86%(7)6 out of 7 people found this document helpful
This preview shows page 14 - 16 out of 20 pages.
advantage. Secondly, Carnival may also experience a significant increase in fuel prices becauseof changes in United States environmental laws to reduce the amount of Sulphur present in fueloils. As a result of this the demand for this type of fuel containing lower Sulphur levels willincrease drastically, causing higher fuel prices for Carnival. Thirdly, the unfortunate threat of piracy and terrorism is one that plagues the cruisingindustry. Carnival has experienced terrorism attacks on its ships from pirates around the worldseeking to profit off of innocent customers on cruise ships. It is a major threat to the cruisingindustry as it speaks to the need for more safety on cruise ships and protection by internationallaws, but also more importantly, it does negatively influence the customer’s perception ofcruising which can pose a detrimental threat to the retention rate passengers.DETAILED FINANCIAL ANALYSISKey Problems - Lack of foundation/structure:The foundation of an organization is built on its mission, which should explain theorganizations reason for existence. Carnivals management states that their mission “Is to deliverexceptional vacation experiences through the world’s best-known cruise brands that cater to avariety of different lifestyle and budgets, all at an outstanding value unrivaled on land or at sea.”This mission does not exhibit a uniqueness that sets Carnival apart from other competitors in themarket. The current mission statement leaves one to believe that Carnival is a travel agencybooking vacations through a well-known cruise brand ranging multiple lifestyles and prices.Without a proper mission of who the company is and a vision of where they strive to be thecompany will fail. Carnival has to establish a solid mission so that leadership, employees andCarnival Cruise Line Case Analysis Rolle | Rizo | Alcindor14
customers understand who the company is, this is the only way Carnival will be able to setobjectives and strategies that are conducive to the mission. Critical Issues - Excessive spending:The most critical issue faced by Carnival is the excessive spending. Since 1990 when TedArison relinquished his role as Chairman to his son Mickey the company has been on acontinuous expansion journey. Carnival has been on a mission to all-out purchase or acquire apercentage of its competitors, spending billions on ships and debt assumption in the 1990’s.Areas such as advertising and suppliers also experienced unnecessary spending that througheffective planning and budgeting may have been avoided. Spending on innovation and a strategicplan for Carnival to differentiate itself from industry competitors could result in brandrecognition, awareness, and loyalty. Strategic Issues - Lack Corporate Social Responsibility:Carnival has strategic issues in practicing Corporate Social Responsibility (CSR),conducting business in an ethical way taking into consideration all stakeholders. The first sign oflack of CSR can be seen in the board of directors, with half of its 14 members being insiders,consisting of suppliers, former CEO’s, and individuals with ties to Carnival subsidiaries.