation should be prescriptive in nature. Never read anything, not even the mission statement.
STRATEGIC PLAN 2013-2015
I. Company Overview
II. Mission/Vision Statement
III. Internal Assessment
IV. External Assessment
V. Strategy Formulation
VI. Strategy Implementation
VII.Conclusion
PRESENTATION OUTLINE
COMPANY OVERVIEW• HEADQUARTERS: Miami, Florida, and London, England
• CRUISE BRANDS: Carnival Cruise Lines (24 ships) Princess Cruises (17 ships) Holland America Line (15
ships) Costa (14 ships) P&O Cruises (7 ships) Cunard (3 ships) Seabourn (6 ships) AIDA (10 ships) P&O Cruises Australia (4 ships) Iberocruceros (3 ships)
• TOTAL NUMBER OF SHIPS: 102
• EMPLOYEES WORLDWIDE: Approximately 90,000
• STOCK EXCHANGE: NYSE and LSE (symbol: CCL)
• 2012 REVENUES: $15.4 billion
• 2012 NET INCOME: $1.5 billion
• CRUISING AREAS: Alaska - Bahamas - Baltic – Bermuda- Caribbean- Hawaii - Mediterranean – New England - North Cape – Panama Canal -South America - South Pacific and other worldwide destinations
Carnival Corporation & PLC:No current vision statement
Proposed Vision Statement:
Carnival’s vision is to provide the world with the finest and safest vacation experience for
our employees and guests.
VISION STATEMENT
Our mission is to take the world on vacation and deliver exceptional experiences that appeal to a large variety of
consumers, all at an outstanding value. We believe our multi-brand strategy is essential to achieving our mission and
maintaining our leadership positions. Our ten unique brands with worldwide sourcing of guests and diverse
itinerary options allow us to expand our offerings to our past guests, while continuing to grow our business through the
acquisition of new guests in established and emerging markets. Our success also depends on, among other things,
our ability to exceed the expectations of our guests by providing them with a wide variety of exceptional vacation
experiences. We strive to capture a greater share of consumers’ spending on vacations by providing extraordinary
cruise products and services, all at an outstanding value.
MISSION STATEMENT
Our mission is to provide our valued customers with the
ultimate vacation experience through a variety of
fabulous food and entertainment (1,2, and 7). We provide state
of the art cruise ships all over the world while enhancing
technology upgrades (3&4). We follow all maritime
regulations to ensure the safety of our employees and
passengers while at sea (5&9). We strive to provide
affordable vacations for all demographics, while
maximizing our shareholder’s profits (8). Our highest
priority remains to perform in an ethical manner while
serving our guests (6).
PROPOSED MISSION STATEMENT
Vision Statement:
Our vision is to empower and enable our employees to deliver the best vacation experience for our guests, thereby generating superior returns for our shareholders and enhancing the well-being of our communities.
ROYAL CARIBBEAN : MISSION/VISION
Mission Statement:
We always provide service with a friendly greeting and a smile. We anticipate the needs of our customers. We make all efforts to exceed our customers’ expectations. We take ownership of any problem that is brought to our attention. We engage in conduct that enhances our corporate reputation and employee morale. We are committed to act in the highest ethical manner and respect the rights and dignity of others. We are loyal to Royal Caribbean and Celebrity and strive for continuous improvement in everything we do.
WEBSITE ANALYSIS
WEBSITE ANALYSIS
Social Media
Social Media
Internal Assessments
RATIO ANALYSIS
Carnival Corporation &
PLC Royal Caribbean
Current Ratio 0.2 0.2
Quick Ratio 0.2 0.2
Long Term Debt to Equity 0.3 0.8
Inventory Turnover 39.4 52.7
Total Assets Turnover 0.4 0.4Accounts Receivable Turnover 21.1 27.4
Average Collection Period 17.3 13.3
Gross Profit Margin 0.9 0.9
Net Profit Margin 0.1 0Return on Total Assets (ROA) 0 0
Return on Equity (ROE) 0.1 0
Chairman of the Board/ CEO
Vice Chairman of the Board/COOCFO CAO
Director Director Director Director Director Director Director Director Director Director Director Director
CURRENT ORGANIZATIONAL CHART
Board of Directors
CEO
CFO CAOCOO
President of the
Australian Market
President of the
European Market
President of the
Spain and Brazil
Market
President of the North
American Market
President of
Carnival
President of
Princess
President of
Holland
President of
Seabourn
President of P&O
Australia
President of Costa
President of P&O
President of Cunard
President of AIDA
President of Ibero
RECOMMENDED ORGANIZATIONAL CHART
HRMCIO CMO CSO
MARKET POSITIONING MAP
Royal Caribbean Carnival Corporation & PLC
High Price
Low Price
Good Customer Service
Bad Customer Service
COMPANY WORTH ANALYSIS
Carnival Corporation and PLC Stockholders' Equity $19,414 Net Income x 5 $6,490 (Share Price/EPS) x Net Income $24,117 Number of Shares Outstanding x Share Price $28,942 Method Average $19,741
Royal Caribbean Stockholders' Equity $7,876 Net Income x 5 $92 (Share Price/EPS) x Net Income $1,999Number of Shares Outstanding x Share Price $8,157 Method Average $4,531
INTERNAL STRENGTHS
1.Carnival Corporation and PLC is the largest cruise company in the world, having 48.4% of worldwide market share in passengers.
2. Passenger Capacity has increased over the last 4 years at an average rate of 3.59%.
3.Fuel consumption has been reduced 21% since 2007, with a projection to reduce fuel consumption by another 5% per unit.
4. The Holland America line has the highest rate of repeat customers in the cruise industry.
5. Seabourn Yachts have a service ratio of one staff member to one guest.
6.
P&O Cruises is the leading Australian cruise line, with 300,000 passengers annually. P&O Cruises (Australia) carried almost half of all Australia and New Zealand cruise passengers in 2012.
7. In 2012, our North America brand represented 61% of our total passenger capacity.
8.Carnival Corp & PLC owns 40% interest in Grand Bahamas Shipyard, LTG, which is the largest cruise ship dry- dock repair facility in the world.
9.Carnival Cruise Line operates from 19 homeports in North America, which is more than our competitors.
10.Carnival Cruise Lines and PLC serves 8.5 million guests a year and has 10 distinct cruise lines under ownership.
INTERNAL WEAKNESSES
1. The net income was $1,298 in FY2012, a decrease of 6% as compared to 2011
2. Revenues declined $410 million in 2012
3.Protecting the health, safety, and security of our guests, employees and all others working on behalf of the company since Costa Concordia tragedy.
4. Carnival Corporation &PLC accounts for 30% of disapperances of guests at sea since 2000.
5. Communicating with passengers and employees, if in crisis mode while sailing. (Costa Concordia tragedy)
6.During 2012, $28 million was spent for ship incident- related expenses that were not covered by insurance.
7.Sales of cruises mainly booked through travel agents cost 10% of sales fees and additional commissions.
8. Cash can only be used in the gaming area of the boat
9.
Full brand recovery from Costa Concorida tragedy will take 2-3 years, extra marketing would come in three areas: funds directed at travel agents, including cooperative advertising; social media; and possibly more TV ads.
10.Loyalty program was recently expanded to six tiers from two, downgrading some members to lower membership level and taking away perks.
IFE MATRIX Internal Factor Evaluation Matrix (IFE) Strengths Weight Rating Weighted Score1.
Carnival Corporation and PLC is the largest cruise company in the world, having 48.4% of worldwide market share in passengers.
0.08 4 0.32
2. Passenger Capacity has increased over the last 4 years at an average rate of 3.59%. 0.05 3 0.15
3. Fuel consumption has been reduced 21% since 2007, with a projection to reduce fuel consumption by another 5% per unit.
0.06 3 0.18
4. The Holland America line has the highest rate of repeat customers in the cruise industry.
0.05 3 0.15
5. Seabourn Yachts have a service ratio of one staff member to one guest. 0.04 3 0.12
6. P&O Cruises is the leading Australian cruise line, with 300,000 passengers annually. P&O Cruises (Australia) carried almost half of all Australia and New Zealand cruise passengers in 2012.
0.04 4 0.16
7. In 2012, our North America brand represented 61% of our total passenger capacity. 0.06 4 0.24
8.Carnival Corp & PLC owns 40% interest in Grand Bahamas Shipyard, LTG, which is the largest cruise ship dry- dock repair facility in the world.
0.07 3 0.21
9. Carnival Cruise Line operates from 19 homeports in North America, which is more than our competitors.
0.05 4 0.20
10. Carnival Cruise Lines and PLC serves 8.5 million guests a year and has 10 distinct cruise lines under ownership.
0.06 4 0.24
IFE MATRIX CONTINUED
Weaknesses Weight Rating Weighted Score1. The net income was $1,298 in FY2012, a decrease of 6% as compared to 2011 0.05 1 0.05
2. Revenues declined $410 million in 2012 0.04 1 0.043. Protecting the health, safety, and security of our guests, employees and all others
working on behalf of the company since Costa Concordia tragedy.0.07 1 0.07
4. Carnival Corporation &PLC accounts for 30% of disapperances of guests at sea since 2000.
0.05 2 0.10
5. Communicating with passengers and employees, if in crisis mode while sailing. (Costa Concordia tragedy)
0.05 2 0.10
6. During 2012, $28 million was spent for ship incident- related expenses that were not covered by insurance.
0.06 1 0.06
7. Sales of cruises mainly booked through travel agents cost 10% of sales fees and additional commissions.
0.02 2 0.04
8. Cash can only be used in the gaming area of the boat 0.01 2 0.029. Full brand recovery from Costa Concorida tragedy will take 2-3 years, extra
marketing would come in three areas: funds directed at travel agents, including cooperative advertising; social media; and possibly more TV ads.
0.06 1 0.06
10. Loyalty program was recently expanded to six tiers from two, downgrading some members to lower membership level and taking away perks.
0.03 2 0.06
TOTALS 1.00 2.57
External Assessments
COMPETITIVE PROFILE MATRIX
Critical Success Factors Weight Rating Score Rating Score Rating ScoreAdvertising 0.11 4 0.44 3 0.33 2 0.22Market Penetration 0.07 3 0.21 2 0.14 4 0.28Customer Service 0.09 3 0.27 2 0.18 4 0.36Store Locations 0.09 4 0.36 3 0.27 1 0.09R&D 0.07 3 0.21 2 0.14 4 0.28Employee Dedication 0.06 2 0.12 1 0.06 4 0.24Financial Profit 0.09 4 0.36 2 0.18 3 0.27Customer Loyalty 0.08 2 0.16 3 0.24 4 0.32Market Share 0.10 4 0.40 3 0.30 1 0.10Product Quality 0.08 2 0.16 3 0.24 4 0.32Top Management 0.06 3 0.18 2 0.12 4 0.24Price Competitiveness 0.10 4 0.10 3 0.30 1 0.10Total 1 2.97 2.50 2.82
Carnival Royal Caribbean Disney Cruises
EXTERNAL OPPORTUNITIES
1.Long term expansion in Asian Vacation Markets due to increased prosperity and size of Asian countries (2012: 8% and 2013: 10%)
2.Worldwide, the cruise industry has an annual passenger compound annual growth rate of 7% from 1990 – 2017.
3. Unveiling of nine cruise ships through March 2016. (Note, this is a Strength, not Opportunity)
4. The UK Provides the largest number of cruise passengers sourced in Europe; 1.8 million are estimated to have cruised in 2012.
5. Europeans and Australians have significantly more vacation days a year than North Americans (4 weeks paid vacation)
6.The age group of 45 years and older is expected to grow by 13% in US and Canada and 11% in the major Western European countries by 2022.
7. The global travel and tourism industry is expected to grow approximately 2.8% during 2012
8.Almost 60% of the cruise passengers in the world are sourced from the North American region, where Carnival Corporation has 19 US ports.
9.Demand for technology growing on cruise ships; In the past five years, Internet logins on the MTN network almost doubled from approximately 15 million to 27 million per year
10.Cruising is about five percent of the overall vacation market and is the fastest growing segment of the travel industry
EXTERNAL THREATS
1.A 6.3% increase in fuel prices, since February 2013. (Fuel accounts for 20% of cruise ticket price)
2.The Costa Concordia and European sovereign debt crisis impacted all cruise line revenues by about -5.1%
3.Increasing cost of ship building; In 1990 it cost $250 million to build a ship, where as in 2012 it cost $740 million.
4. Safety and security of travel- terrorism, drug attacks, vessel seizures
5. Royal Caribbean passengers carried increased 0.3% last year
6. Currency risk- the US dollar decreased 0.3% in Feb. 2013
7. The United States unemployment rate is currently still high at 7.40%
8.Trend toward healthy eating and lifestyles; 1 in 4 Americans are currently on a diet, which is 25% of US Americans.
9. Global warming is causing the oceans to absorb a great deal of extra heat (up to 90%).
10. Increase of corporate tax
EFE MATRIX External Factor Evaluation Matrix (EFE)
Opportunities Weight Rating Weighted Score1. Long term expansion in Asian Vacation Markets due to increased prosperity and size of
Asian countries (2012: 8% and 2013: 10%)0.05 3 0.15
2. Worldwide, the cruise industry has an annual passenger compound annual growth rate of 7% from 1990 – 2017.
0.07 4 0.28
3. Unveiling of nine cruise ships through March 2016. 0.05 4 0.204. The UK Provides the largest number of cruise passengers sourced in Europe; 1.8
million are estimated to have cruised in 2012.0.04 3 0.12
5. Europeans and Australians have significantly more vacation days a year than North Americans (4 weeks paid vacation)
0.05 3 0.15
6. The age group of 45 years and older is expected to grow by 13% in US and Canada and 11% in the major Western European countries by 2022.
0.05 3 0.15
7. The global travel and tourism industry is expected to grow approximately 2.8% during 2012
0.07 3 0.21
8. Almost 60% of the cruise passengers in the world are sourced from the North American region, where Carnival Corporation has 19 US ports.
0.06 4 0.24
9. Demand for technology growing on cruise ships; In the past five years, Internet logins on the MTN network almost doubled from approximately 15 million to 27 million per year
0.04 2 0.08
10. Cruising is about five percent of the overall vacation market and is the fastest growing segment of the travel industry
0.06 3 0.18
EFE MATRIX CONTINTUED
Threats Weight RatingWeighted
Score1. A 6.3% increase in fuel prices, since February 2013. (Fuel accounts for 20% of cruise
ticket price)0.06 2 0.12
2. The Costa Concordia and European sovereign debt crisis impacted all cruise line revenues by about -5.1%
0.05 3 0.15
3. Increasing cost of ship building; In 1990 it cost $250 million to build a ship, where as in 2012 it cost $740 million.
0.05 3 0.15
4. Safety and security of travel- terrorism, drug attacks, vessel seizures 0.08 1 0.08
5. Royal Caribbean passengers carried increased 0.3% last year 0.05 2 0.10
6. Currency risk- the US dollar decreased 0.3% in Feb. 2013 0.06 3 0.18
7.The United States unemployment rate is currently still high at 7.40% 0.03 4 0.12
8. Trend toward healthy eating and lifestyles; 1 in 4 Americans are currently on a diet, which is 25% of US Americans.
0.04 3 0.12
9. Global warming is causing the oceans to absorb a great deal of extra heat (up to 90%). 0.02 2 0.0410. Increase of corporate tax 0.02 1 0.02
TOTALS 1.00 2.84
Strategy Formulation
SWOT MATRIX1234
12
3
4
1234
1234
Add 1 employee per 100 guests to inform them of any safety or security issues while on board any Carnival Cruse Line Ships (W5,T4)Raise ticket price by 10% (W1,T10)Create a new employee division to oversee and maintain all maintance on cruise ships (W6,T7,T2)
SO Strategies
ST Strategies
Expand P&O Cruise Line (Australia) by 2 ships by 2016 (S6,O5)Expand Costa Cruise Line (Asia) by 2 ships by 2016 (S1, O1)Increase technology advancements on 50% of our fleets by 2014 (S2, O9)Increase number of cruises available by 25% (S10, O10)
Continue cost saving fuel energy practices by installing energy reduction techonologies on our ships. (S3,T1) Offer departing specials from 8 homeports in North America. (S9,T5)
Renovate five ships with solar powered technology to reduce cost (W1,W2,T1)
Custom prepared healthy meals for guests on our Seabourn Yachts (S5,T8)
Increase safety and security awarness on all 10 cruise lines, by offering special advertising reassurance to travel on CCL (S10,T4)
Launch four new vessels by 2014 (W2, O3)Create marketing campagin for "baby boomer" generation to revamp our brand on safety/security . (W9,O6)Upgrade Carnival's Website Services for online booking/questions (W7,O7)Promote loyalty membership program on all luxury fleets to secure brand loyalty. (W10, O10)
WO Strategies
WT Strategies
SPACE MATRIX DATA
Internal Analysis: External Analysis:Financial Position (FP) Stability Position (SP)
6 - 25 - 33 - 53 - 35 - 4
Financial Position (FP) Average 4.4 Stability Position (SP) Average -3.4
Internal Analysis: External Analysis:Competitive Position (CP) Industry Position (IP)
- 1 5- 3 5- 2 6- 4 5- 1 7
Competitive Position (CP) Average -2.2 Industry Position (IP) Average 5.6
Return on Investment (ROI)LeverageLiquidity Working Capital Cash Flow Barriers to Entry into Market
Growth PotentialFinancial StabilityEase of Entry into MarketResource UtilizationProfit Potential
Market ShareProduct QualityCustomer LoyaltyTechnological know- howControl over Suppliers and Distributors
Rate of InflationTechnological ChangesPrice Elasticity of DemandCompetitive Pressure
SPACE MATRIX
7
6
5
4
3
2
1
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7-1
-2
-3
-4
-5
-6
-7
CP
Defensive
AggressiveConservativeFP
CompetitiveSP
IP
BCG MATRIX
North America Cruise Brands
EAA Cruise Brands
Cruise Support
Profit $ 9,364 $ 5,827 $ 86
Remaining Profits $ 5,913 $ 9,450 $ 15,191
High+20 Star Question Mark
Industry
SalesGrowth Medium 0 Cash Cow DogRate(Percentage)
Low - 20
High Medium Low1.0 .50 0.0
NA
EAA CS
IE MATRIX (Note, the EFE and
IFE scores possibly do not match the position of the divisions)
4.0 I II III
High
3.0 IV V VI
TheEFETotal Medium
WeightedScores
2.0 VII VIII IX
Low
1.0
Strong Average Weak4.0 to 3.0 2.99 to 2.0 1.99 to 1.0
The Total IFE Weighted Scores
NA
EAA
CS
GRAND STRATEGY MATRIX
Carnival Corporation
Strong Competitive
Position
Slow Market Growth
Weak Competitive
Position
Quadrant III Quadrant IV
Rapid Market Growth
Quadrant II Quadrant I
QSPM
Convert safety and security procedures on all 10 Carnival
and PLC cruise lines.
Expand Costa Cruise Lines(Asia) by 2 ships in 2016.
Opportunities Weight AS TAS AS TAS1. Long term expansion in Asian Vacation Markets due to increased prosperity and
size of Asian countries (2012: 8% and 2013: 10%) 0.05 4 0.20 2 0.10
2. Worldwide, the cruise industry has an annual passenger compound annual growth rate of 7% from 1990 – 2017. 0.07 2 0.14 3 0.21
3. Unveiling of nine cruise ships through March 2016. 0.05 0 0.00 0 0.004. The UK Provides the largest number of cruise passengers sourced in Europe; 1.8
million are estimated to have cruised in 2012. 0.04 2 0.08 1 0.04
5. Europeans and Australians have significantly more vacation days a year than North Americans (4 weeks paid vacation) 0.05 0 0.00 0 0.00
6. The age group of 45 years and older is expected to grow by 13% in US and Canada and 11% in the major Western European countries by 2022. 0.05 0 0.00 0 0.00
7. The global travel and tourism industry is expected to grow approximately 2.8% during 2012 0.07 3 0.21 2 0.14
8. Almost 60% of the cruise passengers in the world are sourced from the North American region, where Carnival Corporation has 19 US ports. 0.06 0 0.00 0 0.00
9. Demand for technology growing on cruise ships; In the past five years, Internet logins on the MTN network almost doubled from approximately 15 million to 27 million per year
0.04 4 0.16 2 0.08
10. Cruising is about five percent of the overall vacation market and is the fastest growing segment of the travel industry 0.06 3 0.18 4 0.24
QSPM CONTINUED
Threats Weight AS TAS AS TAS1. A 6.3% increase in fuel prices, since February 2013. (Fuel accounts for 20% of
cruise ticket price) 0.06 0 0.00 0 0.00
2. The Costa Concordia and European sovereign debt crisis impacted all cruise line revenues by about -5.1% 0.05 4 0.20 1 0.05
3. Increasing cost of ship building; In 1990 it cost $250 million to build a ship, where as in 2012 it cost $740 million. 0.05 1 0.05 2 0.10
4. Safety and security of travel- terrorism, drug attacks, vessel seizures0.08 3 0.24 2 0.16
5. Royal Carribean passengers carried increased 0.3% last year 0.05 0 0.00 0 0.006. Currency risk- the US dollar decreased 0.3% in Feb. 2013 0.06 0 0.00 0 0.00
7. The United States unemployment rate is currently still high at 7.40%0.03 0 0.00 0 0.00
8. Trend toward healthy eating and lifestyles; 1 in 4 Americans are currently on a diet, which is 25% of US Americans. 0.04 0 0.00 0 0.00
9. Global warming is causing the oceans to absorb a great deal of extra heat (up to 90%). 0.02 0 0.00 0 0.00
10. Increase of corporate tax0.02 0 0.00 0 0.00
Convert safety and
security procedures on all 10 Carnival and PLC cruise lines.
Expand Costa Cruise Lines(Asia) by 2 ships
in 2016.
QSPM CONTINUED
Convert safety and security procedures on
all 10 Carnival and PLC cruise lines.
Expand Costa Cruise Lines(Asia) by 2 ships
in 2016.
Strengths Weight AS TAS AS TAS1. Carnival Corporation and PLC is the largest cruise company in the world, having
48.4% of worldwide market share in passengers. 0.08 4 0.32 3 0.24
2. Passenger Capacity has increased over the last 4 years at an average rate of 3.59%. 0.05 3 0.15 4 0.20
3. Fuel consumption has been reduced 21% since 2007, with a projection to reduce fuel consumption by another 5% per unit. 0.06 0 0.00 0 0.00
4. The Holland America line has the highest rate of repeat customers in the cruise industry. 0.05 0 0.00 0 0.00
5. Seabourn Yachts have a service ratio of one staff member to one guest. 0.04 0 0.00 0 0.00
6. P&O Cruises is the leading Australian cruise line, with 300,000 passengers annually. P&O Cruises (Australia) carried almost half of all Australia and New Zealand cruise passengers in 2012.
0.04 0 0.00 0 0.00
7. In 2012, our North America brand represented 61% of our total passenger capacity. 0.06 3 0.18 2 0.12
8. Carnival Corp & PLC owns 40% interest in Grand Bahamas Shipyard, LTG, which is the largest cruise ship dry- dock repair facility in the world. 0.07 0 0.00 0 0.00
9. Carnival Cruise Line operates from 19 homeports in North America, which is more than our competitors. 0.05 0 0.00 0 0.00
10. Carnival Cruise Lines and PLC serves 8.5 million guests a year and has 10 distinct cruise lines under ownership. 0.06 3 0.18 2 0.12
QSPM CONTINUED
Weaknesses Weight AS TAS AS TAS
1. The net income was $1,298 in FY2012, a decrease of 6% as compared to 2011 0.05 3 0.15 1 0.05
2. Revenues declined $410 million in 2012 0.04 4 0.16 3 0.123. Protecting the health, safety, and security of our guests, employees and all others
working on behalf of the company since Costa Concordia tragedy. 0.07 0 0.00 0 0.00
4. Carnival Corporation &PLC accounts for 30% of disapperances of guests at sea since 2000. 0.05 4 0.20 2 0.10
5. Communicating with passengers and employees, if in crisis mode while sailing. (Costa Concordia tragedy) 0.05 3 0.15 2 0.10
6. During 2012, $28 million was spent for ship incident- related expenses that were not covered by insurance. 0.06 4 0.24 1 0.06
7. Sales of cruises mainly booked through travel agents cost 10% of sales fees and additional commissions. 0.02 0 0.00 0 0.00
8. Cash can only be used in the gaming area of the boat 0.01 0 0.00 0 0.009. Full brand recovery from Costa Concorida tragedy will take 2-3 years, extra
marketing would come in three areas: funds directed at travel agents, including cooperative advertising; social media; and possibly more TV ads.
0.06 0 0.00 0 0.00
10. Loyalty program was recently expanded to six tiers from two, downgrading some members to lower membership level and taking away perks. 0.03 0 0.00 0 0.00
TOTALS 3.19 2.23
Convert safety and
security procedures on all 10 Carnival and PLC cruise lines.
Expand Costa Cruise Lines(Asia) by 2 ships in 2016.
Strategy Implementation
RECOMMENDATIONS
Recommendations Amount1 Appoint a "Chief Safety Officer" in each Carnival & PLC Cruise Brand $ 3,000,000
2 Unveil six ships (North American, EAA, UK, Costa) $ 2,843,000,000
3 Reconcile Concorida legal litigation $ 585,000,000
4 World-wide advertising campaign on safety $ 100,000,000
5 Employee procedures and training programs $ 1,200,000
6 Donate to Coral Reef Alliance $ 1,000,000
7 Install security devices throughout on all vessels $ 10,100,000
8 Offer additional support to guests and travel agents via telephone and email $ 250,000
9 Install scrubber technology $ 180,000,000
10 Build a smartphone application for passengers- "Carnival In-touch" $ 125,000
Total $ 3,723,675,000
See Appendix I for explanation
EPS/EPIT ANALYSIS
EBIT $3,000 $3,400 $3,800 $3,000 $3,400 $3,800Interest 0 0 0 112 112 112EBT 3,000 3,400 3,800 2,888 3,288 3,688Taxes 9 10 11 9 10 11EAT 2,991 3,390 3,789 2,880 3,278 3,677# Shares 911 911 911 807 807 807EPS 3.28 3.72 4.16 3.57 4.06 4.56
Tax Rate: .003Interest Rate: .03Amount Needed : $3,724 (Billon)Number of oustanding shares: 807
Recession RecessionDebt FinancingCommon Stock Financing
EPS/EPIT GRAPH
$3,000 $3,400 $3,8000.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
EPS-EBIT Graph
Common Stock Financing Debt Financing
INCOME STATEMENTSIncome Statement (in millions) 2012 2013 2014 2015
Total Revenue 15,382 15,350 16,203 16,987 Cost of Revenue 10,320 10,285 10,856 11,381 Gross Profit 5,062 5,066 5,347 5,606 Operating Expenses Research and Development - 33.3 33.3 33.3 Selling and General Administrative 1,720 1,917 2,113 2,309 Non-recurring 173 1 - - Others 1,527 1,527.4 1,527.8 1,528.2 Total Operating Expenses 1,642 1,587 1,673 1,735
Total Other Income/Expenses Net (4) (6) 2 3 Earnings Before Interest and Taxes 1,638 1,593 1,671 1,732 Interest Expense 336 448 560 672 Income Before Tax 1,302 1,145 1,111 1,060 Income Tax Expense 4 3.5 3.3 3.2 Net Income 1,298 1,141 1,108 1,057
Dividends 1,168 1,168 1,168 1,168 Retained Earnings 130 (27) (60) (111)
See Appendix II for explanation
PROJECT BALANCE SHEETSBalance Sheet (millions) 2012 2013 2014 2015
AssetsCurrent Assets Cash and Cash Eqauivalents 465 860 890 945 Short Term Investments - - - - Net Receivables 730 830 920 975 Inventory 390 715 849 920 Other Current Assets 236 420 536 597Total Current Assets 1,821 2,825 3,195 3,437 Long Term Investments - - - - Property Plant and Equipment 32,137 33,148 34,159 35,170 Goodwill 3,174 3,174 3,174 3,174 Intangible Assets 1,314 1,342 1,489 1,620 Other Assets 715 732 835 875Total Assets 39,161 41,221 42,852 44,276
LiabilitiesCurrent Liabilties Accounts Payable 1,977 2,200 2,215 2,243 Short/Current Long Term Debt 1,734 1,786 1,840 1,895 Other Current Liabilities 3,629 3,702 3,776 3,851 Total Current Liabilites 7,340 7,688 7,830 7,989 Long Term Debt 7,168 8,409 9,650 10,891 Other Liabilties 724 738 753 768 Total Liabilities 15,232 16,835 18,233 19,648
Stockholders' EquityCommon Stock 363 363 363 363 Additional Paid In Capital 8,252 8,252 8,252 8,252 Retained Earnings 18,479 18,452 18,392 18,281 Treasury Stock (2,958) (2,483) (2,213) (2,101) Other Stockholder Equity -207 -198 -175 -167Total Stockholder Equity 23,929 24,386 24,619 24,628 Total Stockholders' Equity and Liabilities 39,161 41,221 42,852 44,276
See Appendix III for explanation
PROJECTED RATIOS
2012 2013 2014 2015
Current Ratio 0.25 0.37 0.41 0.43
Quick Ratio 0.19 0.27 0.30 0.32
Long Term Debt to Equity 0.30 0.34 0.39 0.44
Inventory Turnover 39.44 21.47 19.08 18.46
Total Assets Turnover 0.39 0.37 0.38 0.38
Accounts Receivable Turnover 21.07 18.49 17.61 17.42
Average Collection Period 17.32 19.74 20.72 20.95
Gross Profit Margin 0.89 0.90 0.90 0.90
Net Profit Margin 0.08 0.07 0.07 0.06
Return on Total Assets (ROA) 0.03 0.03 0.03 0.02
Return on Equity (ROE) 0.05 0.05 0.05 0.04
CONCLUSION
As Carnival Corporation and PLC continues to improve the safety and security among our
cruise brands throughout the world, we hope our consumers will regain the trust of the cruise industry by cruising with us. The
corporation needs to focus on the internal and external factors in an effort to further improve its operation and ultimately the return to the
shareholders of the company.
APPENDIXI. Recommendation Notes
1- 10 cruise brands/ 10 new safety officers at $100K salary per year for 3 years 2- Due to increasing passengers carried in cruise industry market we believe that unveiling six news ships will help meet the demand of passengers wanting to travel (North American, EAA, UK, Costa)3- Legal fees/ reimbursing guests costs from Costa Concordia Tragedy4- Create this marketing campaign similar to BP the marketing campaign after the oil spill; to reassure our consumers of the safety/security measures we are taking on our cruise ships (Quote is from Chernoff/Newman Advertising Agency in Columbia, SC)5- We are going to offer our employees an online training certificate program in safety and security measures for our ships; offered for one week; you have to take an online test at the end of session to receive certificate6- Due to the Costa tragedy we will donate $1Million to the Coral Reef Alliance to help our public images and social responsibility. 7- Install safety security devices throughout on all vessels -101 ships at 20 buttons per ship at $5,000 each -Cruise ships are designed and operated in compliance with international and federal regulations specifically designed to maximize the safety of passengers and crew. 101 ships x20= 2020 8- Hiring consultants for customer service, send out brochures, postcards etc. to offer additional support to our guests.9- Install exhaust gas cleaning technology on 32 ships, making it the first company to use this scrubber technology in restricted spaces on existing ships. 10- Smart Phone App to keep passengers in the loop while traveling with our company; such as what activities are going on and specific times; which our rival firm implemented this a few years ago.
II. Notes for Projected Income Statement
Total Revenue Decrease: Decrease is 2013 due to customer skeptic of cruising because of recent events within the cruise industry (i.e.- cruise wrecks, fires, drowning's, etc.)
Cost of Revenue: 67% of revenueResearch and Development: Worldwide Advertising Campaign for 3 years @ $100MSelling and GA: Includes CSO, Legal Fees, Guest Support, Smart AppNon- Recurring: Donation to Coral Reef AllianceOthers: Employee Training (1.2M)Total Other income/ Expense: Decrease in 2013 due to revenue decrease; increase 14, 15 due to increase revenueInterest Expense: Interest Expense from EPS at 112Net Income: Reason for decreasing net income, is due to the implementation of recommendations/ strategies for the safety/security
of our passengers and employees of Carnival PLC ; advertising campaign; Costa Concordia Debt; New shipsHopefully through our positive feedback and reinforcement from our recommendations, we will see NI begin to increase in 2016
III. Notes for Projected Balance Sheet
Property Plant Equipment: New Ships, Security Device, Scrubber ($5.625M per 32 ships)Intangibles: Increase because of trademarks on six new ships ($84M - 6x$14M trademark cost)Accounts Payable: Due to increase in ships and proceduresShort Term Debt: 3% increaseOther Current Liabilities: 2% increaseLong Term Debt: Increase debt 1,241 per year to cover recommendations 100% debtOther Liabilities: 2% increase unforeseen problems with new ships/programsAdditional Paid in Capital: Using all debt, but could change depending on cash flowTreasury Stock: Not buying back as much due to trying to implement recommendations
