Final carnival

Brief History
 Carnival Cruise Lines is one of the largest and most successful
cruise line company in the world. The history of Carnival Cruise
Lines started in 1972. The Chairman and CEO, Ted Arison,
purchased an ocean liner for $6.5 million. The ocean liner was
named Mardi Gras and included in the deal was another ship
called the Carnivale. In the beginning, Carnival experienced a
deficit due to fuel and ship concerns. With the design of on-
board activities, entertainment, an enhanced marketing
approach, and travel packages, Carnival began seeing their
successes and revenue grow. Carnivals' prices were competitive
with other travel packages, which was a major factor in their
success. Slowly, Carnival began buying out their competitors and
adding more cruise ships to their company. Carnival Cruises
became an industry leader with the finalization with Princess
Cruises, which allowed Carnival to become a global cruise line.
2

Timeline
1970s
 1972- Carnival was formed by cruise industry pioneer
Ted Arison
 1972 – The maiden voyage of Carnival’s first ship,
the Mardi Gras, which ran aground on a sandbar
outside the Port of Miami
 1975 – Carnival purchases Empress of Britain, which
enters the service as the Carnivale
 1978 – Festivale begins service for Carnival as the
largest and fastest vessel sailing from Miami to the
Caribbean
3

Timeline
1980’s-
 1982 – Debut of Tropicale, the first new cruise ship the cruise
industry had seen in many years; ship marks the beginning of an
industry-wide multi-billion-dollar shipbuilding boom.
 1984 – Carnival becomes first cruise line to advertise on network
television with the premiere of new advertising campaign starring
company spokesperson Kathie Lee Gifford
http://www.youtube.com/watch?v=BECwNurBbEQ
 1985 – Debut of the Holiday
 1986 – Launch of the Jubilee
 1987 – The Celebration enters service
 1987- Carnival Cruise Line made an initial public offering of 20%
of its common stock. This provided capital that allowed the
company to begin its expansion through acquisition.
 1988- Carnival Cruise Line expanded into charter airlines with
the purchase of Pacific Interstate Airlines
 1989- Carnival’s first acquisition was Holland America Line
4

Timeline1990’s-
 1990- The Fantasy enters service as first new ship ever placed on a three
and four day Bahamas cruise program from Miami.
 1992- Carnival’s second acquisition was Seabourn Cruise Line
 1994- Parent company renamed Carnival Corporation to distinguish
between it and its flagship brand, Carnival Cruise Lines.
 1994- Launches the first passenger vessel to exceed 100,000 tons, Carnival
Destiny, at the time it was the world’s largest cruise ship
 1997- Carnival’s third acquisition is with Costa Cruises
 1997- Carnival’s fourth acquisition is with Celebrity Cruises
 1998- Carnival’s fifth acquisition is with the Cunard Line
 1998 – Introduces Elation, the first new cruise ship deployed on the West
Coast
 1998 – Carnival Paradise, enters service. Paradise was the only non-
smoking cruise ship in the world.
5

Timeline
2000’s
 2000 –Carnival Victory is launched
 2001 – Introduces a new class with the launch of Carnival Spirit. It was the first new
“Fun Ship” ever positioned in the Alaska and Hawaii markets
 2002 –Carnival Pride is launched
 2002- Carnival Legend enters service
 2002- Carnival debuts Carnival Conquest, the largest “Fun Ship” ever constructed at
the time
 2003- Carnival merged with P&O Princess Cruises to form Carnival Corporation and
PLC to become the largest cruise ship company in the world
 2005 –Carnival Liberty debuts, operating the line's first ever Mediterranean cruises
 2007 – Carnival Freedom debuts
 2008 – The Carnival Splendor debuts & Celebration leaves the fleet
 2009 – Carnival Dream, the largest "Fun Ship" ever constructed enters service on
September 21 and is the largest ship ever built
http://www.youtube.com/watch?v=pdgMlBTILq0
6

Timeline
2010’s-
 2010 – A fire on Carnival Splendor leaves the ship crippled
 2011 – Carnival Magic enters service
 2012 – Carnival Breeze enters service
 2012- Carnival Spirit moved to Sydney, Australia in October 2012, it
became the first Fun Ship to sail Australian waters and also became
the largest cruise ship in Australia year-round
 2012- An accident on Costa Concordia, operated by Carnival brand
Costa Cruises, leaves 32 people dead.
 2012-Carnival added features to ships, including the Guy Burger
Joint, Blue Iguana Cantina Taco Bar, Red Frog Rum Bar and Blue
Iguana Bar.
 2013- A fire on Carnival Triumph leaves the ship crippled with no
power for 5 days
7

Mission Statement
 "Our mission is to deliver exceptional vacation
experiences through the world's best-known
cruise brands that cater to a variety of different
lifestyle and budgets, all at an outstanding value
unrivaled on land or at sea."
 Product: Exceptional vacation experiences
 Target Groups: Low, medium, and high income
groups, vacation travelers, and various lifestyle groups
8

Current Performance Objectives
Carnival is currently
expanding and focusing on the
European and Asian markets.
9

Historical Corporate Strategy
 Concentration
 Vertical Integration (Internal): In 2007, Carnival
expanded their cruises with expanded water parks, adult-
only areas and resort styled pools. In 2012, Carnival now
has 90,000 employees. They have increasingly adding
employees to their company to further assist their
customers. In 2013, Carnival further developed safety
training and management training after the Concordia
tragedy.
 Horizontal Integration (External): In 1988, Carnival
Cruise acquired Holland American Line. The deal included
two Holland America subsidiaries, Windstar Sail Cruises,
and Holland America Westours. This acquisition allowed
an aggressive building campaign. In 1992, Carnival
acquired 50% of Seabourn. This acquisition allowed for
additional cruise operations in South America, the
Mediterranean, Southeast Asia, and the Baltic. In 1997,
Carnival merged with Celebrity. The merged resulted in 17
ships and 30,000 berths.
10

Historical Corporate Strategy
 Diversification
 Concentric (Internal) : Carnival Cruise Lines owns cruise ships
and has developed many other travel necessities for their
customers. Carnival has hotels, motor homes, and rail cars.
Carnival owns 12 hotels, 300 motor coaches, and 20 domed rail
cars. All these transportation products relate to developing
travel and vacations.
 Conglomerate (Internal): Carnival experienced risk with the
purchase of Riviera Towers. The hotel consisted of 692 rooms. In
1991, Carnival reached a settlement to surrender the hotel
project and settle their debt with the Bahamian government. In
the late 1980's, Carnival invested into the Airline industry to
transport their guests. In 1997, Pan Am Corp purchased Carnival
Air Line as most of their revenue came from the Carnival Cruise
Corporation. By terminating these travel industry companies,
Carnival reduced their debt, which allowed for a greater focus on
dominating the global cruise line industry.
11

Stability of Carnival
 Carnival Cruises has ambition for profit
stability.
 In 1988, Carnival acquired Holland
American Line.
 In 1992, Carnival gained 50% of the
Seabourn Cruise Lines.
 In 1997, the purchase of Costa. Carnival
Cruises continued more acquisitions and
mergers to become a global cruise line.
12

Retrenchment
 Turn Around
 Divestment : In 1997, Carnival
Corporation finalized an agreement
with Pan Am Corp for their airline. The
airline did not produce high profits,
which allowed for a divestment and
acquisition of the airline.
13

Historical Competitive Strategies For Each Strategic
Business Unit Within the Corporation
 Cost Leadership
 Broad Market: In the 1970's, Carnival Cruise had competitive
packages with other travel packages.
 Differentiation
 Broad Market: In 1972, the company attracted customers with
planned activities, a casino, discos, and other forms of
entertainment. Carnival used a lot marketing to differentiate
themselves from the competition, but the market is now more
narrow as many cruise lines are following their ideas.
14

Historical Functional Strategies
 Nature of Market
 Consumer
 Breadth of Product Lines
 Full
 Degree of Customization
 Standard
 Custom
 Number of Distribution Channels:
 Multiple
 Nature of Multiple Distribution Channels:
 Complimentary
 Distribution form :
 Direct Selling to End-users
 Direct Selling to Retailers
15

Geographic Coverage
 International coverage
 (United States, Australia, Pacific Islands,
Caribbean Islands, Europe, Russia, Scandinavia,
South America and Italy)
 22 departure ports
 (Baltimore, Boston, Charleston, Fort Lauderdale,
Jacksonville, Miami, New York, Norfolk Virginia,
Port Canaveral, Tampa, Galveston, New Orleans,
Seattle, Vancouver, Venice, Barcelona, Barbados,
Sydney, Pacific Islands, St. Peterburg in Russia, San
Juan in Puerto Rico and Los Angeles)
16

Destinations
 Baltimore: Grand Turk and Bahamas
 Boston: Grand Turk and Bahamas
 Charleston: Grand Turk and Bahamas
 Fort Lauderdale: Grand Turk, Bahamas, Mexico, and Cayman Islands
 Jacksonville: Bahamas, Jamaica, Caribbean Islands, Dominican Republic,
British Virgin Islands, Antigua, Mexico, Puerto Rico, Key West and Grand Turk
 Miami: Key West, Mexico, Bahamas, Cayman Islands, Grand Turk, Costa Rica,
Caribbean Islands, Isla Roaton, Belize, Panama, Columbia
 New York: Canada, Bahamas, Caribbean Islands, Puerto Rico, Grand Turk,
Tampa, Curacao, Jamaica, and Cayman Islands
 Norfolk, Virginia: The Bahamas
 Port Canaveral (Orlando), FL: The Bahamas, Key West, Belize, Puerto Rico,
Caribbean Islands, Grand Turk, Mexico, and Isla Roatan
 Sydney, Australia: Pacific Islands and Australia cities
 St. Petersburg: Amsterdam, Denmark, England, Finland and Belgium
18

Destinations
 Tampa: Mexico, Cayman Islands, Panama Canal, Columbia, Long Beach,
Belize, and Costa Rica
 Galveston, TX: Mexico, Belize, Belize, Jamaica, The Bahamas, Key West,
Isla Roatan and Cayman Islands
 New Orleans: Mexico, Cayman Islands, Belize, Jamaica, British Virgin
Islands, The Caribbean Islands, Puerto Rico, Grand Turk, and Key West
 Los Angeles: Mexico cities, Catalina, Hawaii, Tahiti and Fiji Islands
 Seattle: Alaska and Canada
 Vancouver, BC: Canada and Alaska
 London: Ireland, Scotland, Greenland, New York, and Canada
 Barcelona: Spain, New Orleans, Grand Turk, and Canary Islands
 Barbados: The Caribbean Islands
 San Juan, Puerto Rico: The Caribbean Islands, Grand Turk, and Miami
19

Historical Functional Strategies
 Degree of Selectivity of Channels
 Low (not selective/ intensive distribution)
 Pricing Level
 Competitive
 Advertising media
 Print
 Radio TV
 Movies
 Billboards
 Promotion emphasis
 Push (The company uses many aspects to promote their packages to travel
agencies and suppliers. They also use lowest guaranteed price on their
website.)
 Pull (They rely on word-of-mouth, advertising promotions, sales
promotions, and social media.)
20

Carnival: Source of Funds
21
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2008 2009 2010 2011 2012
Carnival Cruise
Short Term Liabilities
Long Term Liabilities
Retained Earnings
Net Stocks

Royal Caribbean: Source of Funds
22
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
2008 2009 2010 2011 2012
Royal Caribbean Cruises
Retained Earnings
Net Stocks

Norwegian Cruises: Source of Funds
23
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
2008 2009 2010 2011 2012
Norwegian Cruises
Retained Earnings
Net Stocks

Dividend Payment vs. Competitors
24
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2008 2009 2010 2011 2012
Dividend Payment
Royal
Carnival Cruises
Norwegian Cruises

Inventory Turnover vs. Competitors
25
0
10
20
30
40
50
60
2008 2009 2010 2011 2012
Inventory Turnover
Royal
Carnival Cruises
Norwegian Cruises

II. Historical Review of the Corporate
Actual Performance
Carnivals Biggest Competitors:
-Royal Caribbean Cruise Line
-Norwegian Cruise Line
26

Stock Performance
 Stock performance is the measurement of a stock's ability
to increase or decrease the wealth of its shareholders.
Performance is typically measured by its fluctuation in
price. When the stock price increases, the stock shows
good performance. Conversely, a decrease in price is a poor
performance.
27

Stock Performance
Ticker Symbols:
 Carnival: CCL
 Royal Caribbean: RCL
 Norwegian Cruise Line: NCLH
28

Market Share
 The percentage of an industry or market's total sales that
is earned by a particular company over a specified time
period. Market share is calculated by taking the company's
sales over the period and dividing it by the total sales of
the industry over the same period. This metric is used to
give a general idea of the size of a company to its market
and its competitors.
 Formula:
Sales revenue over a specified time/total sales of the
industry over the same period
30

Market Share of the Companies in 2008
54%
7.70%
24%
2008 Market Share
Carnival
Norwegian
Royal Caribbean
31

49.8%
6.69%
21.50%
Market Share in 2009
Carnival
Norwegian
Royal Caribbean
32

53.9%
8.20%
25.00%
Carnival
Norwegian
Royal Caribbean
33

34
53.7%
7.50%
25.60%
Carnival
Norwegian
Royal Caribbean

Market Shares of the Companies in 2012
42.4%6.20%
21.20%
Carnival
Norwegian
Royal Caribbean
35

Overall Market Share of the Industry from
2008-2012
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
2012 2011 2010 2009 2008
Carnival
Norwegian
Royal Caribbean
36

Net Income
Net income is a company's total earnings. Net
income is calculated by taking revenues and
adjusting for the cost of doing
business, depreciation, interest, taxes and other
expenses. This number is important measure of
how profitable the company is over a period of
time.
Formula:
 Net income = net revenue - expenses
 Net revenue = gross revenue - cost of goods sold
37

Net Income from 2008-2012
$(500,000,000.00)
$-
$500,000,000.00
$1,000,000,000.00
$1,500,000,000.00
$2,000,000,000.00
$2,500,000,000.00
2008 2009 2010 2011 2012
Net Income
Norwegian
Royal Caribbean
Carnival
38

Net Sales
 Net sales is the amount of sales generated by
a company after the deduction of
returns, allowances for damaged or missing
goods and any discounts allowed.
 Formula:
Net Sales = Gross Sales - Returns and
Allowances
39

$(1,000,000,000.00)
$-
$1,000,000,000.00
$2,000,000,000.00
$3,000,000,000.00
$4,000,000,000.00
$5,000,000,000.00
Norwegian Carnival Royal Caribbean
2008
2009
2010
2011
2012
40
Net Sales from 2008-2012

Number of Employees vs. Competitors
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
Norwegian Carnival Royal Caribbean
2008
2009
2010
2011
2012
41

Number of Cruise Ships Per Cruise Line
Carnival: 102 ships
Norwegian: 12 ships
Royal Caribbean: 21 ships
42

Chart of Cruise Ships for each Cruise Line
0
20
40
60
80
100
120
Carnival Royal Caribbean Norwegian
Number of Ships
43

Profitability Ratios
 A class of financial metrics that are used to assess a
business's ability to generate earnings as compared to its
expenses during a specific period of time.
 The 3 Formulas that will be used:
Gross Profit Margin: Revenue-COGS/Revenue
Operating Profit Margin: Operating Income/Net Sales
Net Profit Margin: Net Income/Sales
44

Gross Profit Margin
 A financial metric used to assess a firm's financial
health by revealing the proportion of money left
over from revenues after accounting for the cost of
goods sold. Gross profit margin serves as the
source for paying additional expenses and future
savings.
45

Gross Profit Margin in 2008
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
Carnival Norwegian Royal
Caribbean
2008
46
Cruise Line 2008
Carnival 38.20%
Norwegian 25%
Royal Caribbean 32.50%

Cruise Line 2009
Carnival 37.50%
Norwegian 30%
Royal
Caribbean 30.80%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
Caribbean
2009
47

30.00%
31.00%
32.00%
33.00%
34.00%
35.00%
36.00%
37.00%
38.00%
Caribbean
Gross Profit Margin 2010
2010
48
Cruise Line 2010
Carnival 37.10%
Norwegian 33%
Royal
Caribbean 33.90%

33.50%
33.60%
33.70%
33.80%
33.90%
34.00%
34.10%
34.20%
34.30%
34.40%
34.50%
Carnival Norwegian Royal Caribbean
2011
Cruise Line 2011
Carnival 34.00%
Norwegian 33.8%
Royal
Caribbean 34.40%
49

30.50%
31.00%
31.50%
32.00%
32.50%
33.00%
33.50%
34.00%
34.50%
35.00%
35.50%
Caribbean
Gross Profit Margin 2012
2012
Cruise Line 2012
Carnival 32.00%
Norwegian 35.0%
Royal
Caribbean 32.90%
50

Operating Profit Margin
 Operating profit margin is a measurement of what
proportion of a company's revenue is left over after
paying for variable costs of production such as
wages and raw materials. A healthy operating
margin is required for a company to be able to pay
for its fixed costs. The higher the operating profit
margin, the better.
51

Operating Profit Margin 2008
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Caribbean
2008
2008
Cruise Line 2008
Carnival 19.60%
Norwegian -3.0%
Royal
Caribbean 12.70%
52

0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Caribbean
2009
2009
Cruise Line 2009
Carnival 21.50%
Norwegian 9.2%
Royal
Caribbean 8.20%
53

0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
2010
Cruise Line 2010
Carnival 16.20%
Norwegian 11.4%
Royal
Caribbean 11.80%
54

11.00%
11.50%
12.00%
12.50%
13.00%
13.50%
14.00%
14.50%
2011
Cruise Line 2011
Carnival 14.20%
Norwegian 14.2%
Royal
Caribbean 12.35%
55

0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
2012
Cruise Line 2012
Carnival 10.60%
Norwegian 15.6%
Royal
Caribbean 5.20%
56

Net Profit Margin
 Net profit margin measures how much out of every
dollar of sales a company actually keeps in earnings. A
higher profit margin indicates a more profitable
company that has better control over its costs
compared to its competitors.
57

Net Profit Margin 2008
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
Caribbean
2008
Cruise Line 2008
Carnival 15.90%
Norwegian -10.0%
Royal
Caribbean 8.70%
58

0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
Caribbean
2009
Cruise Line 2009
Carnival 13.20%
Norwegian 3.6%
Royal
Caribbean 2.70%
59

0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
2010
Cruise Line 2010
Carnival 13.60%
Norwegian 1.1%
Royal
Caribbean 7.60%
60

0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
2011
Cruise Line 2011
Carnival 12.10%
Norwegian 5.7%
Royal
Caribbean 8.00%
61

0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
2012
Cruise Line 2012
Carnival 8.40%
Norwegian 7.4%
Royal
Caribbean 0.20%
62

Common Sized Income Statements
 This type of financial statement can be used
to allow for easy analysis between
companies or between time periods of a
company.
63

Common Sized Income Statements for 2008
64
Common Sized Income Statements for 2008 Percentages
Total Revenue 100%
Cost of Revenue 67%
Gross Profit 32%
Selling & Admin Exp. 9%
Depreciation Exp. 9%
Special Income 1%
Operating Expenses 22%
Operating Income 10%
Net Interest -2%
Other Income -0.9%
Pretax Income 8%
Net Income 8%

65
Total Revenue 100%
Cost of Revenue 65%
Gross Profit 34%
Special Income -
Net Interest -2%
Other Income 0.6%
Pretax Income 12%
Net Income 12%

66
Total Revenue 100%
Cost of Revenue 62%
Gross Profit 37%
Special Income -
Net Interest -2%
Other Income -0.1%
Pretax Income 13%
Net Income 13%

Common Size Income Statements for 2011
67
Percentage
s
Total Revenue 100%
Cost of Revenue 62%
Gross Profit 37%
Special Income -
Net Interest -2%
Other Income -0.1%
Pretax Income 13%
Net Income 13%

Common Size Income Statements for 2012
68
Total Revenue 100%
Cost of Revenue 62%
Gross Profit 38%
Special Income -
Net Interest -2%
Other Income -0.1%
Pretax Income 16%
Net Income 15%

Carnival’s Current Performance
 Carnival’s current performance is above
satisfactory. Carnival has a significant
market share in the cruise industry and
twice as much net income as the second
largest cruise line, Royal Caribbean.
69

III. Examination of the
Corporate Top Decision
Makers
70

Board of Directors
 The responsibility of the directors is to
exercise their business judgment to act in
what they reasonably believe to be in the
best interests of Carnival and their
shareholders. The directors are authorized
to operate and carry into effect the
agreements.
71

Internal vs. External
 Internal directors: Affiliated with company
 External directors: Not engaged with company
 Carnival Cruises Board of Directors:
 4 internal directors
 7 external directors
72

External Board Members (7)
1. Sir Jonathon Band
 63 years old
 Born in United Kingdom
 British
 Bachelors Degree in Social Science from Exeter
University
 Salary from Carnival: $440,408 in 2011
 Stock ownership: 27,454 shares as of 2013
 First Sea Lord & Navy’s most senior serving officer
 Married with two daughters
73

2. Richard J. Glasier
 67 years old
 American
 Bachelors Degree in Economics from Cornell College and
MBA in Finance from Southern Methodist University
 President and CEO Officer of Argosy. Former CFO and
Executive Vice President of Royal Caribbean Cruises. Has
20 years experience in hotels, gaming, and cruises.
 Carnival Cruise Salary: $525,298 in 2011
 Ownership of stock: 44,050 shares in 2013
74

3. Stuart Subotnick
 71 years old
 Bachelor’s Degree in
Business Administration at Baruch College, Master of Law
Degree from Brooklyn Law School, and Juris Doctorate
degree from New York University.
 President and CEO of Metromedia Company. He is also
member of the board of directors of Above.net
 Director since 1987
 Stock ownership: 54,408 shares in 2013
75

4. Debra Kelly-Ennis
 56 years old
 American
 Bachelors Degree
from University of Texas and
MBA from University of Houston.
 Completed executive Leadership program at Harvard
Business School.
 Former President and CEO at Diageo, Canada. She served
as Chief Operating Officer at Saab. She was General
Manager of Oldsmobile.
 She joined the board of directors on May 15, 2013.
76

5. Laura Weil
 55 years old
 American
 Bachelor’s Degree in
Art History and Government from Smith College and
MBA Degree in Finance and Marketing from Columbia
University.
 Chief Operating Officer of New York and Company.
Former CEO of Ashley Stewart, CEO of Urban Brands,
and CFO of American Eagle Outfitters.
77

6. Sir John Parker
 71 years old
 Born in Ireland; Irish
 Doctor of Science in Engineering from Queen’s University
 President of Royal Academy of Engineering and Vice
President of Engineering Employers’ Federation
 Director of the board since 2000
 Married with two children
78

7. Randall J. Weisenburger
 54 years old
 American
 Bachelor's Degree in Finance
and Accounting from Virginia Tech. He has a Master's
degree in Business Administration from the University of
Pennsylvania's Wharton School of Business.
 He is the Chief Financial Officer and Executive Vice
President of Omnicom Group Inc. He is also on the board
of director for Valero Energy Corporation.
79

Internal Board Members (4)
Micky Arison
o Son of Carnival Cruise
founder, Ted Arison
o Chairman of the Board
o 64 years old
o Born in Israel
o Jewish
o Attended the University of Miami but dropped out
o 1979-2013 CEO of Carnival Corporation
o Owner of Miami Heat basketball team
80

Howard Frank
o VP of the Board &
CEO of Carnival Corporation
o 72 years old
o Vice Chairman of the board of directors since 1993
o Joined Carnival as senior VP finance & Chief
Operating Officer in 1989
o Chairman of the Executive Committee of The
Cruise Lines International Association
81

Arnold Donald
o President & CEO of
Carnival Corporation
o 58 years old
o Bachelors Degree in
Economics
o Masters Degree in Mechanical Engineering
o Board of Director of Carnival since 2001
o Chairman of the Board of Merisant Company from
2000-2005
82

Pier Luigi Foschi
o Chairman & CEO
Carnival Asia and
Chairman Costa Crociere
o 66 years old
o Italian
o Chairman of Costa Crociere since 2000
o Appointed Chairman and CEO of Carnival Asia
in 2012
83

Executive Committee
 Micky Arison (Chairperson)
 Howard S. Frank
 Stuart Subotnick
 2 internal & 1 external
84

Audit Committee
 The purpose of the Audit Committee is to assist the
Boards' oversight of the integrity of the Companies’
financial statements, the Companies’ compliance with
legal and regulatory requirements, the independent
auditor’s qualifications and independence, the
performance of the Companies’ internal audit
functions and independent auditors, and relevant
elements of the Companies’ risk management
programs.
85

Members of the Audit Committee
 Richard Glasier (Chairperson)
 Laura Weil
 Stuart Subotnick
 Randall Weisenburger
 (All external members)
86

Compensation Committee
 The Compensation Committee has overall
responsibility for approving and evaluating the
director and officer compensation plans, policies and
programs of Carnival, including annual base
salary, annual incentives, long-term incentives, stock
options, terms of employment agreements and
severance arrangements.
87

Members of the Compensation
Committee
 Richard Galsier
 Randall Weisenburger (Chairperson)
 Laura Weil
88

Nominating and Governance Committee
 The purpose of the Nominating & Governance
Committee is to develop and recommend to the Boards
a set of Corporate Governance Guidelines applicable to
the Companies. They also assist the Boards by
identifying individuals qualified to become Board
members and to recommend to the Boards the director
nominees for the next annual meeting of shareholders.
89

Members of the Nominating and Governance
Committee
 Sir John Parker
 Stuart Subotnick (Chairperson)
 Richard Glasier
 Randall Weisenburger
90

Health, Environmental, Safety &
Security Committee
 The purpose is to assist the Boards in fulfilling their
responsibility to supervise and monitor health,
environmental, safety and security policies, programs,
initiatives at sea and onshore, and compliance with
health, environmental, safety and security legal and
regulatory requirements.
91

Members of Health, Environmental, Safety &
Security Committee
 Sir John Parker (Chairperson)
 Sir Jonathon Band
 Debra Kelly-Ennis
92

Prior Decisions
 On November 15, 2012, the Boards of Directors
declared a special dividend to holders of Carnival
Corporation common stock and Carnival plc ordinary
shares of $0.50 per share.
 In September 2007, the Boards of Directors authorized
the repurchase of up to an aggregate of $1 billion of
Carnival Corporation common stock and Carnival plc
ordinary shares.
93

Management Team for Carnival
 Micky Arison- Chairman of Board
 Howard Frank- VP of Board & Chief Operating Officer
 Arnold Donald- President & CEO
 David Bernstein- Senior VP & CFO
 Richard Ames- Senior VP Shared Services
 Arnaldo Perez- Senior VP, General Counsel & Secetary
 Larry Freedman- Chief Accounting Officer & VP Controller
94

Other Top Management
 Management AIDA:
 Michael Ungerer- President
 Management Carnival Cruise:
 Gerald Cahill- President & CEO
 Management Carnival Australia:
 Ann Sherry- CEO
 Management Carnival UK:
 David Dingle- CEO
95

96
 Management Holland America:
 Stein Kruse (President & CEO)
 Management Princess Cruise:
 Alan Buckelew (President & CEO)
 Management Seabourn:
 Rick Meadows (President)
 Management Costa Crociere:
 Pier Luigi Foschi- Chairman
 Michael Thamm- CEO
Other Top Management

Top Management Involved with Board of
Directors
 Micky Arison
 Arnold Donald
 Pier Luigi Foschi
 Howard Frank
97

Management Style
 Chairman Micky Arison is known for being less
hands on than most. Micky is said to have a hands-
on, but provides an open-door management style.
He gives great independence and authority to his
executive teams who operate Carnival and Carnival
brand ships.
98

Management’s Compensation
99

Management Efficiency Ratios/Activity
 Receivables Turnover
 Indicates the number of times that accounts receivables
are cycled during the period (usually a year)
 Formula = Annual credit sales/Accounts receivables
 Average Collection Period
 Indicates the average length of time in days that a
company must wait to collect a sale after making it; may
be compared to the credit terms offered by the company
to its customers
 Formula = Accounts receivable/(Sales for year/365)

 Inventory Turnover
 Measures the number of times that average inventory of
finished goods was turned over or sold during a period
of time, usually a year.
 Formula = Net sales/Inventory
 Days of Inventory
 Measures the number of one day’s worth of inventory
that a company has on hand at any given time
 Formula = Inventory/(Cost of goods sold/365)

 Fixed Asset Turnover
 Measures the utilization of the company’s fixed assets
(i.e., plant and equipment); measures how many sales
are generated by each dollar of fixed assets.
 Formula = Sales/Fixed assets
 Total Asset Turnover
 Measures the utilization of all the company’s assets;
measures how many sales are generated by each dollar of
assets.
 Formula = Sales/Total Assets

Management Efficiency Ratios/Activity 2012
Ratios Carnival
Royal
Caribbean
Norwegian
Cruise
Accounts receivable Turnover 56.97 27.32 151.13
Average Collection Period Ratio 6.41 13.36 2.42
Inventory Turnover 26.5 35.3 37.3
Days of Inventory 13.8 10.4 9.8
Fixed Asset Turnover 0.48 0.44 0.46
Total Asset Turnover 0.39 0.3 0.38
0
50
100
150
200
Accounts
receivable
Turnover
Average
Collection
Period Ratio
Inventory
Turnover
Days of
Inventory
Fixed Asset
Turnover
Total Asset
Turnover
Carnival Royal Caribbean Norwegian Cruise

Ratios Carnival Royal Caribbean Norwegian Cruise
Days of Inventory 13.3 10.7 9
0.00
50.00
100.00
150.00
200.00
250.00
300.00
Accounts
receivable
Turnover
Average
Collection
Period
Ratio
Inventory
Turnover
Days of
Inventory
Fixed
Asset
Turnover
Total Asset
Turnover

0.00
50.00
100.00
150.00
200.00
250.00
300.00
Accounts
receivable
Turnover
Average
Collection
Period
Ratio
Inventory
Turnover
Days of
Inventory
Fixed Asset
Turnover
Total Asset
Turnover

0.00
50.00
100.00
150.00
200.00
250.00
Accounts
receivable
Turnover
Average
Collection
Period
Ratio
Inventory
Turnover
Days of
Inventory
Fixed Asset
Turnover
Total Asset
Turnover

Ratios Carnival
Royal
Caribbean Norwegian Cruise
Days of Inventory 12.7 8 6.8
0.00
100.00
200.00
300.00
400.00
Accounts receivable TurnoverAverage Collection Period RatioInventory TurnoverDays of InventoryFixed Asset TurnoverTotal Asset Turnover

IV. Examination of Internal
Environment of the Company
108

Corporate Culture
 Maintain friendly, family-like atmosphere in their
ships and in their work environment
109

Corporate Structure
 Carnival Cruise is one of 10 subsidiary companies
owned by Carnival Corporation & PLC
 Within Carnival Cruise, an ‘Open Door’ policy is
advocated
 Employees have the freedom and flexibility to express
their ideas in working toward solutions that benefit the
company.
 “Promote from Within” advancement strategy
110

Common Size Balance Sheet 2012
Carnival
Royal
Caribbean
Norwegian
Cruise
Total Current Asset 5% 4% 3%
Property and Equipment, Net 82% 88% 84%
Goodwill 8% 2% 10%
Other Assets 5% 5% 3%
Total Assets 100% 100% 100%
Current Liabilities 19% 21% 16%
Long-Term Debt 18% 35% 47%
Other long-term liabilities 2% 2% 3%
Shareholders Equity 61% 42% 34%
Total Liabilities and Shareholder
Equity 100% 100% 100%
111

Carnival
Royal
Caribbean
Norwegian
Cruise
Goodwill 9% 4% 11%
Equity 100% 100% 100%112

Carnival
Royal
Caribbean
Norwegian
Cruise
Goodwill 9% 4% 11%
Total Liabilities and
Shareholder Equity 100% 100% 100%
113

Carnival
Royal
Caribbean
Norwegian
Cruise
Goodwill 9% 4% 13%
Equity 100% 100% 100%
114

Carnival
Royal
Caribbean
Norwegian
Cruise
Goodwill 10% 5% 12%
Equity 100% 100% 100%
115

Information Systems
 In the early 2000’s, 95% of sales were made through
travel agents
 Now, individuals can purchase tickets through online
services and the telephone. The website is
carnivalcruise.com and 1-800-Carnival.
 Entire ship carries onboard Wi-Fi
 Electronic-access control system
 Plastic card that allows in and out access, room key, and
on-board credit card.
116

Marketing Product
 Carnival Cruise markets their cruise-based
vacation products with many different
mediums.
 Current slogan: “Fun for all. All for fun”
Carnival emphases on the word ‘Fun’
 Example of copyrighted words: Carnival, The
Fun Ship, and all their ship names.
117

Marketing Promotions
 In 2013, Carnival launched a first ever sweepstakes contest. For a
week, any customer who booked a vacation were automatically
entered into a contest to win over 1,000 prizes.
 Current promotions and offers from their website:
118

Price Guarantee
 Prices range depending on the length, destination, and
amenities.
 Currently, Carnival Cruise advertises on their website with “Price
Guarantee”
 “If you find a better Carnival advertised deal somewhere else within
two days of booking your cruise, we'll not only be very surprised —
we'll give you 110% of the difference in onboard credit.”
119

Human Resources
 Carnival has a Shipboard Human Resources Department
 Divided into two tiers: Staff Admin and Training
 The department is responsible for Employee relations, Employee
Communication, Training and Development, Staff Administration, Coaching and
Counseling, Quality of Life and Leadership Training
 The crew training centers have over 400 learning resources including e-learning
courses, books, tapes, DVD’s, management courses and language resources
 This team also conducts fun and informative training programs including
regulatory/ safety training, Team Carnival Orientation, English
Classes, Hospitality Training, Sales Training and other department-specific
training
 This department is also responsible for overseeing the star employee of the
month program, the service award program and the Crew Recreation
Committee which is responsible for all crew activities and FUN on board
121

V. Examination of the External
Environment of the company
122

Competitors
 North America: Royal Caribbean, Disney Cruise Line,
and Norwegian Cruise Line
 Southern Europe: Mediterranean Shipping Cruises,
Louis Cruise Line, Festival Cruises, and Spanish Cruise
Line
 Germany: Festival Cruises, Hapag-Lloyd, Peter
Deilmann, Phoenix Reisen, and Tranocean
 United Kingdom: My Travel's Sun Cruises, Fred Olsen,
Saga and Thomson
123

Barriers to Entry
1. Competition
2. High start-up costs
3. Use of ports and facilities
4. Reputation and establishment
124

Substitute Product/Services
 High substitute product/services
 Other cruise ship competitors
-Royal Caribbean
-Norwegian Cruise Line, etc.
 Other forms of transportation
-Airplane
-Car
-Train
125

Customers
 Low bargaining power for customers
 Low bargaining power is due to fixed prices
by:
-Travel agents
-Website booking
126

Suppliers
 Low bargaining power for Carnival Cruise
 Low bargaining power is due to:
-Competitive prices from suppliers around
the world
-But Carnival does use a limited number of
suppliers for their fuel and port facility
services.
127

Societal Environment
 Socio-cultural: Age (mostly older
demographic), and Attitudes (think its expensive
& will get sea sick)
 Legal/political: Pollution and energy guidelines.
Also safety concerns with falling off ships, terrorist
attacks and potential wars with other countries
 Technological: Wireless internet and cell phone
use
 Economic: Fuel price concerns, fluctuating
economy and interest rate risks
128

SWOT Analysis
Strengths:
 Largest cruise line in the world
 Higher market shares than competitors
 Acquired several companies in the cruise line industry
 Global and International presence
 Strong consumer demand in Europe
 High value entertainment on ships
 Cost advantages over most of their competitors
 High customer satisfaction
 Affordable vacation packages for families
129

SWOT Analysis
Weaknesses:
 Poor safety record
 Bad publicity
 Many people think cruises are too expensive
 Need to advertise low “average” prices
130

SWOT Analysis
Opportunities:
 Cruise industry appeals to large demographic
 More destination route locations
 Asian and African markets
 Advertising with different medias
131

SWOT Analysis
Threats:
 Diseases
 Weather
 Tight competition with other cruise companies
 Environment regulations
 Increasing fuel prices
 Cheaper vacation packages through competition with
hotels, airline travel, and car driving
132

VI: Recommended Plan of
Action
133

Mission/Objective
 Mission: Continue to make customers feel appreciated
by giving them great customer service. Customers who
feel appreciated and have a fun time will tell their
friends, co-workers and family about the wonderful
experience they had.
 Objectives: Attract customers by having promotional
campaigns. Carnival also needs to make it aware to
customers how a cruise vacation is affordable in a time
where money can be scarce.
134

Recommended Strategies
for Environmental Concerns
 Support environmental issues and laws
 Improve cruise ships to become even more
environmentally friendly
 Fuel technology advancements
 Solar technology advancements
135

Recommended Strategies for Opportunities
 Offer special discounts for repeat customers
 Continue building relationships with travel
booking companies, especially online companies.
 Expanding on social media marketing
 Sending promotional emails
 Continue to add more entertainment activities
 Offer more destination spots to attract customers
who want to travel to different countries
 Create a Referral Program
 Create an alliance with an airline company
136

Program Development
 Make enhancements to emergency power
capabilities, additional emergency generators and new
fire safety technology.
 Carnival also needs to create procedures to
communicate quicker with passengers to let them
know what is happening.
 Create solar paneling on ships
137

Feedback Implementation
 Send customers who went on a cruise an
email survey rating their satisfaction and
experience. As a reward, give them a free
drink ticket for any future cruises.
138

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