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Carnival cruiselines today

This document is founded on the Harvard Business Case study about Carnival Cruise Lines Applegate, Kwortnik, Piccoli, 2006. It really is written as a master thesis for the Grasp of Information Operations (MIM) studies by Christianne Aussems, Nathalie Claes, Eric Janssen and Corné van Schaik, beneath the guidance of Piet Ribbers, Professor of Data Administration, all at TiasNimbas Business School in Tilburg.

1.1 About this report

This report describes the information management strategy for Carnival Cruise Lines (CCL) for the time 2007-2011. It proposes changes in organization, supervision, systems, and governance framework for CCL and describes the implementation plan, incorporating prioritization and a costs and benefits analysis. The target audience of the article is usually Myles Cyr, CIO of Carnival Cruise Lines, and in addition for the strategic supervision degree of CCL.

1.2 Assignment description | Aim and Scope

[Bob Dickinson informed the board about the goals for the next years. He needs Carnival CRUISELINES to stay the market leader and to increase the repeat guest rate. He’s convinced that the potential value of customer data is growing. Therefore he is looking for a way to control customer relationships even more adequately. In the meeting he also mentioned the desire to lessen the gap between top quality improvements and buyer perceptions of the products and services.

Myles Cyr agrees on establishing a new sales technique for the a long time and on the necessity to know the customers better. He really wants to incorporate an overall vision on and evaluation of the info architecture and the prevailing information systems.

At this point in time he and Dwayne Warner are planning of starting the preparation an intensive revision (quite possibly a rebuild) of the shipboard devices (Property Management System and Point of Sales Systems) including the replacing of the Sail & Indication card (with magnetic strip) by a chip cards in combination with the intro of portable equipment based on the IP protocol.

Myles Cyr explicitly asks to elaborate on the prospects of IS to contribute to the business and also to the value chain. The board can be expecting that the relative IT operating costs could be reduced in the next years. He expects an examination and evaluation of the existing state of It all/IS. What’s good? What likely weaknesses are there? What problems must be solved? Which improvements are opportune? He expects a well balanced statement containing your proposals to improve the caliber of data processing and information provisioning (including handling consumer data). Carnival Cruise Lines can only resist and beat the marketplace forces, if the business is innovative, functions agile and reacts quickly and effectively to alterations in the markets.]

Topics to be integrated in report:

-Existing bottle necks that contain to be removed.

-Changes in organization, administration, control concept and governance.

-Changes in systems, info processing and data provisioning.

-Change management process to meet the proposal.

-Implementation system including prioritization.

-Risk evaluation of the parts of your advice.

-Improvement of secureness and risk operations (especially privacy protection).

-Costs and benefits examination of the proposed alternatives.

1.3 Structure

Beschrijven van fase naar fase Cindy

1.4 Approach

To gather extra information on IT in the cruising sector there was the opportunity to do qualitative exploration at another cruising corporation being Royal Caribbean.

Gekozen voor andere maatschappij om huidige bedrijfsvoering niet te verstoren/verontrusten?

The research performed here was qualitative research trough semi structured interviews As defined in the reserve… p467. For this research the complete IT executive group (see appendix) was discovered willing and in a position to participate.

Interview guides were developed, for these interviews. These explained the goals and topics of the interview and the inquiries to become asked. This provided the researchers a framework to ask the queries, not to forget important questions and not to receive distracted from the goals of the interview. On the other hand this process also gave flexibility to discuss unforeseen but relevant topics.

On forehand it was not clear for all the interviewees what their position and responsibilities where and what to ask them . This approach also gave the overall flexibility to start out the interview with just a few questions but in the end having gathered a whole lot of information. Being able to interview more than 10 unique IT executives in various roles and on unique levels also provided an insight on crucial matters on that moment.

Interview guide interview minutes

For the execution of the interviews there is a obvious division of the roles between the interviewers, there is one interviewer in the lead for asking the queries, one checking whether all the questions were asked and one making notes for the conference minutes.

Ruimte

Literatuur

1.5 Constraints

Timing

Tool selectie reeds gedaan

2. Carnival Cruise Lines Today

Carnival Company & plc is a worldwide cruise company and one of many largest vacation companies on the planet. Carnival generates most of its revenues from the cruise sector. The companies wide-ranging merchandise offerings provide friends with exceptional vacation encounters at a superb value. The achievements in providing top quality cruise vacations has built Carnival the most profitable business in the leisure travelling industry. Carnival’s stock is dually outlined on both New York STOCK MARKET and on the London Stock Exchange under symbol CCL. Carnival may be the only company on the planet to be contained in both S&P 500 index in the United States and the FTSE 100 index in britain (Carnival Corporation & PLC, 2012).

Carnival Corporation functions a fleet of 100 ships, with another seven ships planned for delivery between nowadays and March 2016. With approximately 200,000 friends and 77,000 shipboard employees, there are more than 277,000 persons sailing aboard the Carnival fleet at any moment (Carnival Corporation & PLC, 2012).

For the objective of our report it is very important to understand the way the Carnival Cruise Lines corporation works today. We need to understand how the various aspects of the business enterprise are setup and how they interact. Only after a true understanding of the existing situation, we can come with proposals for improvement and indicate the effect on current means of working.

In literature you can fine many types that can be utilised to look at an organization with an internal point of view. In appendix X we provide an overview of some management styles we have found in literature, with an explanation why, when and how it should be used. Since our report needs to cover the implementation of a new IT management strategy, we have decided to use McKinsey’s 7S model. This style, developed in the 1980’s, involves 7 factors, which may be categorized as hard and smooth elements. Hard elements can be determined and influenced more easily. They would be driven by the organization charts and reporting lines within the business enterprise and they may include the systems you utilize to get function done. Soft elements happen to be, by their very nature, more challenging to manage and could be afflicted by the lifestyle of the organization. But you have to apply yourself to these up to the hard elements, as they provide the support composition for the successful implementation of any change, plus they are all interdependent on each other.

Figure X 7S framework (McKinsey)

The hard components in the 7S-model are Strategy, Composition and Systems; the very soft factors are Style, Shared Ideals, Skills and Staff. In order to understand the 7S-version better a brief explanation is listed below.

Hard elements:

Strategy – through the use of mission and eyesight the organization’s goals become clear.

Structure – how may be the organization organized and which hierarchical layers happen to be there

Devices – all formal and informal methods of operation, procedures and interaction flows

Soft elements:

Style – that is about leadership and management styles

Shared values – the standards and ideals and other types of ethics in a organization where vision, corporate tradition and identity will be the key elements

Abilities – these concern both the skills of the organization and the ones of the employees

Staff – this is about the personnel, their competences and task descriptions

2.1 Technique of CCL

The objective of Carnival Corporation is to take the world on holiday and deliver exceptional encounters through a lot of the world’s best-known cruise brands that cater to a number of different geographic areas and lifestyles, all at a superb value unrivaled on land or at ocean (Carnival Corporation & PLC, 2012).

The vision assertion of Carnival is the following: to regularly deliver fun, memorable holidays at a repeat worth.

Derived from this mission and vision, Carnival Cruise Lines has set up the next strategic objectives:

to end up being the leading cruise operator in every segments entered and to maintain the most up-to-date fleet of cruise ships in the world

to develop different cruise segments and progressive cruise packages to reach a larger amount of potential and earlier cruisers

employ sophisticated promotional efforts to accomplish a larger awareness by the general public regarding the availability and afford capacity of cruise travel

attract the first-period and more youthful cruisers (Carnival), knowledgeable cruisers (Holland America), upscale cruisers(Seaborne), and cruisers seeking a sailing vacation (Windstar)

promote cruises as an alternative to land-based vacations

provide a number of activities and ports of call

be innovative in every respect of operations of the ship. BRON

Dominant market share

Carnival’s biggest power is its huge scale and scope. It really is twice as large as its most important competitor and competes in practically every market and segment worldwide. Thus giving Carnival enormous vitality over the cruise industry as a whole. It enables the company to undertake projects that grow the market, gives it a program for continuing mergers and acquisitions activity, and will help Carnival negotiate with significant manufacturers of cruise lines (Levin, Jones, & Slade, 2011).

Strong acquisition strategy

Carnival has the ability to obtain companies through acquisitions. By using an acquisition strategy, the Corporation has been able to put itself in each geographical market on earth and rank itself just as number 1 in the cruising sector.

Comprehensive portfolio

The corporation has a large fleet capacity and operates 11 of the very most recognizable cruise brands. Carnival’s portfolio of brand names appeals to nearly every niche market, from budget minded, modern to luxury cruises. Each cruise line operates globally and is normally targeted at a number of nationalities (look at Appendix X).

2.2 Framework of CCL

Carnival Company & plc has two main headquarters, Carnival Place in the US and Carnival House in the united kingdom. The constituent Corporation and plc are different listed companies with numerous shareholder bodies, but they jointly own all the operating businesses in the group. Carnival Corporation owns almost all stake. As part of the merger between Carnival Company and P&O Princess Cruises in 2002, it was agreed that P&O Princess would be relisted as Carnival plc in London, remaining a separate company with a predominantly British shareholder body. Both headquarters possess their personal management team, approach, and IT organization.

Uncoordinated business operations

Historically, Carnival has been manage by the Arison spouse and children as a coalition of mainly independent businesses. Each cruise range largely manages its own customers, marketing, distribution, revenue, ports, and logistics. This approach has had benefits: internal competition signifies that each line operates better than any would in isolation. The business enterprise operations of the cruiselines are not

centrally managed. Better coordination of these business operations could generate additional rewards for Carnival (Levin, Jones, & Slade, 2011).

Strong financial position

Carnival is probably the most profitable cruising companies. The business’s average net gain (FY2005 to FY2009) amounted to 18.1% when compared to industry standard of 6.3% (Marketingteacher, 2012). The firm is dual listed on the New York STOCK MARKET and the London STOCK MARKET under the symbol CCL. Since the company is dual detailed, it has the opportunity to raise more money from investor than its competition. With this also come greater stability due to different markets being damaged by different financial occurrences, political concerns, and society’s opinions (Corporate information, 2006).

Decreasing profit

The income of Carnival offers diminished during the last years. The web profit was $1,790 million in FY2009, a decrease of 23.2% as compared to 2008. Another weakness is normally that Carnival reports their financial statements in dollars. About 50 % of their income is generated in a non-US currency, but is reported with regards to US dollars. The worthiness of the dollar against Euro appreciated from 1.60 in January 2010 to 1 1.53 by April 2010 against the Pound. If the dollar strengthens it could record a lower earnings than is actually earned (Marketingteacher, 2012).

Clear focus cost leadership

Carnival Cruise Lines has a clear focus on Cost Leadership, we.e. CCL gives its product to the mass marketplace. Which means highest focus is placed on the price and keeping the purchase price only possible. Once the customer is on board the ship, additional revenue is created by getting the customer pay for everything that was not covered in the base price. Carnival is such a sizable company that it has got significant cost advantages over almost all of its competitors.

Strong marketing

Carnival invests explicitly and properly in print and tv set media. Their marketing promotions target the lifestyles of each group of customers (Marketingteacher, 2012).

Over-dependence on US market

Carnival derives a majority of its revenue (nearly 52%) from US clients. In 2009 2009 the revenue from the UNITED STATES market registered a dual digit decline. The over-dependence on the US market makes Carnival susceptible to the monetary fluctuations of the American economy and this company is dependent on customers’ disposable profits] (Marketingteacher, 2012).

Poor safety record

There is no public database of key cruise accidents, but Carnival has a notably worse safeness record than other cruise companies. The Costa Concordia tragedy has got been the most recent in Carnival’s protection woes.

The Center for Disease Control does track all main viral outbreaks on cruiselines. In the 2009-2011 period, Carnival-owned corporations accounted for 56% of most viral outbreaks, in comparison to a 48% average marketplace share. The business is also thought to have a worse safeness record for individuals lost at sea, especially in the Carnival company: of the 179 disappearances since 2000, Carnival Cruise Line alone makes up about nearly 30% of these (Levin, Jones, & Slade, 2011).

Incidents/Bad press

In 2009, Carnival experienced poor press when three travellers fell away ships in a three week period. There have been a total of 22 incidents of passengers falling overboard in ’09 2009. In December 2008, passengers on the Carnival possessed Oceania cruise ship were attacked by Somali pirates. Such occasions reflect negatively on the business and the industry.

2.3 Systems in CCL

Within Carnival CRUISELINES every brand sometimes appears as a separate business unit, with its own profit and reduction statement.

Decentralized systems

This decentralization translates into a decentralization of devices as well. Decisions aren’t usually communicated from the one cruise range to the additional, which causes duplication of effort. This decentralization of the business enterprise organization translates to the IT organization aswell. Every brand has its own IT department with personal systems and infrastructure.

Legacy systems

There are many legacy devices, since there aren’t various players in the cruising sector, almost all of the strategic significant applications are custom made. This causes a spaghetti landscape in which integration is quite difficult and which affects the speed to market significantly.

No integrated CRM system

Carnival doesn’t use a built-in CRM system for your corporation. Customers from the one cruise line aren’t named a repeat client with a distinct cruise brand within the group, it has an immediate influence on the pricing for do it again customers.

The yearly capital setting up of investments is done on US and UK Headquarter level aswell as on the various cruise collection level. This will likely lead to lack on synchronization and duplication of costs and work.

2.4 Design within CCL

The leadership design at Carnival CRUISELINES could be called family-like. People with the proper skills are hired and so are giving the support and space to accomplish their jobs effectively. This family-like leadership design is a management design that Ted Arison already utilized when he was even now steering the company. Ted Arison possessed a non-hierarchical approach to management, meaning that he delegated a whole lot of do the job downwards in the organization, allowing him to oversee the bigger picture.

People are encouraged to be hands-on and consider measured risks. Taking risks also signifies that mistakes can occur, however Carnival runs on the no blame culture through which people feel empowered (Managementparadise, 2012).

Carnival includes a separate training and development department create in the organization. The corporation invests heavily in coaching of high potentials by giving them learning options that are fit because of their personal needs.

2.5 Shared ideals of CCL

Derived from the objective and eyesight of Carnival (see 2.1.1) the business has set some provider values that wear a higher priority. These values happen to be: Honesty, integrity, fairness, hospitality and teamwork. The values are deemed important to do their work in a correct manner.

Carnival, as all the cruise lines in the market, takes much proud in the concentrate they put on the surroundings. They invest intensely in health insurance and safety, both for clients and for employees. You will find a very strong concentrate on the environment and also to function in a greener way. Charity is also one of many key elements of their sociable responsibility strategy.

2.6 Skills at CCL

Working in the leisure sector requires some specific abilities that you cannot constantly learn. Most important skills that someone employed in the leisure industry would need, are the following:

Customer focused

Empathy

Team work

Stress resistant

Multi-cultural

Service orientation

Multi linguistic

Since Carnival Cruise Lines wants to be seen as the cruise range that gives fun, the attitude of the employees is very important as well. The employees need to be cheerful and enthusiastic.

2.7 Personnel at CCL

Cruise ships typically function with three classes of crew. The foremost is the officers: these pros are extremely paid and given greatest control of the ship. The second is entertainers and wait staff: typically lower-paid, but from the same countries as the cruisers that they provide. Finally, most of the ships’ crew is normally drawn from growing countries. While give is low, the income can represent an appealing chance for these workers, who generally work 10-month contracts without being able to look at their homes and family members. Turnover is great, and several crew see focusing on a cruise liner as a practical long-term career. Staff remains 24/7 on board of the ship, have their personal cabins at the cheapest two decks of the ship. Just officers are allowed to mix between friends, this at special occasions and in formal attire. Other crew participants have dedicated times during which they can be present on guest decks.

Operational excellence & experience

Carnival has accomplished below-industry-common costs and above-average revenue historically. That is largely because of the company’s immense encounter in owning and operating cruises, together with some smart strategic takes on. That benefits makes expanding into new markets vastly less difficult for Carnival than for a smaller person or upstart firm.

Carnival has the largest pool of info to draw on to determine what does and can not work and has the most experienced advertisers of cruises on earth. These ‘soft’ advantages let Carnival possibly segment its customers extra efficiently than opponents (Levin, Jones, & Slade, 2011).

3. Carnival CRUISELINES Competitive Position

5 forces model of Porter (Levin, Jones, & Slade, 2011)

According to Michael Porter, the point out of competition within an industry depends upon five basic forces (Porter, 1980). These forces are: Bargaining Ability of Suppliers, Bargaining Electric power of Buyers, Risk of New Entrants, Threat of Substitutes, and Rivalry among Competitors. The collective strength of these combined forces determines the ultimate profit potential of a business. The following paragraphs are based on Levin et al. (Levin, Jones, & Slade, 2011) and interviews at Royal Caribbean.

3.1 Bargaining ability of suppliers

Supplier Electricity within the cruise collection industry is moderately strong. Most of a cruise ship’s materials are bought on an available, competitive market. The risk of integration by these suppliers is very low. One significant exception is Carnival’s fresh builds. There are only 6 major shipyards that contain recently built cruise lines, and 2-3 additional that either perform conversions or possess built ships before 2000. Ability and capability at these primary builders can be limited, so Carnival Company uses limited number of companies because of its new builds. The great supplier electricity within the shipbuilding can be weakened because the romantic relationship is symmetrical: cruising can be a likewise concentrated market. Additionally, the massive purchase benefit of a new ship provides a sizeable incentive for ship suppliers to provide cruise liners with competitive pricing.

Additionally, cruise liner companies such as for example Carnival face comprehensive switching costs, both in construction and owning a ship. Switching a ship’s producer is hugely pricey for cruise firms because, typically, the shipbuilder owns the proper over a ship’s design, which means that, in switching shipbuilders, cruise collection companies need to incur high financial and time costs in redesigning the ship. Such a swap can expense the cruise range company millions of dollars. Further, there is huge suggestions differentiation between ships, meaning that, while there are options for the majority of supply pieces (both in ship building and in cruise service), the cruise ship company markets particular ships and amenities to the consumer, thereby increasing switching costs and distributor power.

3.2 Bargaining power of buyers

Buyer vitality within the cruise brand industry is fairly low. By contrast to most other vacations, more than two thirds of cruises remain booked through travel agents. Further, consumers are spread around the world , nor have any mechanisms through which they are able to express a collective tone of voice or exert collective ability, leaving them with reduced control. Additionally, customers don’t have the ability or assets to make the cruise experience by themselves – it is, naturally, a highly packaged deal. In addition, the experience made available from a cruise is very unique, and differs from other styles of vacations more than enough that customers who prefer cruises are likely to choose them over other types of vacations, as long as the how to write a history essay: get a ready-made answer! cost is not a substantial barrier. Buyer vitality is increased by search on the internet engines which enable comparisons of cost and technical specs across multiple locations, makes, and companies. Furthermore, the continued excessive reliance on travel

agencies increases buyer electric power because travel agencies make volume purchases and may demand lower prices predicated on the volume of customers they refer to specific companies.

3.3 Threat of new entrants

The threat of entry of new competition to the cruise range industry that could give a plausible risk to Carnival Company in core market segments is low. Entry into the high-end cruise line sector requires capital of around $1 billion since it costs, on average, $400 million to build a ship. Further, large cruise ships employ a huge selection of sailors and crew that happen to be trained for sea duty, which creates an additional cost. Since brand acknowledgement is very important in the cruise series industry, it would have a new competitor valuable time to build an identity and reputation to become able to compete with the incumbents. Last but not least, there are strict authorities and international regulations that are participating with a cruise firm. Obtaining proper permits to operate, in addition to the political connections, would also cost a company a large period of time and resources. In Asia, on the other hand, Carnival could be more concerned about new entrants. Asian operations, markets, and buyers are significantly less defined than in the Americas or European countries, and anticipations of cruise quality and level are lower. There are many Asian entrepreneurs and firms that could be able to utilize this fast-growing market.

3.4 Threat of substitutes

There are various substitutes, such as for example all inclusive, Golf club Med, and alternative travel packages. However, market research indicates that cruiselines provide higher customer satisfaction than land based vacation packages. Cruisers express a standard 94.8% satisfaction rate with their encounters. Any vacation could be substituted for, and there is not a high cost to change, which makes the threat of substitution seem very high. This trend offers fueled the continuing development of the cruise vacation experience. Over the years, cruise lines have expanded itineraries to include more various ports of call and also have introduced ground breaking onboard amenities and services to compete with land based travelling. These onboard encounters include cellphone access, Internet cafes and Wi-Fi zones which let passengers to feel like they are linked on land. They have also added onboard experiences such as for example rock-climbing, bowling alleys, browsing pools, multi-area villas, multiple themed eating places and expansive spas, health facilities that quickly rival land-based options (CLIA, 2012) Although there are many substitutes to the cruise range industry, they can not replicate the cruise line experience.

3.5 Rivalry of competitors

Carnival is the leading provider within the cruise series industry because of its multiple fleets and significant overseas presence. There are significant barriers to entry and exit within the cruise range industry, which includes resulted in a high focus ratio. The cruise line industry is effectively an oligopoly marketplace, where several significant cruise liners constitute a lot more than 90% of the market shares. Carnival is continually engaged in advertising and prices battles with these competition, making interior rivalry central to the market. Additionally, cruiselines have historically been at the mercy of heavy mergers & acquisitions activity, and Carnival sometimes competes to obtain a lot more share.

Overall, Carnival’s branding can be strong within the sector, and even better within its industry category (contemporary). When compared to its competitors, Carnival continues to stay a formidable drive in the cruise market.

Figure X: 5 forces version for Carnival Cruise Lines

4. Cruise Industry Developments

We use a PESTEL analysis to provide the context of the cruising sector as a whole, to be able to understand the organization’s role in relation to the external environment. The PESTEL evaluation provides a context for the organization’s role with regards to the external environment. The PESTEL research technique is often found in conjunction with a SWOT examination to assess the problem of a organization. PESTEL includes Political, Economic, Public, Technological, Legal and Environmental elements. The evaluation consists in carefully identifying all factors and finding out exactly in what manner also to what extent these elements influence the company. Each category of factors is of critical importance to advanced strategic administration (Marketingminefield, 2012).

Figure 2 gives an overview of PESTEL elements for the Cruise Industry. The PESTEL analysis is further explained in the following sections of this chapter.

Political

Economic

OPPORTUNITIES

Growing market in Asia

Multiple trade agencies and lobbyist:

-Cruise Lines International Association

-Florida-Caribbean Cruise Association (trade organization)

-International Council of Cruise Lines; Cruise industry lobbyist

-North West & Canada Cruise Association (trade company for Hawaii and Pacific North West)

-Passenger ship Association

-International Maritime organization (IMO) section of the United Nations

OPPORTUNITIES

Profitable business; cruisers spend typically more on vacation then non cruisers

Pricing based on data analysis

Big market share to capture; cruising industry is the speediest growing branch of the total leisure industry

THREATHS

Global economic recession

Decrease in development for South of European countries because of bad economy

High fuel prices

THREATS

Geopolitical instability

-Terrorism actions

Tax loopholes

Social

Technological

OPPORTUNITIES

Strongly favorable Demographics

Changing consumer trends: extra concentrate on health, spa arrangements, even more diversity in dining and additional selling points

Changing role of travel around agent

Number of on line bookings is increasing and increasing additional every year

OPPORTUNITIES

Changing consumer trends: Bring Your Own System (BYOD), connectivity

Technological development in satellite communication:

-State of the art technology possibilities on the ship

-Higher connectivity on the ship

THREATHS

Due to the exploding market in Asia, systems ought to be setup in Chinese characters. This is a challenge for some systems

Outsourcing level 2 &b 3 support is tough because the knowledge is very specific

THREATHS

Overblown media focus when something occurs on a cruise ship

Environmental

Legal

THREATHS

Events in the exterior community (9/11, Costa Concordia crash and Ash cloud Iceland)

OPPORTUNITIES

Complex diversity of environmental, health and safety legislation

Figure X: PESTEL research Cruise Industry

4.1 Political Factors

Political factors represent the way and degree to which a federal government influences the economy and the business. Particular areas are: labor laws, tax plan, tariffs, trade constraints and environmental law.

Geopolitical Instability

[In 2011, the Arab Planting season revolutions induced significant upheaval over the Eastern Mediterranean. While laudable from a democratic perspective, these types of disruption also have a tendency to shut down cruises. As the Eastern Mediterranean is a relatively small market, Carnival must watch out for foreseeable future threats and react correctly. Obviously, virtually all geopolitical threats happen to be unavoidable from Carnival’s perspective. On the other hand, most cruisers are not wedded to a specific vacation spot. If Carnival is prepared to pivot quickly in one region to another, then your losses from these cruises could be minimized. ] (Levin, Jones, & Slade, 2011)

This developing geopolitical instability increases throughout the whole leisure and cruising market an elevated fear for terrorist episodes. The threat of terrorism and pirates overtaking cruise ships is a problem for firms in this industry, and also negatively affect consumers’ perceptions of cruising (Marketingteacher, 2012).

Growing Asian Market

While the income for cruises provides declined in america, it really is growing in Europe and Asia, leading to more opportunities for CRUISELINES to increase in these areas (Marketingteacher, 2012). Asian customers accounted for only 9.8% of global cruise revenues this year 2010. However, this market segment grew by practically 40%, driven by a new, affluent category and aging demographics over the Asia-Pacific region. If properly tapped, Asia could be as important market as THE UNITED STATES for Carnival within the next 10-20 years (Levin, Jones, & Slade, 2011). Buyers in Asia are now looking for luxurious cruises as a getaway option. Disposable salary of the Chinese consumer has grown each year by 10% a year. The full total number of travellers sourced from China heightened approximately 74% in 2009 2009 (Marketingteacher, 2012).

From a technological level the growing Asian market puts the machine developers for a concern. Most devices within Carnival happen to be legacy systems, developed when Carnival was simply looking at the united states market. Carnival had hardly ever envisioned stepping into the Asian market at the moment of system development, therefore the systems aren’t setup to cope with the Chinese characters.

Trade organizations

There are various trade organizations mixed up in cruise industry. Largely these trade organizations are focused on one market and they enhance actively the cruising encounter for the reason that area.

Tax Loopholes

Carnival has been choosing benefit of special tax loopholes in order to avoid paying US company taxes. In ’09 2009 the government decided to appear at closing those loopholes. If these loopholes will be closed, it might affect their personal statements and fiscal bottom line in the foreseeable future (Marketingteacher, 2012).

4.2 Economic Factors

Economic factors make reference to areas unique to economy and directly influenced by market or comprised by economy, areas such as for example inflation rate, interest, economic growth or exchange prices. All areas can considerably influence a business, making them an exceptionally important part of the PESTEL analysis.

Global economic recession

Global economic recession. Decrease in progress for South of European countries due to bad economy.

Still big market talk about to capture

The cruise industry is continuing to grow considerably during the past 10 years but still occupies a very small proportion of the global getaway market. Cruise lines accounted for just 4.5% of the $542.2 billion value of the travel market in 2009 2009. While the revenue for cruises features declined in the US, it is growing in Europe and Asia, leading to more possibilities for Carnival to increase in these areas. (Marketingteacher, 2012)

There is still a major market share to fully capture; only 23% of Us citizens has ever booked a cruise (Interview ….). You will find a strong customer demand in European countries (Carnival CRUISELINES, 2012).

Pricing predicated on data analysis (Interview Patrick Manuel)

Changing role of travelling agents

Carnival Cruise Lines makes extensive utilization of travel agents. In their overall benefit chain the role of the intermediary requires a crucial purpose. In literature an intermediary can be described as ‘an monetary agent that buys from suppliers as a way to resell to consumers, or that helps buyers and suppliers to meet up and transact’ (Spulber, 1996). Predicated on this definition, we can distinguish 2 sorts of intermediaries:

Transactional intermediaries: those that move, retail outlet and deliver physical goods

Infomediaries: those who provide information and details services, usually associated with those physical items and providers (Papazoglou & Ribbers, 2006).

In the case of the cruising industry we can clearly define the travel companies as infomediaries. The travelling agent helps the client to reserve a cruise, by providing him all relevant information and different options that are available.

Due to the rise of Net Sarkar et al. (Sarkar, Butler, & Steinfeld, 1996) refer to the Threatened Intermediaries Hypothesis (TIH), this hypothesis discusses the bypass of intermediaries in the value chain. The hypothesis argues that on line consumers will interact straight with online suppliers, making the position of intermediaries redundant. Even so this hypothesis has also been questioned by various other researchers, who argue that this hypothesis is much too basic (Schmitz, 2000). These experts point out 3 products and services that intermediaries give, that tend to be neglected in research: inventory holding for immediacy service purposes, reducing info asymmetry; and gathering, arranging and evaluating dispersed facts. During our exploration and interviews it started to be clear, that the position of the travel agents, especially in the cruising market is targeted on reducing information asymmetry and gathering, organizing and evaluating dispersed information. The merchandise that is being sold, i.e. the cruise, is merely too complex for most people to book the complete cruise

themselves. The travel around agent is significant in explaining the 38 different room types on board, different dining experiences, etc. Though on the web booking increases every year, this is mostly performed for the ‘vanilla’ cruises; a few days with limited options. For all other types of cruises the part of the travel agent remains crucial along the way.

Fuel Price Risk

Of all the concerns facing the cruise industry today, rising fuel costs and the necessity to become more green are perhaps the virtually all pressing. For operators, more and more expensive fuel has already established a negative impact on operating costs. Increasingly stringent environmental restrictions have made the necessity to begin using cleaner types of fuel an urgent subject, but making the switch can be quite a costly business that could send fuel prices soaring (Adams, 2011). Lately Carnival and various other cruising firms have imposed modest ‘gas surcharge fees’. These charges often aren’t apparent until quite overdue in the cruise booking procedure, so these surcharges upset comparatively few customers and then add extra earnings (Levin, Jones, & Slade, 2011).

4.3 Social Factors

Social factors mainly make reference to demographic elements, which comprise elements like population growth rate, cultural aspects, get older distribution and health awareness.

Strongly favorable demographics

Demographic shifts will form the future. Critical issues and trends deserve attention.

In the cruise industry, the under-65’s are considered ‘the young place’. As populations across Europe and North America age, Carnival’s target market keeps growing larger. Carnival is already very well positioned to take benefit of this tendency: its branding, segments, and market talk about make it the best-positioned cruise line overall (Levin, Jones, & Slade, 2011). Tendencies happen to be shifting in the cruising market towards the 45-60 year later years group. As this age group grows in inhabitants, Carnival can take good thing about the economies of level and offer them the best prices (Marketingteacher, 2012).

4.4 Technological Factors

Technological factors refer to automation, incentives, the rate of technological switch and R&D activity. These factors greatly influence other areas or aspects, including the minimum efficient production level, quality, costs, and outsourcing decisions.

Technology, and more specific IT, can and must enjoy a crucial role in cruising industry reform. An interesting summary of areas where information systems can help CI are available in a report prepared for…

The idea of connectivity nowadays

Based on a 2012 McKinsey survey, ‘Minding your Digital Business’, half of the executives responding perspective investments in digital technology as building a competitive advantage within their business. Forming this digital advantage requires fresh thinking and a fresh method of access customer benefit and make revenue and benefits addressable to the business.

Royal Caribbean cruiselines sought that edge when it was building the Oasis-category ships (The digital Advantage), On these large oversized ships Royal Caribbean desired to make sure that every guest could enjoy a personalized encounter while being on an enormous ship with a large number of other customers. First step was setting a distinct and unambiguous final result – eliminating the necessity for lines up to speed. A multi-disciplinary staff was put together to recognize the bottlenecks along the way.

When passengers check in their photos are used and routed to a digital profile that forms the foundation for digital support of their experience on board. The cruise line offers a smart card for onboard actions and purchases. The intelligent cards, combined with their digital image facilitate on- and off boarding of the ship as customers swipe their intelligent cards and also have their digital photo verified by the quartermaster.

Once on board the ship, digital systems give passengers greater direct control of their private experiences via smart phone apps and digital signage. Instead of telling guests where they are able how to write an essay introduction to consume, Royal Caribbean captures each one of the 24 restaurants’ capacity facts instantly via shape-sensing camera’s. These details can be found on various places on the ship.

4.5 Environmental Factors

Environmental factors refer to all factors directly related, influenced or dependant on the surrounding environment. This consists of, but is not limited to weather, climate, geographical situation, climate change and also insurance. Environmental factors can tremendously influence a company’s approach to operate.

Strong dependency on happenings in the exterior world

The cruise industry could be highly influenced by events in the exterior world, such as for example 9/11, Costa Concordia crash, and the ash cloud above Iceland. These large, visible accidents generate huge bad publicity, hurting the cruise market all together.

Lower-profile problems may also have significant impacts. Two such problems will be viral outbreaks and individuals lost at ocean. Viral outbreaks typically necessitate the return of a ship to home interface, a burst of harmful publicity in newspapers, television, and industry websites, and refunding many travellers. Overboard incidents’ have results that will be harder to predict: the business is often faced with lawsuits and negative news tales (Levin, Jones, & Slade, 2011).

4.6 Legal Factors

Legal factors refer to all the laws directly linked to a business and its spot of activity, including buyer law, antitrust regulation, discrimination law and health insurance and safety law.

Complex diversity of worldwide and federal government codes and regulations

The cruise line market must abide with a sophisticated diversity of foreign and federal government codes and restrictions. All ships visiting ports, regardless of where they happen to be flagged, must adhere to all applicable federal rules. In the US for example, they have got ‘the responsibility for ensuring that these ships meet up with all overseas conventions and domestic requirements for safe practices, security and environmental protection’ (USCG, 2012).

The Cruise Lines International Association (CLIA) provides as a non-governmental consultative company to the International Maritime Company (IMO), an agency of the US. The IMO mandates global regulations for the security and operation of cruise ships. The foreign Convention for the Safety of Life at Ocean (SOLAS) includes comprehensive details on safety gear and procedures.

The International Ship and Slot Facility Security Code (ISPS), a broad set of security requirements for ships and slot facilities, was added as an amendment to SOLAS following the September 11, 2001 attacks. Compliance with SOLAS criteria and different internationally recognized conventions is definitely monitored by both the ship’s flag and port express representatives, which is the US Coast Guard in america.

The Cruise Vessel Security Act contains some innovative provisions and clarifies other existing CLIA policies, such as for example how the cruiselines report allegations of criminal offense to the government.

In addition to announced and unannounced protection inspections, the united states Coast Guard yearly conducts a Control Verification Certificate exam for every cruise liner that ports in america for compliance with both federal government and international rules (Cruiseindustryfacts, 2012).

With products as Digital Health Information and medical billing companies, the Cruise Industry must comply with the Health Insurance Portability and Accountability Act (HIPAA), the primary law that establishes the united states legal framework for well being information privacy (US Section of Health & Human Companies, 1996).

5. Carnival CRUISELINES SWOT Analysis

When we incorporate the 3 styles as reviewed in chapters 2, 3, and 4, we are able to derive strengths, weaknesses, threats and options (SWOT) for Carnival CRUISELINES. The below picture indicates conceptually how exactly we have used the 3 different models to ultimately derive the specific SWOT evaluation of Carnival CRUISELINES.

Figure X: Mix of 5 forces model, 7-S style and PESTEL analysis

The info of the 5forces style of Porter gives input to all or any 4 areas of the SWOT analysis. The information of the 7S version gives input, since it’s mainly focusing on the inner set up of the organization, to the strengths and weaknesses of Carnival CRUISELINES. Lastly, the PESTEL examination gives suggestions to the prospects and threats to the business. As mentioned previously in chapter 3, provides PESTEL analysis a more in depth insight what external forces can possess an affect on the cruise market as a whole and Carnival Cruise Lines in specific.

Concluding, number X shows the precise strengths, weaknesses, chances and threats of Carnival CRUISELINES. This SWOT is the synthesis of all data provided in chapter 2, 3 and 4.

Strengths

Weaknesses

IT is incorporated in the company results

Focus on core processes

Increased internet capability on the ships

Consumer outreach system can lead to economies of scale versus travel agents

Loyalty applications are in place

Strong security governance, good frameworks, secureness is embedded in all other processes

Talent development programs in place

Family-like management style

Easy to accomplish business with (from travelling agent perspective)

Strong acquisition strategy

Dominant market share

Operational excellence and experience

Comprehensive portfolio

Strong financial position

Promote lifestyle of every target group

Decentralization of business operations

Lack of end to end overview of the project portfolio

No prioritization process in place

No Total Price of Ownership in place for IT

Weak resource management

Complex product which includes a direct effect on online ordering and dependence on good relation with travel and leisure agents

Legacy systems

No benefits tracking in place

Poor safety record

Over-dependence on the united states Market

No integrated CRM system

Opportunities

Threats

Growing Asian market

Benchmarking is tricky within the sector

Technological developments in satellite connection

Role of travel agents is changing

Number of over the internet bookings is raising and increasing even more every year

Still big market talk about to fully capture; only 23% folks population has ever before taken a cruise

Pricing based on data analysis

Profitable business

Strongly favorable demographics

Complex diversity of environmental, health and safety legislation

Multiple trade corporations are in place

Changing consumer styles, both social and technological

Technological development in satellite communication

Increasing fuel prices

Floating resort with independent IT

Changing consumer requirements, i.e. BYOD, connection)

Strong dependency on incidents in the outside globe (9/11, Costa crash, ash cloud above Iceland)

Compliance to a complicated diversity of regulations (global company)

Competing with the complete leisure industry which results in several challenge and higher cost for IT

Strongly competitive industry

Speed of technological changes

Outsourcing level 2 & 3 support difficult because of very specific knowledge

Decreasing profit

Hugh cash outflow

High fuel prices

Geopolitical instability

Tax loopholes

Global economic recession

Overblown media focus when something occurs on a cruise ship

Due to the exploding marketplace in Asia, systems should be setup in Chinese characters. That is a challenge for some systems

Figure X: SWOT research of Carnival Cruise Lines

Based on this SWOT we are able to conclude that Carnival Cruise Lines is active in an exceedingly competitive environment. The need for cost awareness combined with continuous innovation as a way to deliver the customer experience in critical. In the next chapter we will move deeper into the strategic IT options we think Carnival Cruise Lines should take to keep their dominant space available in the market, or even grow their market show.

6. Strategy Analysis

Difficult decisions have to be made. Should CCL continue managing technology platforms with a decentralized way, in which each CLL brand chose its IT platforms and had the autonomy to run them? Or should CCL have a mixed approach, where the same standard applications would run through the entire enterprise but would be managed independently by Headquarters in US and UK offices? Or should CCL espouse a "one-firm" approach and boldly aim for a centralized execution of its most significant systems (HCM and fiscal statements), with all its offices interconnected on the same "instance" of a software program platform?

6.1 Cruise Sector drivers

In order to comprehend how Carnival CRUISELINES can leverage their threats and weaknesses and transform them around into strengths

and opportunities, we have to take a closer consider the benefit chain of Carnival Cruise Lines. The thought of a value chain was initially advised by Michael Porter (Porter, 1980) to depict how customer worth accumulates along a chain of actions that result in an end product or service. Porter describes two main categories of business activities: primary activities and support activities. Most important activities are directly involved with transforming inputs into outputs and in delivery and after-sales support. Support activities support primary actions and other support actions.

Despite the actual fact that Carnival Cruise Lines serves different marketplaces with different customer tastes, Carnival doesn’t need to alter its benefit chain to please different buyer segments. Each cruise range brand has the ability to add value by offering the same manufacturer experience with slightly several price tips and cruise line experience offerings. The worthiness chain, proven in Figure X, is targeted on giving customers top quality vacation packages, a multitude of vacationing options and a delightful overall cruise vacation experience.

Figure X: Porter’s value chain for Carnival Cruise Lines

Based on our evaluation and in-depth interviews with cruise market experts we found there are 4 main drivers that define the cruise industry: quickness to advertise, consumer demands, customer operations and cost management. Based on Carnival Cruise Lines mission, vision, ideals and business model we recognized 4 strategic target areas from the technology point of view that will direct the info management technique for 2007-2011 for Carnival Cruise Lines.

The direction and targets with regard to the strategic concentration are defined in strategic intentions. These strategic intentions define advancements of Carnival Cruise Lines’ strategic and operational efficiency from a technology perspective.

6.2 Strategic Intentions

Text……

Speed to market

For Carnival Cruise Lines it is crucial to provide their buyer offerings swiftly to the marketplace, especially in the very competitive marketplace they are in. In order to keep their strategic dominant posture in the market, they need to have the ability to deliver their offerings prior to the competition. This involves from IT they can quickly operationalize the business enterprise demand. To allow this, the It all infrastructure should support working across efficient and organizational boundaries in the most effective way.

Customer Relationship Management

Customer Relationship Management (CRM) can be seen as a process in which in-depth analysis of client behavior and understanding of the customer habits, desires and desires are managed. For Carnival CRUISELINES it will be vital that you increase the focus on return customers, since at this moment most customers are first-time cruisers. In addition to Customer Relationship supervision, a CRM program would help to recognize and anticipate on customer’s needs. Such something will help to:

Identify high-end customers

The CRM program can analyze buyers spend behavior on board and determine which clients spend the most funds. Carnival CRUISELINES would then be able to set up specific activities to attract those customers

Set up loyalty programs

The CRM system can recognize return customers. Through the help of a Loyalty plan these repeat customers could possibly be rewarded for cruising with Carnival once again (e.g. better cabin, beverages for free,…) These loyalty programs would be going across all the cruise lines

Manage complaints

For each customer problems could possibly be gathered and analysis will be performed to recognize the root-cause of the problem. Solutions would be captured as well.

Cost management

Carnival Cruise Lines has a strong give attention to controlling costs. Building cruise lines is an extremely expensive venture, and needs to go hand in hand with a proper planning. Besides the building of the ships, there are plenty of other assignments ongoing on a annual basis which should deliver a much better customer experience. As in any other organization, there are just limited funds and solutions available to deliver the large number of projects, so a portfolio control and prioritization process ought to be set in place. This technique will drive your choice making and can maximize the worthiness per dollar spend. It will prevent duplication of work and costs.

Consumer demands

While the cruise industry was for long viewed as the most popular way of traveling of the older people, this is no more the case today. There can be an increasing amount of teenagers, singles and families taking a cruise. It has created a shift in consumer requirements. On the main one hand, people want to have the same connectivity with the exterior world because they have at home. Due to the utilization of satellites on the ship this produces a real concern for the cruise industry, and Carnival in certain. Guests not only want the same connectivity, in addition they want to be in a position to use their own device to connect to the network. The It all infrastructure should have the ability to support an increased connectivity and support a variety of devices to meet up these customer demands.

6.3 IT Requirements

The strategic intentions need further innovations on it. This may lead to further enhancements to currently existing solutions along with the introduction of new technology. For every of the strategic intentions we identified a number of technology requirements. An overview of these requirements is provided in Table X. The requirements are the basis for the identification of strategic It again initiatives. In the next chapter we propose a deployment timetable for those initiatives.

Speed to market

Deliver offerings more quickly to the customer

Reduce period lines of offering delivery

Minimize duplication of effort

Improve conversation and collaboration between business lines

A flexible, productive and effective IT scenery and IT processes…

Duplication = ERP

Collaboration = ERP

Cloud…Communication = SaaS / SOA

Reorganize IT landscape and IT processes; substitution of a patchwork of legacy applications…

Sourcing strategy: keep primary IT applications in-house

Outsource non business essential IT; off-the-shelf applications to best-of-breed partners

Customer Relationship Management

Provide 1 look at of the customer

Recognize repeat customers

Improve understanding of the customer

Increase loyalty programs

Analysis of customer behavior

Targeted marketing actions

Central customer data source: knowing the potential benefit of the customer

Understanding customer experience: client satisfaction

Program initiated: from CRM to CEM (Customer Knowledge Management)

Measure client satisfaction = SERVQUAL

Initial cleansing customer get better at data and stop entering granularity customer info = CRM

Customer (profitability) segmentation / recognize repeating customers

Cost Management

Make the right investments

Prioritization of investments

Business case development

Understanding impact of choices

Investments made at the proper place at the proper time in the right sequence.

Portfolio Management

Business Case Management

Consumer Demands

Drive consumer choices

Give information to the client to drive their decision making

Deliver same connectivity conditions as at home

Make the stay simply because comfortable as possible

Bring your own device on the boat…

Your own unit as point-off-sales

Connectivity: customer wifi.

Mobile Platform connectivity

7. IT Initiatives

Text…

7.1 Information Control Strategy

Text…

7.2 IT Initiatives

Text…

7.2.1 Quickness to market

(source: HBR organization case en Janssen 2012)

IT supply

A period of weighty consolidation and acquisitions of cruise brands resulted in CCL because they are right now. But, every acquisitioned manufacturer stayed a separate company entity within CCL called sections. Currently CCL has 12 separate sections in total. Every business product has its own IT section with their own systems, applications and IT infrastructure. Next to this IT landscape diversity within the business enterprise units, CCL owns various legacy systems. Due to the fact there aren’t various players in the cruise sector, so almost all of the strategic essential applications are tailor made.

Due to the "separate business unit" way CCL has a sophisticated and diversity IT scenery and makes it problematic for CCL to incorporate and communicate its details, with additional disadvantage that it’s highly costly to run support and their It again infrastructure. IT innovations are difficult to implement, if an innovative program is chosen to apply at CCL, in many cases it takes too long. The CCL IT scenery is not well prepared to look at innovations or talk and interconnect with new systems. Their It all costs are currently too high. CCL’s speed to advertise can be an serious issue.

Network

To run almost all of its back-end IT procedures, as well as to provide basic conversation and productivity applications CCL should decide on a solid financial spouse which diminish long-term partner risks (for instance Microsoft/ Windows server 2000). Having an individual platform and common global applications, like ERP, would help CCL lessen overall expenditures and allow for the versatility to develop through scalability.

Platform selection

As mentioned before to cut down costs the granularity and complexity of their IT landscape must be simplified. To simplify their It all landscape initially all applications will come to be classified. Their core or strategic IT competencies should be classified as off-the-shelf or custom-made applications. Legacy devices are often custom-made and therefore difficult to replace with off-the-shelf applications. For instance CCL has offices around the world which had adopted their personal individual accounting and human resources software systems, rendering it very complex to obtain an up to-date snapshot of the complete organization’s status at anybody period. Implementing and global ERP program is the first step to take.

CCL should chose for example for SAP ERP application because of the software giant’s solid budget (which diminished long-term spouse risk), its global presence, and the high degree of integration it presented in its applications CCL is definitely a public dual listed business, it required a more integrated method of financial management, one that would meet GAAP standards and various other compliance and regulatory requirements. Legacy financial management devices impeded the production of the strongest practical operating model.

Large companies which have the ability to renew their IT landscape will need to make important strategic decision. For example should CCL choose "best-in-breed" or one system approach. Under a best-of-breed approach, the organization would purchase what it believed was the best possible application in the market for a specific need-potentially ending up with many applications, from various vendors, that didn’t necessarily "speak to each other." Big disadvantage is called the Pareto result created by the business’s requirements, wherein a comparatively small number of particular applications needs tended to make a disproportionately large numbers of complexities. In addition, working multiple applications would require multiple specialists, increasing the training costs and IT employees count. That is exactly what we want to prevent, we want spend less in IT personnel and application costs.

The one-platform approach could have the advantage of making important economies of scale for the company. Biggest advantage and most important, CCL could proficiently operate with less IT support head count when working with a single platform, reducing training costs for its IT experts while leveraging economies of scale beneath the establishment of global support centers.

Vendor arguments

Applications sourced from the same vendor typically "talk" to one another, allowing information to stream seamlessly and instantly, without the need to create custom interfaces or to acquire expensive middleware. The largest advantage of a one-system over a best-of-breed methodology is the ability to deploy new technology more quickly and less expensively.

The single-vendor approach, on the other hand, would lower CCL’s negotiating power regarding future purchases from that one vendor, who would identify that any decision to move to a new platform will be a costly one. Furthermore, if the vendor was not financially solid or encountered future operating challenges, CCL could set itself

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