Strategy Implementation in Strategic Management - Essay Example

Strategy Implementation in Strategic Management Carnival Corporation case study SWOT analysis Strengths Carnival Corporation boasts of 12 unique brands that are renowned the world over. In addition, the corporation has operations in all the seven continents, and this has meant that their revenues have increased tremendously. Over the years, the corporation has managed to acquire new ships, translating into an extra capacity for the passengers, translating into extra revenues (Wheelen & Hunger, 2008). More revenues means more ships acquisition, and a corresponding rise in passenger capacity. Furthermore, the corporation boast of an all-inclusive package, whose price range is low, relative to packages offered at theme parks and resorts. Moreover, the corporation is ISO 14001 certified, and this has acted to enhance its corporate image. Weaknesses A major weakness for Carnival Corporation is that it has amongst its fleets a lot of many old ships (Wheelen & Hunger, 2008). This has meant lost business at times, because their target market is the young travellers, and these prefer newer ships. Another weakness for the company could be the presence of too many members of the Arison family amongst the directors (six out of fourteen), and this could impact greatly on the corporate decisions of Carnival. Opportunities An opportunity that Carnival Corporation may consider venturing more into is the cruise market in Europe, instead of concentrating more into the American market. This is because according to the cruise industry in Europe, this is one of the most lucrative routes. Furthermore, Carnival corporations could also wish to venture into the area of organising and facilitating visits to historical sites of the world, and include this addition into their package of services offered. Threats The escalation in fuel prices poses a threat to Carnival, as this means that the corporation may have to raise its fares. Terrorist attacks, such as the one in September 2002, caused panic to the public, and this affected tourism. There are also occasion whereby virus attacks have infiltrated into the corporation’s server, thereby disrupting its programs, and affecting business immensely (Wheelen & Hunger, 2008). A number of legal tussles between on the one hand, the corporation and on the other passengers have also been witnessed in recent years, and this could lead to a dented image of the corporation. In addition, some former employees have also sued the corporation, on the issue of unpaid overtime. In 2002, Carnival Corporation was charged $ 18 million as a result of counts of pollution by its ships (Levine, 2006) Overview History Carnival cruise line was founded in 1972, by Ted Arison. The first cruise ship that the company purchase was named Mardi Gras, but it proved to be a fuel guzzler, in addition to being slow. The second ship that Arison bought was known as Festivale, and this was meant to compliment the services offered by Mardi Gras. Such diversions as a disco, casino, discos, planned activities, as well as a number of other types of entertainment had to be incorporated, as way of enhancing the experience of being on board the ships (Wheelen & Hunger, 2008). Between 1972 and 1975, this was a period that Carnival lost money, a trend that changed in the later part of 1975, when Mardi started recording profits, and an occupancy capacity of almost 100 percent. It was also around this time that the management at carnival changed the company’s approach as regards cruise vacations. The company was now more interested the young travellers, and also those who were cruising for the first time. In addition to offering a variety of exotic ports of the Caribbean, Carnival also made sure that all manner of activities and entertainment were added to the cruise members’ base fare. For the entire 1980s, the rate of growth of Carnival was an impressive 30 percent (Wheelen & Hunger, 2008). From 1982 to 1988, the company’s ships managed to sale to a capacity that averaged 104 percent. In a bid to raise money for expansion, Ted Arison shed about 20 percent of his holdings in the company in 1987, realising more than $ 400 million. Two years later, the company had managed to cruise over 750,000 passengers in one year, an industry’s record. The hitherto explosive rate of growth that was a characteristic of the cruise industry reduced in 1990, and this was the time that Ted’s son, Mickey, assumed the chairmanship of the company (Wheelen & Hunger, 2008). That decade was characterised by slow growth, but the company expanded all the same, acquiring other cruise lines along the way. A major acquisition of a Spanish cruiseline, Pullman, took place in September, 2006. Board of directors The board of directors at Carnival Corporation is chaired by the corporation’s CEO, Micky Arison. The CEO and president of Carnival cruise lines is Robert Dickinson, while the Corporation’s Chief Operations Officer (COO) is Howard Frank (Klein, 2005). Out of the 14 board members of Carnival, 6 of them belonged to the Arison family. Services The main services that Carnival Corporation provides is a cruise experience to its passengers. In this case, Carnival combines elegance with class to afford their passengers a cruise experience that is quite competitive in the industry. In addition, the corporation has also ventured into hotel and lodging services. A cruise experiences includes entertainment as well, in the form of dancing, music, night clubs, as well as movie selection (Keefe, Ross, & Middlebrook, 2002). Corporate governance All the company’s director, along with its executive officers held about 29.8 percent of the entire shares of the company. Mickey Arison, the CEO of Carnival Corporation controls 29 percent of the corporation’s stock. In addition, the Arison family, along with the trusts that are associated with it, owns about 36 percent of the corporation’s stock (Wheelen & Hunger, 2008). Shari Arison, a daughter of Carnival’s founder Ted Arison, is believed to have the corporation’s shares to the tune of 5 million. Competition The principal competitors that Carnival faced were Disney, Royal Caribbean, as well as Norwegian Cruise Line. The latter competitor had two brands in operation, Celebrity, and the Royal Caribbean International lines, whose operation consisted of 20 cruise ships with close to 45,470 berths. On the other hand, Celebrity ship had in operation 166 ships, and about 16,116 births. With its base in Miami, Royal Caribbean came into being in 1968, and had a workforce of 38,800 (Wheelen & Hunger, 2008). The company managed to realise revenues to the tune of $ 4.9 billion in 2005. On the other hand, Royal Caribbean’s gross margin, relative to that of Carnival in 2005, was 54.25 percent. References Levine, G. (2006). "Billionaire Arison 'Cruise Line in' Grease Suit," Forbes.com. February 13, 2006. Keefe, M. I., Ross, J. K., &. Middlebrook, B. J. (2002). "Carnival Corporation: Acquiring Princess Cruise Line (2002) in Strategic Management and Business Policy-10th Edition. Wheelen and Hunger. Ross A. Klein, R. A. (2005). Cruise ship squeeze: the new pirates of the seven seas Gabriola Island, BC, Canada: New Society Publishers. Wheelen L. T., & Hunger, D. L. (2008). Strategic Management and Business Policy (11th) Edition). New York: Prentice Hall. Read More