Secondly Carnival may also experience a significant increase in fuel prices

Secondly carnival may also experience a significant

This preview shows page 14 - 16 out of 20 pages.

advantage. Secondly, Carnival may also experience a significant increase in fuel prices because of changes in United States environmental laws to reduce the amount of Sulphur present in fuel oils. As a result of this the demand for this type of fuel containing lower Sulphur levels will increase drastically, causing higher fuel prices for Carnival. Thirdly, the unfortunate threat of piracy and terrorism is one that plagues the cruising industry. Carnival has experienced terrorism attacks on its ships from pirates around the world seeking to profit off of innocent customers on cruise ships. It is a major threat to the cruising industry as it speaks to the need for more safety on cruise ships and protection by international laws, but also more importantly, it does negatively influence the customer’s perception of cruising which can pose a detrimental threat to the retention rate passengers . DETAILED FINANCIAL ANALYSIS Key Problems - Lack of foundation/structure: The foundation of an organization is built on its mission, which should explain the organizations reason for existence. Carnivals management states that their 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.” This mission does not exhibit a uniqueness that sets Carnival apart from other competitors in the market. The current mission statement leaves one to believe that Carnival is a travel agency booking 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 the company will fail. Carnival has to establish a solid mission so that leadership, employees and Carnival Cruise Line Case Analysis Rolle | Rizo | Alcindor 14
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customers understand who the company is, this is the only way Carnival will be able to set objectives 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 Ted Arison relinquished his role as Chairman to his son Mickey the company has been on a continuous expansion journey. Carnival has been on a mission to all-out purchase or acquire a percentage 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 through effective planning and budgeting may have been avoided. Spending on innovation and a strategic plan for Carnival to differentiate itself from industry competitors could result in brand recognition, 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 of lack 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.
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