Carnival CRUISELINES Today

This document is based on the Harvard Business Case study about Carnival Cruise Lines Applegate, Kwortnik, Piccoli, 2006. It is written as a expert thesis for the Expert of Information Administration (MIM) tests by Christianne Aussems, Nathalie Claes, Eric Janssen and Corné van Schaik, under the supervision of Piet Ribbers, Professor of Information Supervision, all at TiasNimbas Business School in Tilburg.

1.1 About this report

This report describes the info management technique for Carnival CRUISELINES (CCL) for the time 2007-2011. It proposes changes in organization, operations, systems, and governance structure for CCL and describes the execution plan, incorporating prioritization and a costs and rewards analysis. The target audience of the survey is definitely Myles Cyr, CIO of Carnival CRUISELINES, and in addition for the strategic administration level of CCL.

1.2 Assignment explanation | Aim and Scope

[Bob Dickinson informed the board about the goals for the next years. He desires Carnival CRUISELINES to stay the marketplace leader and to enhance the repeat guest rate. He is convinced that the potential value of customer data is growing. Therefore he is searching for a way to control customer relationships considerably more adequately. In the conference he likewise mentioned the desire to lessen the gap between quality improvements and buyer perceptions of the companies.

Myles Cyr agrees on establishing a fresh sales technique for the a long time and on the necessity to know the customers better. He wants to incorporate a standard vision on and analysis of the information architecture and the existing information systems.

At this second he and Dwayne Warner are planning of starting the preparation an intensive revision (probably a rebuild) of the shipboard devices (Property Management System and Point of Sales Systems) including the substitute of the Sail & Indication card (with magnetic strip) by a chip cards in combo with the launch of portable equipment based on the IP protocol.

Myles Cyr explicitly asks to elaborate on the options of IS to contribute to the business also to the worthiness chain. The board is usually expecting that the relative IT operating costs can be reduced in another years. He expects an evaluation and evaluation of the current state of IT/IS. What’s good? What practical weaknesses is there? What problems must be solved? Which improvements are opportune? He expects a well-balanced survey containing your proposals to improve the caliber of data processing and info provisioning (including handling consumer data). Carnival CRUISELINES can only just resist and beat the market forces, if the business is innovative, works agile and reacts quickly and effectively to improvements in the markets.]

Topics to be integrated in report:

-Existing bottle necks which have to be removed.

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

-Changes in systems, info processing and data provisioning.

-Change management process to meet up the proposal.

-Implementation program including prioritization.

-Risk evaluation of the elements of your advice.

-Improvement of reliability and risk supervision (especially privacy protection).

-Costs and benefits research of the proposed alternatives.

1.3 Structure

Beschrijven van fase naar fase Cindy

1.4 Approach

To gather additional information on IT in the cruising sector there was the possibility to do qualitative study at another cruising company being Royal Caribbean.

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

The research performed in this article was qualitative study trough semi organized interviews As defined in the book… p467. For this research the complete IT executive staff (see appendix) was found willing and able to participate.

Interview guides were made, for these interviews. These referred to the goals and issues of the interview and the concerns to be asked. This gave the researchers a composition to ask the problems, never to forget important questions rather than to acquire distracted from the goals of the interview. On the other hand this approach also gave flexibility to discuss unforeseen but relevant topics.

On forehand it was not clear for all the interviewees what their role and tasks where and what things to ask them . This process also gave the versatility to start out the interview with simply a few questions however 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 several levels also provided an insight on crucial topics on that moment.

Interview guide interview minutes

For the execution of the interviews there was a obvious division of the functions between the interviewers, there is one interviewer in the lead for asking the inquiries, one checking whether all the questions were asked and one producing notes for the appointment minutes.

Ruimte

Literatuur

1.5 Constraints

Timing

Tool selectie reeds gedaan

2. Carnival Cruise Lines Today

Carnival Company & plc is a global cruise company and among the largest vacation companies on earth. Carnival generates most of its revenues from the cruise sector. The companies wide-ranging merchandise offerings provide friends with exceptional vacation encounters at an outstanding value. The achievement in providing quality cruise vacations has built Carnival the most lucrative enterprise in the leisure travel and leisure industry. Carnival’s inventory is dually detailed on both the New York Stock Exchange and on the London Stock Exchange under symbol CCL. Carnival may be the only company on earth to be included 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 guests and 77,000 shipboard employees, there are a lot more than 277,000 persons sailing aboard the Carnival fleet at any moment (Carnival Corporation & PLC, 2012).

For the purpose of our report it is very important to understand how the Carnival CRUISELINES corporation works today. We have to understand how the many aspects of the business are setup and how they interact. Only after a genuine understanding of the current situation, we can come with proposals for improvement and reveal the effect on current ways of working.

In literature one can fine many models that works extremely well to look at a business with an internal perspective. In appendix X we provide an overview of some management models we have found in literature, with an explanation why, when and how it must be used. Since our article 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 is often categorized as hard and tender elements. Hard factors can be discovered and influenced more easily. They might be driven by the business charts and reporting lines within the business and they may include the systems you utilize to get function done. Soft elements are, by their very dynamics, more difficult to manage and may be affected by the customs of the business. But you have to apply yourself to these as much as the hard elements, because they provide the support structure for the successful execution of any change, plus they are all interdependent on one another.

Figure X 7S framework (McKinsey)

The hard factors in the 7S-model are Strategy, Framework and Systems; the very soft components are Style, Shared Values, Skills and Staff. To be able to understand the 7S-version better a short explanation is given below.

Hard elements:

Strategy – by using mission and perspective the organization’s objectives become clear.

Structure – how is the organization structured and which hierarchical layers happen to be there

Systems – all formal and informal methods of operation, procedures and communication flows

Soft elements:

Style – that is about leadership and management styles

Shared values – the standards and values and other kinds of ethics in a organization in which vision, corporate traditions and identity are the key elements

Expertise – these concern both the skills of the business and the ones of the employees

Staff – this is about the employees, their competences and work descriptions

2.1 Strategy of CCL

The objective of Carnival Corporation is to take the world on vacation and deliver exceptional activities through most of the world’s best-known cruise brands that cater to a variety of different geographic areas and lifestyles, all at an outstanding value unrivaled on property or at ocean (Carnival Corporation & PLC, 2012).

The vision statement of Carnival is the following: to constantly deliver fun, memorable getaways at a repeat benefit.

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

to be the leading cruise operator in every segments entered also to maintain the most up-to-date fleet of cruise lines in the world

to develop innovative cruise segments and progressive cruise packages to attain a larger amount of potential and previous cruisers

employ advanced promotional efforts to accomplish a greater awareness by the public concerning the availability and afford capability of cruise travel

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

promote cruises as an alternative to land-based vacations

provide a number of activities as well as ports of call

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

Dominant market share

Carnival’s biggest durability is its huge level and scope. It is doubly large as its major competitor and competes in practically every market and segment worldwide. This gives Carnival enormous vitality over the cruise industry all together. It enables the company to undertake projects that grow the industry, gives it a platform for ongoing mergers and acquisitions activity, and helps Carnival negotiate with main manufacturers of cruise ships (Levin, Jones, & Slade, 2011).

Strong acquisition strategy

Carnival has the ability to obtain firms through acquisitions. By using an acquisition strategy, the organization has been able to position itself in each geographical industry on the planet and rank itself as number 1 in the cruising sector.

Comprehensive portfolio

The corporation has a big fleet ability and operates 11 of the most recognizable cruise brands. Carnival’s portfolio of brand names appeals to almost every market, from budget minded, modern day to high end cruises. Each cruise line operates globally and is definitely targeted at one or more nationalities (observe Appendix X).

2.2 Composition of CCL

Carnival Corporation & plc has two primary headquarters, Carnival Place in america and Carnival House in the united kingdom. The constituent Company and plc are individual listed companies with different shareholder bodies, however they jointly own all the operating corporations in the group. Carnival Company owns the majority stake. As part of the merger between Carnival Company and P&O Princess Cruises in 2002, it had been agreed that P&O Princess would be relisted as Carnival plc in London, remaining another business with a predominantly British shareholder human body. Both headquarters contain their unique management team, strategy, and IT organization.

Uncoordinated business operations

Historically, Carnival possesses been work by the Arison relatives as a coalition of largely independent businesses. Each cruise collection largely manages its customers, marketing, distribution, sales, ports, and logistics. This process has already established benefits: internal competition ensures that each line operates much better than any would in isolation. The business operations of the cruise lines are not

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

Strong financial position

Carnival is among the most rewarding cruising companies. The business’s average net income (FY2005 to FY2009) amounted to 18.1% compared to the industry standard of 6.3% (Marketingteacher, 2012). The organization is dual listed on the brand new York STOCK MARKET and the London STOCK MARKET beneath the symbol CCL. Since the company is dual listed, it has the ability to raise more cash from investor than its rivals. With this as well come greater stability due to different markets being affected by different monetary occurrences, political issues, and society’s opinions (Corporate information, 2006).

Decreasing profit

The profit of Carnival offers diminished during the last years. The web profit was $1,790 million in FY2009, a loss of 23.2% as compared with 2008. Another weakness is certainly that Carnival reports their economic statements in dollars. About half of their income is generated in a non-US currency, but is reported regarding US dollars. The worthiness of the dollar against Euro appreciated from 1.60 in January 2010 to at least one 1.53 by April 2010 against the Pound. If the dollar strengthens it would record a lower income than is in fact earned (Marketingteacher, 2012).

Clear focus cost leadership

Carnival Cruise Lines has a clear focus on Cost Leadership, we.e. CCL presents its item to the mass market. Therefore the highest focus is placed on the purchase price and keeping the price as low as possible. After the customer is on board the ship, additional revenue is created by having the customer purchase everything that had not been covered in the base price. Carnival is such a large company that it features significant price advantages over the majority of its competitors.

Strong marketing

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

Over-dependence on US market

Carnival derives most its revenue (practically 52%) from US customers. In ’09 2009 the earnings from the North American market registered a dual digit decline. The over-dependence on the united states market makes Carnival susceptible to the economic fluctuations of the American economy and this company would depend on customers’ disposable salary] (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 Middle for Disease Control will track all key viral outbreaks on cruiselines. In the 2009-2011 period, Carnival-owned corporations accounted for 56% of most viral outbreaks, compared to a 48% average industry share. The business is also thought to have a worse basic safety record for persons lost at sea, specifically in the Carnival manufacturer: of the 179 disappearances since 2000, Carnival Cruise Line alone accounts for nearly 30% of these (Levin, Jones, & Slade, 2011).

Incidents/Bad press

In 2009, Carnival experienced awful press when three passengers fell off ships in a three week period. There were a complete of 22 incidents of passengers falling overboard in ’09 2009. In December 2008, travellers on the Carnival owned Oceania cruise ship had been attacked by Somali pirates. Such occurrences reflect negatively on the company 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 damage statement.

Decentralized systems

This decentralization translates into a decentralization of devices aswell. Decisions aren’t usually communicated from the one cruise line to the other, which leads to duplication of work. This decentralization of the business organization means the IT organization aswell. Every brand has its IT department with own systems and infrastructure.

Legacy systems

There are various legacy devices, since there aren’t various players in the cruising sector, the majority of the strategic important applications are tailor made. This brings about a spaghetti landscape where integration is quite difficult and which impacts the speed to advertise significantly.

No integrated CRM system

Carnival doesn’t use a built-in CRM system for the whole corporation. Customers from the main one cruise line aren’t recognized as a repeat client with a different cruise collection within the group, this has an immediate influence on the pricing for do it again customers.

The yearly capital setting up of investments is performed on US and UK Headquarter level aswell as on the different cruise brand level. This will most likely lead to absence on synchronization and duplication of costs and initiatives.

2.4 Design within CCL

The leadership style at Carnival Cruise Lines could be called family-like. People with the right skills are hired and are offering the support and room to accomplish their jobs correctly. This family-like leadership design is a management style that Ted Arison previously used when he was nonetheless steering the company. Ted Arison experienced a non-hierarchical approach to management, and therefore he delegated a lot of work downwards in the business, allowing for him to oversee the bigger picture.

People are encouraged to be hands-on and take measured risks. Taking risks also implies that mistakes may appear, however Carnival uses a no blame culture through which people feel empowered (Managementparadise, 2012).

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

2.5 Shared values of CCL

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

Carnival, as all other cruise lines in the market, takes substantially proud in the target they put on the surroundings. They invest intensely in health and safety, both for buyers and for employees. You will find a very strong focus on the environment and job in a greener approach. Charity is also one of the key components of their sociable responsibility strategy.

2.6 Skills at CCL

Working in the leisure industry requires some specific abilities that you cannot generally learn. Most significant 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 observed as the cruise brand that provides fun, the frame of mind of the employees is very important as well. The employees must 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 very paid and given greatest control of the ship. The second reason is entertainers and wait staff: typically lower-paid, but from the same countries as the cruisers that they serve. Finally, almost all of the ships’ crew is drawn from growing countries. While pay out is low, the salary can represent an eye-catching opportunity for these workers, who quite often work 10-month contracts without being able to check out their homes and families. Turnover is large, and several crew see working on a cruise ship as a practical long-term career. Staff remains 24/7 on board of the ship, include their own cabins at the lowest two decks of the ship. Simply officers are allowed to mix between guests, this at special occasions and in formal attire. Other crew customers have dedicated times during which they could be present on guest decks.

Operational excellence & experience

Carnival has obtained below-industry-standard costs and above-average earnings historically. That is largely as a result of company’s immense experience in owning and functioning cruises, and some smart strategic has. That edge makes expanding into new markets vastly easier for Carnival than for a smaller participant or upstart firm.

Carnival has the greatest pool of data to draw on to know what does and does not work and gets the most experienced marketers of cruises on the globe. These ‘soft’ advantages let Carnival possibly segment its customers even more efficiently than competition (Levin, Jones, & Slade, 2011).

3. Carnival Cruise Lines Competitive Position

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

According to Michael Porter, the condition of competition within an industry depends on five fundamental forces (Porter, 1980). These forces observation paper are: Bargaining Electric power of Suppliers, Bargaining Power of Buyers, Threat of New Entrants, Risk of Substitutes, and Rivalry among Rivals. The collective strength of the 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 power of suppliers

Supplier Vitality within the cruise range industry is moderately solid. Most of a cruise ship’s products are bought on an wide open, competitive market. The threat of integration by these suppliers is very low. One significant exception is Carnival’s different builds. There are only 6 major shipyards which may have recently built cruise lines, and 2-3 more that either perform conversions or own built ships before 2000. Capacity and ability at these main builders is also limited, so Carnival Corporation relies on a limited number of companies for its new builds. The huge supplier power within the shipbuilding is usually weakened because the romance is symmetrical: cruising is a likewise concentrated market. On top of that, the massive purchase benefit of a new ship provides a sizeable incentive for ship suppliers to supply cruise liners with competitive pricing.

Additionally, cruise ship companies such as for example Carnival face intensive switching costs, both in setting up and running a ship. Switching a ship’s supplier is hugely costly for cruise companies because, commonly, the shipbuilder owns the proper over a ship’s style, meaning that, in switching shipbuilders, cruise series companies have to incur high financial and time costs in redesigning the ship. Such a swap can price the cruise series company huge amount of money. Further, there is high suggestions differentiation between ships, and therefore, while there are alternatives for nearly all supply elements (both in ship engineering and in cruise support), the cruise ship company markets particular ships and services to the consumer, therefore increasing switching costs and supplier power.

3.2 Bargaining ability of buyers

Buyer electric power within the cruise series industry is comparatively low. By contrast to most other vacations, a lot more than two thirds of cruises remain booked through travel agents. Further, consumers are spread around the world and do not have any mechanisms by which they can express a collective tone of voice or exert collective ability, leaving them with reduced control. Additionally, customers do not have the ability or means to create the cruise experience independently – it is, by nature, a highly packaged deal. In addition, the experience provided by a cruise is quite specific, and differs from other types of vacations more than enough that clients who prefer cruises will probably choose them over other types of vacations, as long as the cost is not a considerable barrier. Buyer ability is increased by internet search engines which enable comparisons of cost and technical specs across multiple locations, brands, and companies. Furthermore, the continued high reliance on travel

agencies increases buyer vitality because travel agencies make volume purchases and will demand lower prices predicated on the quantity of customers they refer to specific companies.

3.3 Threat of new entrants

The risk of entry of new competition to the cruise range industry that could give a plausible risk to Carnival Corporation in core market segments is low. Entry in to the high-end cruise line market requires capital of approximately $1 billion because it costs, typically, $400 million to create a ship. Further, large cruise ships employ hundreds of sailors and crew that happen to be trained for sea duty, which creates an additional cost. Since brand reputation is very important in the cruise brand industry, it would take a new competitor precious time to build an identification and reputation in order to be able to compete with the incumbents. Last but not least, there are strict federal government and international restrictions that are participating with a cruise business. Obtaining proper permits to operate, as well as the political connections, would also cost a company a huge period of time and solutions. In Asia, however, Carnival could be more worried about new entrants. Asian procedures, markets, and consumers are much less defined than in the Americas or Europe, and objectives of cruise top quality and level are lower. There are many Asian entrepreneurs and businesses that might be able to tap into this fast-growing market.

3.4 Threat of substitutes

There are many substitutes, such as 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 an overall 94.8% satisfaction level with their experience. Any vacation can be substituted for, and there is not a high cost to improve, which makes the threat of substitution seem very high. This trend provides fueled the continuing evolution of the cruise getaway experience. Through the years, cruiselines have expanded itineraries to add more different ports of call and also have introduced progressive onboard amenities and facilities to contend with land based travel. These onboard experiences include cellphone access, Net cafes and Wi-Fi zones which allow 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-bedroom villas, multiple themed restaurants and expansive spas, health facilities that very easily rival land-based choices (CLIA, 2012) Although there are various substitutes to the cruise line industry, they cannot replicate the cruise collection experience.

3.5 Rivalry of competitors

Carnival may be the leading firm within the cruise line industry due to its multiple fleets and significant overseas presence. There are significant barriers to entry and exit within the cruise brand industry, which includes resulted in a high concentration ratio. The cruise series industry is effectively an oligopoly industry, where several main cruise liners make up more than 90% of the market shares. Carnival is continually engaged in advertising and prices battles with these competitors, making inner rivalry central to the sector. Additionally, cruiselines have historically been subject to weighty mergers & acquisitions activity, and Carnival sometimes competes to obtain even more share.

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

Figure X: 5 forces model for Carnival Cruise Lines

4. Cruise Industry Developments

We use a PESTEL analysis to provide the context of the cruising market as a whole, to be able to understand the organization’s part with regards to the exterior environment. The PESTEL research offers a context for the organization’s role in relation to the exterior environment. The PESTEL analysis technique is often found in conjunction with a SWOT examination to assess the situation of a business. PESTEL includes Political, Economic, Public, Technological, Legal and Environmental factors. The analysis consists in carefully deciding all factors and learning exactly in what manner and also to what extent these factors influence the company. Each group of factors is of crucial importance to advanced strategic operations (Marketingminefield, 2012).

Figure 2 gives a synopsis of PESTEL factors for the Cruise Industry. The PESTEL analysis is further explained in the following parts of this chapter.

Political

Economic

OPPORTUNITIES

Growing market in Asia

Multiple trade organizations 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 corporation for Hawaii and Pacific North West)

-Passenger ship Association

-International Maritime company (IMO) part of the United Nations

OPPORTUNITIES

Profitable organization; cruisers spend typically extra on holiday then non cruisers

Pricing based on data analysis

Big market share to fully capture; cruising industry is the quickest 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: additional give attention to health, spa arrangements, even more diversity in eating and different selling points

Changing role of travel around agent

Number of on line bookings is increasing and increasing even more every year

OPPORTUNITIES

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

Technological development in satellite communication:

-State of the artwork technology opportunities on the ship

-Higher connection on the ship

THREATHS

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

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

THREATHS

Overblown media attention when something takes place on a cruise ship

Environmental

Legal

THREATHS

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

OPPORTUNITIES

Complex diversity of environmental, health insurance and safety legislation

Figure X: PESTEL research Cruise Industry

4.1 Political Factors

Political factors represent just how and extent to which a government influences the market and the business. Particular areas are: labor regulation, tax coverage, tariffs, trade restrictions and environmental law.

Geopolitical Instability

[In 2011, the Arab Springtime revolutions triggered significant upheaval over the Eastern Mediterranean. While laudable from a democratic perspective, these kinds of disruption also have a tendency to shut down cruises. As the Eastern Mediterranean is a relatively small marketplace, Carnival must watch for long term threats and react correctly. Obviously, virtually all geopolitical threats will be unavoidable from Carnival’s perspective. On the other hand, most cruisers aren’t wedded to a specific vacation spot. If Carnival is ready to pivot quickly from one region to another, then the losses from these cruises can be minimized. ] (Levin, Jones, & Slade, 2011)

This developing geopolitical instability increases through the entire entire leisure and cruising market an elevated fear for terrorist episodes. The threat of terrorism and pirates overtaking cruise lines is a problem for companies in this industry, and in addition negatively affect customers’ perceptions of cruising (Marketingteacher, 2012).

Growing Asian Market

While the earnings for cruises features declined in america, it really is growing in European countries and Asia, resulting in more opportunities for Cruise Lines to broaden in these areas (Marketingteacher, 2012). Asian buyers accounted for only 9.8% of global cruise revenues in 2010 2010. However, this market segment grew by nearly 40%, driven by a new, affluent course and aging demographics across the Asia-Pacific region. If effectively tapped, Asia could possibly be as important a market as North America for Carnival within the next 10-20 years (Levin, Jones, & Slade, 2011). Clients in Asia are now looking for magnificent cruises as a getaway option. Disposable salary of the Chinese consumer has grown yearly by 10% a time. The total number of travellers sourced from China heightened approximately 74% in 2009 2009 (Marketingteacher, 2012).

From a technological point the growing Asian industry puts the system developers for a obstacle. Most systems within Carnival happen to be legacy systems, created when Carnival was simply looking at the united states market. Carnival had never envisioned stepping in to the Asian market at the moment of system development, therefore the systems aren’t set up to cope with the Chinese characters.

Trade organizations

There are many trade organizations active in the cruise industry. Usually these trade agencies are centered on one market plus they promote actively the cruising experience in that area.

Tax Loopholes

Carnival has been acquiring good thing about special tax loopholes 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 could affect their economical statements and fiscal important thing down the road (Marketingteacher, 2012).

4.2 Economic Factors

Economic factors refer to areas unique to economy and immediately influenced by market or comprised by economy, areas such as for example inflation rate, interest rate, economic growth or exchange rates. All areas can tremendously influence a business, making them an exceptionally important portion of the PESTEL analysis.

Global economic recession

Global economic recession. Reduction in growth for South of European countries because of bad economy.

Still big market share to capture

The cruise industry has grown considerably in past times 10 years but still occupies a very little proportion of the global holiday market. Cruise lines accounted for only 4.5% of the $542.2 billion worth of the travel sector in ’09 2009. While the earnings for cruises possesses declined in the US, it really is growing in Europe and Asia, resulting in more possibilities for Carnival to increase in these regions. (Marketingteacher, 2012)

There is still a big market share to capture; only 23% of People in america has ever before booked a cruise (Interview ….). There is a strong customer demand in Europe (Carnival Cruise Lines, 2012).

Pricing based on data evaluation (Interview Patrick Manuel)

Changing role of travelling agents

Carnival Cruise Lines makes extensive utilization of travel agents. In their overall worth chain the role of the intermediary requires a crucial position. In literature an intermediary is certainly described as ‘an financial agent that buys from suppliers so as to resell to buyers, or that helps customers and suppliers to meet up and transact’ (Spulber, 1996). Based on this definition, we are able to distinguish 2 sorts of intermediaries:

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

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

In the case of the cruising market we can clearly define the travel companies as infomediaries. The travelling agent helps the customer to book a cruise, by giving him all relevant facts and different options that are offered.

Due to the rise of Net Sarkar et al. (Sarkar, Butler, & Steinfeld, 1996) mention the Threatened Intermediaries Hypothesis (TIH), this hypothesis discusses the bypass of intermediaries in the value chain. The hypothesis argues that on the net consumers will interact directly with online suppliers, producing the purpose of intermediaries redundant. On the other hand this hypothesis has also been questioned by various other researchers, who argue that hypothesis is much too simple (Schmitz, 2000). These researchers point out 3 solutions that intermediaries give, that tend to be neglected in exploration: inventory positioning for immediacy assistance purposes, reducing information asymmetry; and gathering, arranging and evaluating dispersed data. During our analysis and interviews it started to be clear, that the role of the travel agents, especially in the cruising market is targeted on reducing information asymmetry and gathering, organizing and evaluating dispersed details. The product that is for sale, i.e. the cruise, is merely too complex for most people to book the complete cruise

themselves. The travel agent is crucial in explaining the 38 different room types on board, different dining activities, etc. Though on the web booking increases each year, this is mostly carried out for the ‘vanilla’ cruises; a few days with limited options. For all the types of cruises the purpose of the travel around agent remains crucial in the process.

Fuel Price Risk

Of all the concerns facing the cruise sector today, rising fuel prices and the necessity to become more environmentally friendly are perhaps the most pressing. For operators, more and more expensive fuel has already established a negative effect on operating costs. Increasingly rigid environmental restrictions have made the necessity to start out using cleaner varieties of fuel an urgent subject, but switching can be quite a costly business that could send fuel prices soaring (Adams, 2011). Just lately Carnival and additional cruising businesses have imposed modest ‘gas surcharge fees’. These charges often aren’t apparent until quite later in the cruise booking method, so these surcharges upset fairly few customers and then add extra earnings (Levin, Jones, & Slade, 2011).

4.3 Social Factors

Social factors mainly refer to demographic elements, which comprise factors like population growth amount, cultural aspects, years distribution and health awareness.

Strongly favorable demographics

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

In the cruise industry, the under-65’s are believed ‘the young collection’. As populations across European countries and THE UNITED STATES age, Carnival’s marketplace keeps growing larger. Carnival has already been very well positioned to take benefit of this development: its branding, segments, and market share help to make research paper writing service it the best-positioned cruise line total (Levin, Jones, & Slade, 2011). Developments are shifting in the cruising industry towards the 45-60 year later years group. As this generation grows in people, Carnival can take good thing about the economies of level and offer them the best prices (Marketingteacher, 2012).

4.4 Technological Factors

Technological factors make reference to automation, incentives, the price of technological transformation and R&D activity. These factors greatly influence the areas or aspects, like the minimum efficient creation level, top quality, costs, and outsourcing decisions.

Technology, and more particular Information Technology, can and must play a crucial role in cruising industry reform. An interesting overview of areas where information systems can help CI can be found in a written report prepared for…

The idea of connectivity nowadays

Based on a 2012 McKinsey study, ‘Minding your Digital Organization’, fifty percent of the executives responding watch investments in digital technology as building a competitive advantage within their organization. Forming this digital border requires latest thinking and a new method of access customer benefit and make earnings and results addressable to the organization.

Royal Caribbean cruiselines sought that border when it was building the Oasis-school ships (The digital Edge), On these large oversized ships Royal Caribbean needed to make sure that every guest could enjoy a personalized knowledge while being on a massive ship with a large number of other customers. First step was setting a obvious and unambiguous outcome – eliminating the need for lines up to speed. A multi-disciplinary group was put together to recognize the bottlenecks along the way.

When passengers check within their photos are considered and routed to a digital profile that forms the basis for digital support of their experience up to speed. The cruise line provides a smart card for onboard actions and purchases. The smart cards, combined with their digital picture facilitate on- and off boarding of the ship as clients swipe their smart cards and have their digital photo verified by the quartermaster.

Once on board the ship, digital systems give passengers greater direct control of their personal encounters via smart phone software and digital signage. Rather than telling guests where they can consume, Royal Caribbean captures each of the 24 restaurants’ capacity data instantly via shape-sensing camera’s. This information can be found on various locations on the ship.

4.5 Environmental Factors

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

Strong dependency on events in the exterior world

The cruise industry could be highly influenced by events in the outside world, such as 9/11, Costa Concordia crash, and the ash cloud above Iceland. These large, noticeable accidents generate huge detrimental publicity, hurting the cruise sector all together.

Lower-profile problems may also have significant impacts. Two such complications happen to be viral outbreaks and folks lost at ocean. Viral outbreaks typically necessitate the come back of a ship to home slot, a burst of harmful publicity in newspapers, tv set, and industry blogs, and refunding many travellers. Overboard incidents’ have effects that are harder to predict: the business is often confronted with lawsuits and negative news reports (Levin, Jones, & Slade, 2011).

4.6 Legal Factors

Legal factors make reference to all of the laws directly linked to a business and its own location of activity, including consumer law, antitrust legislation, discrimination law and health insurance and safety law.

Complex diversity of intercontinental and federal government codes and regulations

The cruise line industry must abide with a complicated diversity of overseas and federal government codes and restrictions. All ships browsing ports, regardless of where they happen to be flagged, must adhere to all applicable federal regulations. In the US for instance, they own ‘the responsibility for making certain these ships connect with all intercontinental conventions and domestic requirements for security, security and environmental coverage’ (USCG, 2012).

The CRUISELINES International Association (CLIA) will serve as a non-governmental consultative organization to the International Maritime Corporation (IMO), an agency of the US. The IMO mandates global restrictions for the protection and operation of cruise lines. The international Convention for the Safeness of Life at Sea (SOLAS) includes comprehensive info on safety gear and procedures.

The International Ship and Slot Facility Protection Code (ISPS), a wide set of reliability requirements for ships and interface conveniences, was added as an amendment to SOLAS following the September 11, 2001 episodes. Compliance with SOLAS criteria and different internationally recognized conventions is monitored by both the ship’s flag and port status representatives, which is the US Coast Guard in america.

The Cruise Vessel Security Act contains some brand-new provisions and clarifies different existing CLIA policies, such as how the cruise lines report allegations of crime to the government.

In addition to announced and unannounced safe practices inspections, the US Coast Guard yearly conducts a Control Verification Certificate evaluation for every cruise liner that ports in the US for compliance with both federal and international rules (Cruiseindustryfacts, 2012).

With products as Electric Health Data and medical billing services, the Cruise Industry has to comply with the Health Insurance Portability and Accountability Take action (HIPAA), the principal law that establishes the US legal framework for wellbeing information privacy (US Division of Health & Human Offerings, 1996).

5. Carnival Cruise Lines SWOT Analysis

When we incorporate the 3 models as mentioned in chapters 2, 3, and 4, we are able to derive strengths, weaknesses, threats and opportunities (SWOT) for Carnival Cruise Lines. The below picture indicates conceptually how exactly we have used the 3 different models to ultimately derive the specific SWOT examination of Carnival Cruise Lines.

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

The details of the 5forces style of Porter gives input to all 4 areas of the SWOT analysis. The information of the 7S style gives input, since it’s mainly focusing on the internal set up of the business, to the strengths and weaknesses of Carnival Cruise Lines. Lastly, the PESTEL evaluation gives insight to the opportunities and threats to the business. As already mentioned in chapter 3, gives the PESTEL analysis a far more in depth insight what external forces can own an impact on the cruise market as a whole and Carnival CRUISELINES in specific.

Concluding, physique X shows the specific strengths, weaknesses, possibilities and threats of Carnival Cruise Lines. This SWOT is the synthesis of all information 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 software can result in economies of level versus travel agents

Loyalty applications are in place

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

Talent development courses in place

Family-like management style

Easy to do business with (from travel around agent perspective)

Strong acquisition strategy

Dominant market share

Operational excellence and experience

Comprehensive portfolio

Strong financial position

Promote lifestyle of each target group

Decentralization of business operations

Lack of end to get rid of summary of the project portfolio

No prioritization method in place

No Total Expense of Ownership in place for IT

Weak resource management

Complex product which has an impact on online purchasing and need for good relation with travel agents

Legacy systems

No benefits tracking in place

Poor safety record

Over-dependence on the US Market

No integrated CRM system

Opportunities

Threats

Growing Asian market

Benchmarking is challenging within the sector

Technological developments in satellite connection

Role of travel companies is changing

Number of on the net bookings is increasing and increasing additional every year

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

Pricing based on data analysis

Profitable business

Strongly favorable demographics

Complex diversity of environmental, health insurance and safety legislation

Multiple trade agencies are in place

Changing consumer trends, both social and technological

Technological development in satellite communication

Increasing fuel prices

Floating hotel with independent IT

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

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

Compliance to a intricate diversity of laws and regulations (global company)

Competing with the whole leisure market which results in several challenge and more expensive 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 interest when something occurs on a cruise ship

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

Figure X: SWOT examination of Carnival Cruise Lines

Based upon this SWOT we are able to conclude that Carnival CRUISELINES is active in a very competitive environment. The necessity for cost awareness combined with continuous innovation as a way to deliver the customer experience in crucial. In the following chapter we will move deeper into the strategic IT alternatives we think Carnival CRUISELINES should take to retain their dominant space on the market, and even grow their market talk about.

6. Strategy Analysis

Difficult decisions have to be made. Should CCL continue controlling technology systems with a decentralized procedure, in which each CLL brand chose its IT platforms and got the autonomy to run them? Or should CCL have a mixed approach, where the same standard applications would run through the entire enterprise but will be managed independently by Headquarters in US and UK office buildings? Or should CCL espouse a “one-firm” approach and boldly shoot for a centralized execution of its most critical systems (HCM and personal statements), with all its office buildings interconnected on a single “instance” of a software platform?

6.1 Cruise Market drivers

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

and opportunities, we must 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 bring about an end service or product. Porter describes two significant types of business activities: primary actions and support activities. Principal activities are directly involved in transforming inputs into outputs and in delivery and after-sales support. Support actions support primary actions and other support actions.

Despite the fact that Carnival CRUISELINES serves different marketplaces with different customer choices, Carnival doesn’t need to alter its value chain to please numerous client segments. Each cruise series brand can add value by offering the same brand experience with slightly distinct price items and cruise line experience offerings. The worthiness chain, shown in Figure X, is focused on giving customers high quality vacation packages, a multitude of vacationing options and a wonderful overall cruise vacation experience.

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

Based on our evaluation and in-depth interviews with cruise industry experts we found there are 4 main drivers that define the cruise industry: velocity to advertise, consumer demands, customer operations and cost management. Based on Carnival CRUISELINES mission, vision, values and business model we determined 4 strategic emphasis areas from the technology perspective that will direct the information management strategy for 2007-2011 for Carnival Cruise Lines.

The direction and objectives in regards to 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 point of view.

6.2 Strategic Intentions

Text……

Speed to market

For Carnival CRUISELINES it is crucial to deliver their consumer offerings swiftly to the marketplace, especially in the remarkably competitive industry they are in. In order to keep their strategic dominant posture in the market, they need to manage to deliver their offerings before the competition. This requires from IT they can quickly operationalize the business enterprise demand. To permit this, the It all infrastructure will have to support working across practical and organizational boundaries in the most effective way.

Customer Relationship Management

Customer Relationship Control (CRM) can be seen as a process where in-depth analysis of buyer behavior and knowledge about the customer habits, desires and needs are handled. For Carnival CRUISELINES it will be important to increase the concentrate on return customers, since currently most customers are first-time cruisers. In addition to Customer Relationship operations, a CRM program would help to identify and anticipate on customer’s needs. Such something will help to:

Identify high-end customers

The CRM system can analyze customers spend behavior on board and determine which customers spend the most money. Carnival CRUISELINES would then have the ability to set up specific activities to attract those customers

Set up loyalty programs

The CRM system can recognize return customers. By using a Loyalty program these repeat customers could be rewarded for cruising with Carnival again (e.g. better cabin, beverages free of charge,…) These loyalty programs will be going across all of the cruise lines

Manage complaints

For each customer complaints could be gathered and analysis would be performed to identify the root-cause of the issue. Solutions would be captured aswell.

Cost management

Carnival Cruise Lines has a strong concentrate on controlling costs. Building cruise lines is a very expensive venture, and must go hand in hand with a proper planning. Besides the setting up of the ships, there are many other tasks ongoing on a yearly basis that should deliver a much better customer experience. As in any other organization, there are just limited funds and information open to deliver the large number of projects, consequently a portfolio administration and prioritization process should be set in place. This process will drive your choice making and can maximize the worthiness per dollar spend. It’ll prevent duplication of effort and costs.

Consumer demands

While the cruise industry was for long viewed as the most popular method of traveling of the old people, this is no longer the case today. There is an increasing amount of young people, singles and families taking a cruise. This has created a shift in consumer needs. On the main one hand, people want to have the same connection with the outside world because they have at home. Due to the application of satellites on the ship this creates a real obstacle for the cruise sector, and Carnival in particular. Guests not only want to have the same connectivity, they also want to be in a position to use their own device to hook up to the network. The It again infrastructure should have the ability to support a higher connectivity and support a variety of devices to meet up these customer demands.

6.3 IT Requirements

The strategic intentions require further innovations on information technology. This may result in further enhancements to currently existing solutions as well as the introduction of new technologies. For each of the strategic intentions we defined a number of technology requirements. A synopsis of the requirements is presented in Table X. The requirements will be the basis for the identification of strategic It again initiatives. Within the next chapter we propose a deployment timetable for all those initiatives.

Speed to market

Deliver offerings more rapidly to the customer

Reduce time lines of offering delivery

Minimize duplication of effort

Improve conversation and collaboration between business lines

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

Duplication = ERP

Collaboration = ERP

Cloud…Communication = SaaS / SOA

Reorganize IT landscape and IT processes; alternative 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 perspective of the customer

Recognize repeat customers

Improve understanding of the customer

Increase loyalty programs

Analysis of customer behavior

Targeted marketing actions

Central customer database: knowing the potential value of the customer

Understanding customer experience: buyer satisfaction

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

Measure client satisfaction = SERVQUAL

Initial cleansing customer master data and prevent entering granularity customer data = CRM

Customer (profitability) segmentation / understand 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 right time in the proper sequence.

Portfolio Management

Business Case Management

Consumer Demands

Drive consumer choices

Give information to the customer to operate a vehicle their decision making

Deliver same connectivity conditions as at home

Make the stay as comfortable as possible

Bring your own unit on the boat…

Your own product as point-off-sales

Connectivity: customer wifi.

Mobile Platform connectivity

7. IT Initiatives

Text…

7.1 Information Administration Strategy

Text…

7.2 IT Initiatives

Text…

7.2.1 Speed to market

(source: HBR business case en Janssen 2012)

IT supply

A period of weighty consolidation and acquisitions of cruise makes resulted in CCL because they are right now. But, every acquisitioned brand stayed a separate corporation entity within CCL called business units. Currently CCL has 12 separate business units altogether. Every business device has its IT section with their own devices, applications and IT infrastructure. Next to the IT scenery diversity within the business units, CCL owns various legacy systems. Because of the fact there aren’t many players in the cruise sector, so almost all of the strategic important applications are tailor made.

Due to this “separate business unit” way CCL has a complex and diversity IT landscape and makes it problematic for CCL to integrate 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 put into practice, if an innovative system is chosen to put into action at CCL, in many cases it takes too long. The CCL IT landscape is not well prepared to adopt innovations or communicate and interconnect with fresh systems. Their IT costs are currently too much. CCL’s speed to advertise is an serious issue.

Network

To run the majority of its back-end IT procedures, as well as to provide basic interaction and productivity applications CCL should decide on a solid financial partner which diminish permanent partner risks (for example Microsoft/ Windows server 2000). Having an individual platform and prevalent global applications, like ERP, would help CCL lessen overall expenditures and allow for the overall flexibility to develop through scalability.

Platform selection

As discussed earlier to cut down costs the granularity and complexity of their It again landscape must be simplified. To simplify their IT landscape first of all all applications will end up being classified. Their main or strategic IT competencies ought to be classified as off-the-shelf or custom-made applications. Legacy systems are often custom-made and for that reason difficult to displace with off-the-shelf applications. For example CCL has offices around the world which had used their individual individual accounting and human resources software systems, which makes it very complex to acquire an up to-date snapshot of the complete organization’s status at any one period. Implementing and global ERP program is the first step to take.

CCL should chose for example for SAP ERP program because of the program giant’s solid budget (which diminished long-term partner risk), its global existence, and the high amount of integration it offered in its applications CCL is normally a general public dual listed provider, it required a far more integrated method of financial management, one that would meet GAAP specifications and other compliance and regulatory requirements. Legacy financial management devices impeded the expansion of the strongest possible operating model.

Large companies which have the ability to renew their IT landscape must make important strategic decision. For example should CCL choose “best-in-breed” or one program strategy. Under a best-of-breed strategy, the organization would acquire what it believed was the best possible application in the market for a specific need-potentially finding yourself with many applications, from a plethora of vendors, that didn’t necessarily “speak to one another.” Big disadvantage is named the Pareto impact created by the business’s requirements, wherein a relatively small number of specialised applications needs tended to make a disproportionately large number of complexities. In addition, operating multiple applications would require multiple specialists, increasing the training costs and IT staff count. This is exactly what we want to prevent, we want cut costs in IT staff and application costs.

The one-platform approach would have the advantage of creating important economies of scale for the business. Biggest advantage and most important, CCL could efficiently operate with a lower IT support head count when coping with an individual platform, reducing training charges for its IT professionals while leveraging economies of level beneath the establishment of global support centers.

Vendor arguments

Applications sourced from the same vendor typically “talk” to each other, allowing information to stream seamlessly and instantly, without the need to design custom interfaces or to acquire expensive middleware. The largest good thing about 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, however, would lower CCL’s negotiating power regarding future purchases from that one vendor, who recognize that any decision to move to a different platform would be a expensive one. Furthermore, if owner was not financially strong or encountered future operating challenges, CCL could set itself