The Carnival Cruise Lines

The fair sail Linesfair sheet Lines is a global ratvass phoner and virtuoso of the grandst spend companies in the world. CCL generates only of its revenues from the fannyvas industriousness. The federations wide-ranging product offerings run guests with stupendous spend friendships at an outstanding measure. The success in providing quality canvass vacations has made CCL the al virtu wholey get able-bodied attach to in the leisure blend diligence. circus journey Lines stock is treblely listed on both(prenominal) the New York memory give-and-take and on the London Stock Exchange under run across CCL. It is the only company in the world to be included in both the SP 500 baron in the United States and the FTSE 100 index in the United Kingdom ( circus passel PLC, 2012). carnival sheet Lines operates a fleet of 100 ships, with a nonher seven ships scheduled for deli very amid forthwith and March 2016. With approximately 200,000 guests and 77,000 shipboa rd usageees, there argon to a greater extent than 277,000 people sailing aboard CCLs fleet at any aband bingled m ( bazaar Corporation PLC, 2012).For the purpose of our report it is crucial to understand how the circus Cruise Lines Corporation works today. We need to understand how the various aspects of the production disembowel ar bound up and how they work together. Only after a true understanding of the incumbent situation, we undersurface come with proposals for improvement and argue the impact on true ways of working.In literature one can fine many models that can be used to intuitive feeling at an cheek with an intrinsic perspective. In appendix X we provide an oerview of some focalisesing models we have found in literature, with an explanation why, when and how it should be used. Since our report unavoidably to cover the implementation of a new IT parcel outment scheme, we have decided to use McKinseys 7S model as sh witness in figure X. This model, dev eloped in the 1980s, involves 7 factors, which can be categorized as hard and blue elements. Hard elements can be go under and influenced to a greater extent than easily. They would be driven by the organization charts and inform lines deep d protest the vocation and they may include the systems you use to get work done. blue elements are, by their very nature, much difficult to manage and may be moved(p) by the civilisation of the organization. But you have to apply yourself to these as ofttimes as the hard elements, as they provide the support structure for the thriving implementation of any change, and they are comp permitely interdependent on distributively other.Figure 7S framework (McKinsey)The hard elements in the 7S-model are Strategy, Structure and Systems the soft elements are Style, share Values, Skills and cater. In order to understand the 7S-model better a brief explanation is given be disordered.Hard elements of the 7S-modelStrategy by using mission and great deal the organizations objectives become behave.Structure how is the organization structured and which hierarchical layers are thereSystems all formal and informal methods of operation, procedures and communication flowsSoft elements of the 7S-modelStyle this is about leadership and management personalised mannersShared mold the standards and values and other forms of ethics within an organization in which vision, bodied culture and identity are the samara elementsSkills these concern both the skills of the organization and those of the employees staff this is about the employees, their competences and job descriptionsIn addition to the above elements we added two divides specifically on Information focus and assay heed to give a complete overview of the situation of fair Cruise Lines today.2.1 Strategy of CCLThe mission of circus Cruise Lines is to take the world on vacation and deliver transcendent experiences through many of the worlds best(p)-kn ac cept cruise crisscrosss that cater to a innovation of assorted geographic regions and life names, all at an outstanding value unrivalled on land or at sea ( bazaar Corporation PLC, 2012).The vision statement of CCL is the undermentioned to consistently deliver fun, memorable vacations at a repeat value (fair Corporation PLC, 2012).Derived from this mission and vision, Carnival Cruise Lines has cause up the following(a) strategical objectivesto be the leading cruise hustler in all segments entered and to maintain the close to up-to-date fleet of cruise ships in the worldto develop new cruise segments and innovative cruise packages to reach a larger number of potential and past cruisersemploy sophisticated promotional causal agents to achieve a greater awareness by the public concerning the availability and afford ability of cruise travel close in the showtime-time and younger cruisers (Carnival), experienced cruisers (Holland America), upscale cruisers(Seaborne), and cru isers wanting a sailing vacation (Windstar)promote cruises as an alternative to land- pocketbookd vacationsprovide a variety of activities as well as ports of callbe innovative in all respects of trading operations of the ship. solely initiatives that are taken by Carnival Cruise Lines need to be in line with the mission, vision and strategic objectives (Carnival Corporation PLC, 2012).With respect to the strategy of Carnival Cruise Lines the following mediums can be identified distinctivenesssimpuissanceesDominant food food market handle unanimous learning strategyComprehensive portfolio (target groups)StrengthDominant market shareThe biggest readiness of Carnival Cruise Lines is its huge scale and scope. The company is twice as large as its biggest competitor and competes in nearly all market and segment worldwide (Appendix X). This gives CCL enormous power over the cruise labor as a whole. It enables the company to undertake projects that grow the industry, gives it a political program for continued mergers and acquisitions activity, and helps CCL negotiate with major manufacturers of cruise ships (Levin, Jones, Slade, 2011). In all initiatives and projects that are undertaken by the company, the incentive is everlastingly to keep that dominant market share and even to grow it further. CCL wants to be a leader, and this will be reflected in management decisions.StrengthStrong acquisition strategyCarnival Cruise Lines has the ability to obtain companies through acquisitions. By using an acquisition strategy, the Corporation has been able to position itself in each geographical market in the world and rank itself as number one in the cruising sector. However, this strength also results in a highly decentralize IT grace, as expound in paragraph 2.8.StrengthComprehensive portfolio (target groups)The corporation has a large fleet capacity and operates ten of the most recognizable cruise brand names. CCLs portfolio of brand names appeals to almo st either niche market, from budget minded, coetaneous to opulence cruises (Marketingteacher, 2012). Each cruise line operates globally and is targeted at one or more nationalities (Appendix X). This is linked to the fact that CCL wants to be the leader in the cruising industry and wants to keep the dominant market share.2.2 Structure of CCLCarnival Cruise Lines Corporation plc has two main headquarters, Carnival Place in the US and Carnival House in the UK. The constituent Corporation and plc are disperse listed companies with different shareholder bodies, but they jointly own all the run companies in the group. Both headquarters have their own management squad, strategy, and IT organization. indoors Carnival Cruise Lines every brand is seen as a fracture communication channel unit of measurement of measurement, with its own earnings and sacking statement.With regard to the structure of Carnival Cruise Lines the following strengths and weaknesses can be identifiedStr engths trippingnessesStrong financial positionClear snap on exist leadershipStrong marketingDecentralization of lineage operationsDecreasing proceedsOver-dependence on US marketStrengthStrong financial positionCarnival Cruise Lines is one of the most profitable cruising companies. The companys average net income (FY2005 to FY2009) amounted to 18.1% compared to the industry standard of 6.3% (Marketingteacher, 2012). The firm is dual listed on the New York Stock Exchange and the London Stock Exchange under the symbol CCL. Since the company is dual listed, it has the ability to raise more funds from investor than its competitors. With this also comes greater stability due to different markets being affected by different economical occurrences, political issues, and societys views (Levin, Jones, Slade, 2011). Due to the strong financial position, CCL has a certain luxury to take strategic important and cutting edge decisions and, at the analogous time, invest the necessary fun ds to get through it possible.StrengthClear focus on cost leadershipCarnival Cruise Lines has a clear focus on Cost Leadership, i.e. CCL offers its product to the mass market. Therefore the highest focus is put on the price and keeping the price as low as possible. Once the client is on board the ship, additional revenue is created by having the customer pay for everything that was not covered in the base price. CCL is overmuch(prenominal) a large company that it has significant cost advantages over most of its competitors. Unlike Royal Caribbean where the focus is on delivering the best customer experience (Appendix X, interview Vicki Freed), the focus at CCL is more on providing the best cruise for the lowest amount. Additional revenues are generated once a customer is onboard.StrengthStrong marketingCarnival Cruise Lines invests explicitly and effectively in print and television media. Their promotions target the lifestyles of each group of customers (Marketingteacher, 2012 ). This strategy enables CCL to get name recognition in every market segment, thusly the different cruise lines under the brand.WeaknessDecentralization of argumentation operationsHistorically, CCL has been run by the Arison family as a coalition of largely free lance assembly linees. Each cruise line largely manages its own customers, marketing, distribution, gross revenue, ports, and logistics. This procession has had benefits infixed competition means that each line operates better than any would in isolation. The yearly capital planning extremity happens on both the US location as on the UK brass, which might lead to duplication of effort. The calling operations of the cruise lines are not centrally managed. Better coordination of these championship operations could generate additional benefits for Carnival Cruise Lines (Levin, Jones, Slade, 2011).Figure boldness chart Carnival Cruise LinesFigure X gives the high-level organization chart of CCL. On the left hand side all the 10 brands with their presidents are listed, with a take away line to Mickey Arison. As state above, although there is a direct reporting line to Mickey Arison, every brand is managed as a avocation unit with its own profit and loss. On salutary hand side all the sustenance functions, such as HR, legal, IT, are listed with their CxO or head of department. These departments have a direct reporting line to Mickey Arison as well, but in every melody unit there is an own representation of each supporting function with a reporting line to the president of the brand. The communication amidst the condescension unit representation and the CxO of the supporting function is not always seamless, which can lead to duplication of effort.WeaknessDecreasing profitThe profit of CCL has diminished over the last years. The net profit was $1,790 million in FY2009, a decrease of 23.2% as compared to 2008. The profit recovered some in 2010 and 2011 but never reached the level of 2008 (s ee appendix X) Another weakness is that Carnival Cruise lines reports their financial statements in dollars. About half of their revenue is generated in a non-US currency, but is reported in terms of US dollars. The value of the dollar against Euro appreciated from 1.60 in January 2010 to 1.53 by April 2010 against the Pound. If the dollar strengthens it would record a lower revenue than is actually earned (Marketingteacher, 2012). The pressure on profit will keep on adding pressure on taking the counterbalance management decisions and investing in the right opportunities.WeaknessOver-dependence on US marketCarnival Cruise Lines derives a majority of its revenue (nearly 52%) from US customers. In 2009 the revenue from the North American market registered a double digit decline. The over-dependence on the US market reaps CCL vulnerable to the economic fluctuations of the American economy and this company is dependent on customers disposable income (Marketingteacher, 2012). All crui se companies, CCL as well, are moving their focus from the US market to Europe and Asia. Especially in Asia there is a huge ingathering potential.2.3 Systems within CCLThis paragraph gives a high level overview of systems as mentioned in the 7S model all formal and informal methods of operation, procedures and communication flows. In paragraph 2.8 we focus on Information Technology systems and the current IT grace.With regard to the systems of Carnival Cruise Lines the following strengths and weaknesses can be identifiedStrengthsWeaknessesIT in mergedd in company resultsNo prioritization process in placeNo benefits trackNo interconnected CRM processStrengthIT incorporated in company resultsIn some companies IT is considered as free of charge, since IT is not incorporated in the company results. This leads to a distorted view of company/business unit results. However, Carnival Cruise Lines incorporates the costs of IT in the company/business unit results, which allows both the co mpany/business unit itself to get a more realistic view of the results, but also the market gets a more trustworthy view of the results. This leads to a more positive ranking in the market.WeaknessNo prioritization process in placeSince every business unit is set up as an own profit and loss center, every business unit deems their own project to be the most important. Currently, there is no prioritization process in place on the business side, which leads to a continuous flow of projects that need IT resources.WeaknessNo benefits bring inMany projects get kicked off and promise benefits. However there is no process in place to measure these benefits after the project has been delivered. This allows the business to keep on creating additional projects to deliver the same thing, again allowing business increase costs instead of reducing costs.WeaknessNo integrated CRM processCarnival Cruise Lines does not have an integrated CRM process in place for the whole corporation. This leads t o the fact that customers from the one cruise line arent recognized as a repeat customer with a different cruise line within the group, this has an immediate effect on the price for repeat customers. Also, due to the lack of this process, the organization cannot target specific customers groups, ground on their previous behavior on the cruise, since that information is only fragmented available.2.4 Style within CCLThe leadership style at Carnival Cruise Lines can be called family-like. This family-like leadership style is a management style that Ted Arison already used when he was still steering the company. Ted Arison had a non-hierarchical come near to management, meaning that he delegated a lot of work downwards in the organization, allowing him to oversee the bigger picture ( troubleparadise, 2012).With regard to the style of Carnival Cruise Lines the following strength can be identifiedStrengthsWeaknessesLeadership style empowering peopleStrengthLeadership style empowering p eoplePeople with the right skills are hired and are giving the support and room to do their jobs correctly. People are encouraged to be hands-on and take reckon essays. Taking gambles also means that mistakes can occur, however CCL uses a no blame culture through which people feel empowered (Managementparadise, 2012).2.5 Shared values of CCLDerived from the mission and vision of Carnival Cruise Lines (see 2.1) the company has set some company values that were a high priority. With regard to the share values of CCL the following strengths can be identifiedStrengthsWeaknessesStrong company valuesFocus on the environmentStrengthStrong company valuesThe company values are honesty, integrity, fairness, hospitality and teamwork. The values are deemed important to do their job in a correct manner.StrengthFocus on the environmentCarnival Cruise Lines, as all other cruise lines in the industry, takes much pride in the focus they put on the environment. They invest heavily in health and safety, both for customers and for employees. There is a very strong focus on the environment and to work in a greener way. Charity is also one of the key components of their social responsibility strategy.2.6 Skills at CCLWorking in the leisure industry requires some specific skills that you cannot always learn. Most important skills that someone working in the leisure industry would need, are the following customer focused, empathy, team work, stress resistant, multi-cultural, service orientation and multi linguistic.With regard to the skills of Carnival Cruise Lines the following strengths can be identifiedStrengthsWeaknessesStrong attention for skills attitude obedience programs in placeStrengthStrong attention for skills attitudeSince Carnival Cruise Lines wants to be seen as the cruise line that delivers fun, the attitude of the employees is very important as well. The employees need to be cheerful and enthusiastic. CCL puts great effort in stimulating the desired skills and attitude of the employees.StrengthLoyalty programs in placeCCL has its allegiance programs in place. The company introduced a new loyalty program in 2012 providing past guests with a variety of value-added benefits and features, including priority embarkation and debarkation, guaranteed supper club reservations and dining times, personalized stationery and custom-designed CCL logo items (Carnival, 2012). Contrary to what is state in the business causa, Carnival Cruise Lines has now its loyalty programs in place.2.7 Staff at CCLCruise ships typically operate with three classes of work party. The first is the officers these professionals are highly paid and given ultimate command of the ship. The moment is entertainers and wait staff typically lower-paid, but from the same countries as the cruisers that they serve. Finally, most of the ships crew is drawn from developing countries. While pay is low, the salary can represent an attractive opportunity for these workers, who often work 10-month contracts without being able to see their homes and families. Turnover is high, and few of the crew sees working on a cruise ship as a viable long-term career. Staff remains 24/7 on board of the ship, have their own cabins at the lowest two decks of the ship. Only officers are allowed to mix among guests, this at special occasions and in formal attire. Other crew members have dedicated times during which they can be present on guest decks.With regard to the staff of Carnival Cruise Lines the following strengths can be identifiedStrengthsWeaknessesOperational excellence experienceTalent organic evolution programs in placeStrengthOperational excellence experienceCarnival Cruise Lines has achieved below-industry-average costs and above-average revenue historically. This is largely due to the companys immense experience in owning and direct cruises, as well as some hopeful strategic plays. That advantage makes expanding into new markets vastly easier for CCL than for a smaller role player or upstart firm.CCL has the largest pool of data to draw on to determine what does and does not work and has the most experienced marketers of cruises in the world. These soft advantages let CCL potentially segment its customers more efficiently than competitors (Levin, Jones, Slade, 2011).StrengthTalent increment programs in placeCCL has a separate training and development department set up in the organization. The corporation invests heavily in coaching of high potentials by giving them learning opportunities that are fit for their personal needs.2.8 Information ManagementThe current IT landscape painting of CCL is much diversified. First of all, the IT landscape is split in the shore side systems and the shipboard systems. This split among on shore and shipboard adds a dimension to the complexity of the landscape, since most of the shipboard systems need to be able to communicate to the shore side systems. An additional challenge in the current IT land scape is the use of bequest systems. Since there are basically only three main competitors in the cruise industry, there is not really a vendor that specializes in cruise industry systems, hence all the cruise companies use their own developed systems. Years ago, this was not really a problem, but straight off with the globalization of industries, limitations of these legacy systems refrain CCL to be as agile as they would like to be. Figure X gives a high level overview of the current IT landscape within Carnival Cruise Lines at the time of the oddball description One can assume that due to acquisitions between 2006 and 2012 this landscape has grown in complexity even more. Another type of systems now in the current landscape which were not described in the case are the risk management and interior(a) visualise systems. For this CCL uses IBM OpenPages Financial Controls Management and IBM OpenPages Operational fortune Management (IBM Corporation, 2011).Figure Information syste ms within CCLWith regard to Information Management the following strength and weaknesses can be identifiedStrengthsWeaknesses refined involution system for travel agentsDecentralized systemsbequest systemsNo overview of project portfolioWeak resource managementTCO for IT not in placeOutsourcing level 2 3 support difficultStrengthExcellent booking system for travel agentsFrom a travel agents perspective CCL is clear to do business with travel agents will say that Carnival is much easier to work with than Royal (Appendix X, interview Vicky Freed).Carnival Cruise Lines has upgraded the booking engine within its travel agent web portal, to help agents save time when booking reservations online. A streamlined and simplified process for managing bookings, as well as an interactive toolbar that provides easier navigation between different components of the booking engine, make it easier for agents to book cruises for their clients. In addition to an entirely new design and navigation , the upgraded booking engine offers convenient links to several applications (Travel Agent Central, 2012). The updated booking engine is designed to reflect the changing business models of travel agents and represents the latest enhancement to this comprehensive portal which serves as a one-stop-shop for travel agents to fulfill all of their sales and marketing needs (Lynn Torrent, senior vice president of sales and guest services CCL).WeaknessDecentralized systemsThe decentralization within Carnival Cruise Lines translates into a decentralization of systems as well. Decisions arent always communicated from one cruise line to the other, which leads to duplication of effort. This decentralization of the business organization translates to the IT organization as well. Every brand has its own IT department with own systems and infrastructure.WeaknessLegacy systemsThere are many legacy systems. Since there arent many players in the cruising sector, most of the strategic important appl ications are custom made. This leads to a spaghetti landscape in which integration is very difficult and which affects the time to market significantly.WeaknessNo overview of project portfolioProjects can start within a business unit or on a corporate level within CCL. Since the business is set up in separate business units, with their own IT departments, there is a lot of duplication of effort. There in not one global IT Program Management Office that oversees all the current projects and their requirements for IT. This has both an impact on the IT resource management as on the IT landscape that runs the risk to get even more diversified.WeaknessWeak resource managementDue to the lack of a prioritization process for projects, the first-in-first-out pattern is often used, this means that resources get allocated either to the project that came in the strain first or either to the project that has a business owner or project manager who is very persuasive. Without the prioritizatio n process in place, it is very difficult for the IT management to decide where to allocate resources to. The lack of prioritization leads to frustration on the business side, because there is the perception that IT is not able to deliver in time.WeaknessTCO for IT not in placeTo really understand the essence cost of IT for the business all costs of IT should be made unsophisticated and understandable for any business owner. Currently CCL has no total cost of ownership for IT in place. Reasons for not having TCO for IT in place are unhomogeneous it is very difficult to really get cost like meshwork transparent, an IT service catalogue needs to be in place, IT management needs to be committed, However implementing TCO for IT will help the IT management get the armament of costs as a result of duplication of effort unmistakable to the business.WeaknessOutsourcing level 2 3 support difficultAs already stated above, most of the applications of CCL are custom made. This in-house de velopment induces resources with a very specific knowledge. Often, this knowledge is both on the system side as on the business process side and therefore confidential. Outsourcing level 2 and 3 support is very difficult, due to these specific knowledge.2.9 Risk ManagementEnterprise Risk Management is a process, effected by an entitys board of directors, management and other personnel, applied in strategy set and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable pledge regarding the achievement of entity objectives (COSO, 2004). Organizations which manage risk effectively and efficiently are more likely to achieve their goals and to achieve this at a lower boilersuit cost. Risk management is therefore good management. Risk management should be a multi-faceted discipline often referred to as enterprise, integrated, holistic or practical risk management (The Institute of Ris k Management, 2012). The objective of a risk management framework is to help mark that appropriate technical and administrative controls are identified and implemented to protect information resources and help ensure continuity of business operations (Hillson, 2006).With regard to Risk Management the following strengths and weaknesses can be identified for CCLStrengthsWeaknessesEnterprise Risk Management in placeGood frameworksStrong focus on security solitude regulationsPoor safety recordStrengthEnterprise Risk Management in placeCarnival Cruise Lines has introduced the Enterprise Risk Management (ERM) program. This program is designed to identify, assess, manage and report the most significant business and strategic risks face by the company to senior management and the tabular array of Directors. The ERM program is overseen by a team within the Corporate Risk Advisory Assurance Services Department, based in the Miami headquarters. CCL also maintains onsite teams at each of its brands, in order to stay aligned with the corporations generally decentralized management structure and to develop on-site audit expertise at each of the major brands. (IBM Corporation, 2011).Within CCLs business units risk management and internal control is an ongoing process. It is designed to identify, evaluate and manage the significant risks faced by the units and is embedded in each of the operations. A system of internal controls has been fall ined to be capable of responding quickly to evolving risks in the business. It includes procedures for the direct reporting of material internal control deficiencies together with the appropriate corrective action. The corporate executive management team receives periodic information regarding internal control issues arising at the business units. The primary focus of this aspect of the system is the corporate Management Advisory Services (MAS) Department. MAS is responsible for monitor the process, ensuring that issues normal to more than one business unit are identified and that all relevant matters are brought to the attention of the boards as a whole. The MAS Department is supported by the Corporate Finance and Corporate Legal Departments, as well as the CEO, COO and the CFO (CCL, 2010).StrengthGood frameworksCCL has adopted the Committee of Sponsoring Organizations of the Treadway counsel (COSO) guidance for implementing its internal control framework as part of the Sarbanes-Oxley bet Section 404 compliance plan (CCL, 2010). The COSO framework for ERM provides key principles and concepts, a common language, and clear direction and guidance for organizations to evaluate and improve their enterprise risk management (COSO, 2004).Carnival Cruise Lines has a structured approach to monitoring and managing operational, financial and compliance risk across the corporations spectrum of cruise brands. The system allows a high degree of comparability across the brand portfolio while recognizing the differences t hat make each individual(a) operating company unique (IBM Corporation, 2011). The key to CCLs approach to auditing risk is the conceptualization of each of its brands as a set of business processes. Despite the differences in organizational structures, IT infrastructures and market segments, Carnival Cruise Lines operating companies all operate primarily in the cruise industry, which enables the organization to establish a common analytical framework. CCL has identified over 300 individual processes that are organized into 13 sections as shown in figure X (CCL, 2010).1. Understand ma