Strategic Management and Marketing of Carnival Corporation & PLC - Essay Example

Strategic Management and Marketing - CARNIVAL UK CORPORATION & PLC Summary Carvival UK Corporation & Plc is among the leading firms in the cruise/ vacations industry; the fact that the firm has adopted a dual-listed system for establishing a strong presence in both UK and USA has been found to be quite helpful towards the stabilization of its profitability; in fact, during the last two years the firm managed to achieve a continuous growth despite the global recession. A series of factors have played a role in the achievement of this target: the adoption of effective strategic plans, the close monitoring of the market trends, the practices of competitors and the financial potentials of the customers; the wise use of resources also helped to the limitation of the firm’s expenses and the increase of its profits – a practice used especially for the period from 2008 onwards. The critical assessment of the firm’s policies led to the conclusion that in the near future the update of existing organizational strategies would be required in order for the firm to keep its competitiveness at high levels; innovation in all organizational activities and change of current firm’s culture would be necessarily included in such a project. 1. Introduction The expansion of financial crisis during the last two years led to the limitation of activities of firms operating in various industrial sectors; cruise and vacations industry has been an industrial sector strongly affected by the world recession – under the continuous decrease of their income people at all levels of society had to review all their expenses – the limitation of funds spent on cruises and vacations has been an expected outcome of the current recession. However, it seems that the business environment has been traditionally hostile towards the firms that operate in the specific sector; this view is clearly stated by Morris (1990, p. 317); at a next level, the strategies of the firms that operate in this sector have been often characterized as ineffective, wrongly designed and developed or not appropriately supervised (Bloor & Sampson 2009, p. 711); under these terms, the use of ‘McKinneys seven S factors of Structure, Strategy, System, Staff, Skill, Style (leadership), and Shared Values’ (Lee et al. 2001, p. 49) is often proposed as a successful method in order to develop effective organizational plans; however, other issues, like a firm’s environment, its competitors and the use of its resources would be also thoroughly examined before focusing on the design and the establishment of strategic business policies. 1.1 Carnival UK Corporation & Plc - overview Carnival Corporation & Plc is one of the most profitable firms in the cruise/ vacations industry worldwide; the firm’s is based both in Miami and in London (UK); the framework used for the development of a dual presence serves as a vehicle for the support of the firm’s activities in USA and UK - two markets that are considered as fundamental for the development of organizational performance; the firm also operates in Canada and in Europe; the firm’s employees worldwide have been estimated to 10,700 (Datamonitor 2009). The performance of Carnival Plc up today can be characterized as quite satisfactory – especially if taking into consideration the strong competition in the cruise/ vacations industry but also the global financial crisis, which has negatively affected most industrial sectors worldwide. The effectiveness of the strategies used by the firm’s managers for the support of its activities can be proved primarily by the significant increase in the firm’s share price. More specifically, on the 6th of March 2009 the share price reached the 1287p; on the 18th of February 2010 the share price was estimated to 2332p (Citywire, 2010); the graphical representation of this increase is presented in Graph 1 – Appendices section. In 2008 a similar success in the increase of the firm’s profits was identified (Datamonitor, 2009) proving the high level of the firm’s profitability during the specific period. 2. Carnival UK Corporation & Plc – organizational environment, competition and strategic decisions 2.1 Analysis of the firm’s existing strategies – success factors As already noted above, Carnival Corporation & Plc is a business scheme consisted by two different firms: Carnival Corporation and Carnival Plc; these business entity has the following characteristics: a) each firm has its own shareholders – being able to be listed independently from the member of the scheme- it is perhaps for this reason that the firm’s share price is kept at high levels (Reuters, 2010); b) the two firms share the same board and the same executive management (Datamonitor, 2009). The specific method of operating in the market can be characterized as a unique business plan: these scheme allows the firm to have headquarters in both USA and Britain having more chances to survive under conditions of strong recession – like current ones. At the same time, these scheme gives the firm’s executive managers the ability to monitor closely two other markets – near to the above two; the Canadian market – close to the USA ‘branch’ of the firm and the European market – close to the British ‘branch’ of the firm can be easily accessed and monitored – by the managers of the firm based in USA and UK. The co-existence of two different headquarters has been the firm’s most important strategic plan; the continuous efforts for the limitation of its expenses is another measure taken aiming to gathering the funds necessary for the development of the firm’s presence in Europe – where the firm’s profitability has been found to be higher compared to that of USA and Canada; Micky Arison, the firm’s Chairman, emphasizes on the need for developing the firm’s activities across Europe and on the necessity of reducing the firm’s expenses in all organizational activities (Cruise Industry Wire, 2009). The success of the firm has been also resulted by the use of 12 strong brands; other factors leading to the firm’s success have been the ‘innovative vacation packaging and extensive advertising campaigns’ (Gross et al., 2007). 2.3 Assessment of the firm’s resources The use of resources in Carnival has been a bit problematic; apart from the fact that the customer services sector is highly supported, there are still issues appear periodically in regard with the effectiveness of the resources management sector of the organization. In this context, the profitability of the firm has not proved adequate taking into consideration the increase of investment on the firm’s cruise-ships – an issue highlighted by Hall (2009). On the other hand, the increase of investment in the firm’s activities led to the increase of the capacity of its cruise-ships – in a firm’s report related with the organizational performance in the fourth quarter of 2009 it is noted that ‘booking volumes and pricing’ are at satisfactory levels – referring to the period from September 2009 onwards (PRNewswire, 2009). The development of the firm’s stock presents differentiations being increased and decreased periodically probably under the influence of the global recession (Graph 2, Appendices). As for the funds required for the further development of the firm’s activities these could be retrieved through the use of existing cost-control strategy; the firm’s shareholders could also support a relevant scheme – having in mind that they can check the use of their funds which are going to be invested locally – the firm’s other part – in USA – has its own shareholders. The firm’s development in the British and the European markets can lead to the assumption that its employees are adequately selected and supported. 2.4 Assessment of the business and competitive environment for the enterprise The successful performance of Carnival can be explained if taking into consideration the organizational structure – referring to the ‘dual listing’ scheme as analyzed above. However, the business environment has been another factor supporting the firm’s development worldwide. Business environment in the case of Carnival is characterized by the following: a) close and effective cooperation between employees, b) communication with customers is effective, c) the firm’s projects are adequately supported – financially and technically – by the firm’s shareholders and its employees, d) the personal development of employees is an important part of the firm’s strategic policies. The global cruise industry sets the following challenges for the firm: a) new competitors are likely to appear offering services of lower price (Porter, 1998), b) it cannot be guaranteed that the firm’s leaders will be able to identify the changes required in the firm’s existing strategies (Casson, 2000), c) the history of shipping has proved that the trends of customers in the particular industry can be changed anytime (Andrews, 1984) and d) it will be difficult for the firm to keep its profitability against its competitors in the long term – especially if no measures are taken for the continuous update of firm’s existing policies (Brown, 2005). 3. Conclusions and Recommendations All firms worldwide need to constantly review their strategic decisions aiming to keep their position in the market and to increase their power towards their competitors. Different criteria are set each time that the assessment of a firm’s strategies and policies is attempted. In accordance with Armagan et al. (2005) ‘four dimensions of political culture – nationalism, internationalism, patriotism, and cosmopolitanism – influence firms’ willingness to explore new opportunities’ (Armagan et al., 2005, p.275). On the other hand it seems that the social and cultural characteristics of the targeted market need to be taken into consideration when deciding on the strategies used for the establishment or the expansion of a firm in the specific market (Verhage et al., 1989, p. 129); at the same time, concepts like ‘customer satisfaction, commitment, confidence benefits, and social benefits’ (Hennig et al., 2002, p. 230) can be particularly effective for establishing successful business plans. In accordance with the facts and the issues presented above, Carnival is a firm with a strong position in the British market; the firm has managed to keep the quality of its services at high levels however additional measures could be taken in order to guarantee the high profitability of the firm in the long term. The suggestions of Armagan et al. (2005) – as explained above – can help the firm to further increase its profits in Britain – by emphasizing on the dimensions of political culture presented by Armagan et al. (2005) the firm could effectively increase its market share in Britain – especially if the specific effort could be combined with the increase of innovation used in all parts of organizational activities. It is assumed that appropriate restructuring and update of managerial practices (Palich et al., 1999, p. 587) will take place in case that such a plan is introduced. References/ Bibliography A. Books Andrews, K., 1984. 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Online reports/ articles Citywire, 2010. Carnival PLC, [internet] 20 February 2010. Available at: http://www.citywire.co.uk/Personal/share-prices-and-performance/share-factsheet.aspx?InstrumentID=171758 [Accessed 20 February 2010] Cruise Industry Wire, 2009. Carnival Corporation & PLC Reports Fourth Quarter and Full Year Earnings, [internet] 21 December 2009. Available at: http://www.cruiseindustrywire.com/article42882.html [Accessed 20 February 2010] Datamonitor, 2009. Carnival – SWOT analysis, Report Buyer, [internet] March. Available at: http://www.reportbuyer.com/consumer_goods_retail/company_reports_consumer_goods_retail_/carnival_swot_analysis.html [Accessed 20 February 2010] Gross, D., Derdak, T., Stansell, C., 2007. Carnival Corporation. International Directory of Company Histories, vol. 78, [internet] 2007 Available at: http://findarticles.com/p/articles/mi_gx5202/is_2007/ai_n19123704/ [Accessed 20 February 2010] Hall, A., 2009. Sinking feeling for Carnival. Investors Chronicle, 2010. Carnival PLC, [internet] 27 February 2009 Available at: http://www.investorschronicle.co.uk/Tips/Sell/TipsOfTheWeek/article/20090227/89064f96-01bd-11de-888e-00144f2af8e8/Sinking-feeling-for-Carnival.jsp [Accessed 20 February 2010] PRNewswire, 2009. Carnival Corporation & plc Fourth Quarter Earnings, [internet] 18 December 2009 Available at: http://www.prnewswire.co.uk/cgi/news/release_disclose?id=34202 [Accessed 20 February 2010] Reuters UK, 2010. Financial Statements for Carnival PLC. [internet] 19 February 2010. Available at: http://uk.reuters.com/business/quotes/incomeStatement?symbol=CCL.L [Accessed 20 February 2010] Reuters UK, 2010. Performance for Carnival PLC. [internet] 19 February 2010. Available at: http://uk.reuters.com/business/quotes/companyPerformance?symbol=CCL.L [Accessed 20 February 2010] Reuters UK, 2010. Carnival PLC – London Stock Exchange. [internet] 20 February 2010. Available at: http://uk.reuters.com/business/quotes/quote?symbol=CCL.L&exchange=XXCX [Accessed 20 February 2010] Thomson Reuters, 2010. Stock chart for Carnival, [internet] 20 February 2010 Available at: http://www.guardian.co.uk/business/carnival [Accessed 20 February 2010] D. Other Websites Carnival UK Corporation & PLC, 2010. [internet]. Available at: http://www.carnivalukgroup.com/ [Accessed 20 February 2010] Appendices Graph 1 – Share price of Carnival PLC – Mar 09-Jan 10 (source: Citywire, 2010) Graph 2 – Carnival PLC – Stock chart, Jan-Feb 10 (source: Thompson Reuters, 2010) Read More