Royal Caribbean Cruise

Team members
Javed Ahmed
Syed Mohsin
Zafar Nazki
Ravis Maqbool
Alekhika
 Contents
• EFE Matrix
• IFE Matrix
• Tows Matrix
• Space Matrix
• BCG Matrix
• IE Matrix
• Grand Strategy Matrix
• QSPM
EFE MATRIX
Key External factors Weight Rating Weighted
Score
Opportunities
1. Growth of cruise industry at 7.6%(average for 20 yrs) and 0.08 3 0.24
12 % growth in 2004 compared to 2003
2. Growth in internet use, around 93%of travelers access 0.06 4 0.24
information through net before deciding cruise
3. Cruise market generates $15mn a year from N America 0.07 3 0.21
4.By 2008, more than 29mn adults aged 25 or older with 0.07 4 0.2
household income of $40000 or more to cruise
5. Capacity utilization of cruise's consistently >90% for 2004 0.05 4 0.20
6.Industry target passenger market is between ages of 25 & 0.07 2 0.14
40,only 34% of this have ever cruised, 127 Mn have
never cruised.
7.Presence of players in every segment very low 0.07 3 0.21
8.Projection of >11mn passengers in 2005 (9.4 Mn in N 0.08 3 0.24
America)
9.Only 16 % of US population has ever cruised 0.06 2 0.12
Contd….
Threats
10.Outbreak of Noro virus on cruise ships 0.05 4 0.20
11. Political unrest in Haiti, UK bombings 0.07 3 0.21
12. Effect of September 11 attack on Cruise industry 0.06 3 0.18
13. Change in US tax regulations 0.02 2 0.04
14. Average cruise customer is 50 yr old with income of 0.04 2 0.08
approx $99000
15. Cruise industry highly dependent on External promotions 0.05 3 0.15
and marketing
16. Of 10.6 Mn people that took cruise in 2004, 9mn were 0.04 2 0.08
from N America
17. 90% of bookings done through travel agents, who make 0.02 3 0.06
more than 50% of their sale.
18. Highly differentiated competition in terms of ships & 0.04 3 0.12
market between the top leader( carnival) and the rest
competitors
Total score 3.0
IFE MATRIX
KEY INTERNAL FACTORS Weight Rating Score
Strengths

1. RCC is worlds 2nd largest cruise line after carnival with 29 cruise 0.08 4 0.32
ships and 60,590 berths.

2. Covers approximately 160 destinations 0.06 3 0.18

3. Leader in ship design and cruise marketing, also order given to 0.07 4 0.28
biggest ship (1,60000 tons.)

4. Owns land properties in Miami, Florida, Cocay, Bahamas which are 0.06 3 0.18
given for lease as tourist destinations.

5. Offered industry’s first fully automated cruise vacation reservation 0.05 3 0.15
system helping 250000 travel agents to access it.

6. Occupancy rate of 105% compared to industrial average of 102%. 0.08 4 0.32

7. 30.2% market share in 2004(3.5mn out of 10.6mn) 0.07 4 0.28

8. Earning per share of $2.39 in 2004 compared to $1.45 in 2003 0.07 4 0.28

9. Offering unique midnight chocolate buffet. 0.04 3 0.12

10. Anchor programs which allows customers to accrue credits that 0.04 3 0.12
can be used for cruises, upgrades and RCC products.
 CONTD…
weakness Weight Rating Score
11. substantial drop in RCC stock because of fears of 0.06 2 0.12
collapse in tourism resulting from London subway
bombing
12.In 2004 Company anticipated a decrease in net 0.04 2 0.08
income of $9.5mn to $11.5mn in 2005 when the new
tax regulations took effect.
13. Carnival cruise has 77 ships where as Caribbean 0.08 1 0.08
cruise has 29 ships.

14. U.S presence 82% and other countries 18% 0.07 2 0.14
15. Passenger ticket are the primary source of 0.06 2 0.12
revenue for RCC
16. RCC’s Return on assets in 2004 is 0.039 as 0.06 1 0.06
compared to Carnivals 0.06

2.83
TOWS Matrix

O1.Growth of cruise industry at 7.6%(average for 20
yrs) and 12 % growth compared to 2004
O2. Growth in internet use, around 93%of travelers
access information through net before deciding
cruise
O3.Cruise market generates $15mn a year from N
America
O4.By 2008, more than 29mn adults aged 25 or older
with household income of $40000 or more to cruise
O5.Capacity utilization of cuisse's consistently >90%
for 2004
O6.Industry target passenger market is between ages
of 25 & 40,only 34% of this have ever cruised, 127
Mn have never cruised.
07.Presence of players in every segment very low
O8.Projection of >11mn passengers in 2005 (9.4 Mn
S1.RCC is worlds 2nd largest cruise line after
carnival with 29 cruise ships and 60,590 berths.
S2. Covers approximately 160 destinations
S3.Leader in ship design and cruise marketing,
also order given to biggest ship (1,60000 tons.)
S4.Owns land properties in Miami, Florida, Cocay,
Bahamas which are given for lease as tourist
destinations.
S5. Offered industry’s first fully automated cruise
vacation reservation system helping 250000
travel agents to access it.
S6.Occupancy rate of 105% compared to
industrial average of 102%.
S7.30.2% market share in 2004(3.5mn out of
10.6mn)
S8.Earning per share of $2.39 in 2004 compared
to $1.45 in 2003
S9. Offering unique midnight chocolate buffet.
S10. Anchor programs which allows customers to
accrue credits that can be used for cruises,
upgrades and RCC products.
SO
1.Capitalize on growing industry by adding more
and more destinations(s1,s2,o1).
2. Capitalize on present market position and built
more ships to cater the projected demand
(s1,s2,s3,o4).
3. More use of IT enabled online booking systems
to attract more customers.(s1,s2,s3,s5,02,08)
4. Enter maximum number of segments with
more variety of ships (s1,s3,o7).
5.Channelize present resources and marketing
strategies to attract 84% US population , and 127
Mn capable customers(s1,s3,s4s9,o6,o9)
6.Sustain present market position to cope up with
growing demand.(s6,s7,o1,o3)
W1. substantial drop in RCC stock
because of fears of collapse in
tourism resulting from London
subway bombing
W2.In 2004 Company anticipated
a decrease in net income of
$9.5mn to $11.5mn in 2005 when
the new tax regulations took
effect.
W3.Carnival cruise has 77 ships
where as Caribbean cruise has 29
ships.
W4.U.S presence 82% and other
countries 18%
W5. Passenger ticket are the
primary source of revenue for RCC
W6. RCC’s Return on assets in
2004 is 0.039 as compared to
Carnivals 0.06
WO
1.Capitalize on growing market
(w1, o1,o3,o4,o6,o8,o9)
2. Capitalize on growing market to
reach the market leader (w3,o1,
o3, o4 ,o8)
3.Aggressive marketing in US (w4,
o9)
Contd..
T1.Outbreak of Noro virus on cruise ships
T2.Political unrest in Haiti, UK bombings
T3.Effect of September 11 attack on
Cruise industry
T4.Change in US tax regulations
T5.Average cruise customer is 50 yr old
with income of approx $99000
T6.Cruise industry highly dependent on
External promotions and marketing
T7.Of 10.6 Mn people that took cruise in
2004, 9mn were from N America
T8.90% of bookings done through travel
agents, who make more than 50% of
their sale.
T9.Highly differentiated competition in
terms of ships & market between the top
leader( carnival) and the rest competitors
ST
1. Use of current market
position and marketing
strategies to overcome the
effect of political unrest
(s1,s2, t2, t3)
2. Use of brand value to
overcome advertising
promotional expenses
(s1,s5,s9,s10,t6)
3. Use of online booking and IT
facilities (s1,s5,t8)
4. Need to show more global
presence ( s1, s2, t7)
WT
1.Prepare to cope up with political
unrest and contingency (w1, t1, t2,
t3)
2.Generate more revenues to
overcome taxes (w2, t4)
3. More global presence required (
w4, t7)
4.Use of more IT enabled systems for
online ticket bookings (w5, yt8)
5.Capitalize on current position to
reach market leader (w3, t9)
Space Matrix
 Financial Strengths Rating
1. Working capital negative $ 1412896 1.0
2. Net income as on 2004 is $474691 3.0
compared to $280664 in 2003
3. Earnings per share of $2.39 compared to 5.0
last years $1.45
4. Return on assets is 0.03 compared to 2.0
Carnival’s 0.06
Average 11.0/4 .0 = 2.75
 Industrial Strengths Rating
1. Growth 12% in 2004 compared to 7% in 2003 5.0

2.Cruise market generates $15 Mn a year in North 5.0

America
3.Growth in internet penetration 3.0

4. Player presence in every segment very low 2.0

Average 15/4 =3.75

 Competitive Advantage Rating
1. 2nd largest cruise -1.0
2. Market share 30.2% in 2004 -2.0

3. Calls upon 160 destinations -2.0

4. Occupancy rate 105% -1.0
5. Leader in ship design and cruise marketing - 2.0

Average -8/5 = -1.6

 Environmental Stability Rating
1. Effect of Sept. 11 attack on cruise industry -5.0

2. Political unrest and UK bombing -5.0

3. Change in US tax regulation -4.0

4. Norovirus attack -4.0

5. Highly differentiated competition in terms of -3.0
ships and market b/w top leader and the rest

Average -21/5 = -4.2

Space Matrix
BCG Matrix
Market share

RCC (30.4%)

Carnival (50.2%) Relative Market share Position

Relative Market Share Ratio=0.6

Industry growth= >7
High Medium Low

1.0 0.5 0.0

High 20
RCCL
Industry II I
Growth Medium 0
Rate

Low - 20 III IV
IE Matrix
 IFE= 3.0
EFE=2.83 IFE Total Weighted Score

Strategy-Grow and Build Strong Average Weak

3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

High
3.0 to 4.0
EFE I II III
Total Medium RCCL
Weighted 2.0 to 2.99
IV V VI
Score
Low
1.0 to 1.99
VII VIII IX
Grand strategy Matrix
QSPM
 Strategies
• S1= Channelize present resources and
increase market presence in North America.
(Market Penetration)

• S2= Increase Global Presence, Create New

Markets. (Market Development)
 Market penetration Market Development
Key External factors Weight AS1 TAS1 AS2 TAS2
Opportunities

1.Growth of cruise industry at 7.6%(average for 20 0.08 4 0.32 2 0.16

yrs) and 12 % growth in 2004 compared to 2003
2. Growth in internet use, around 93%of travelers 0.06 3 0.18 1 0.06
access information through net before deciding
cruise
3. Cruise market generates $15mn a year from N 0.07 4 0.28 1 0.07
America
4.By 2008, more than 29mn adults aged 25 or older 0.07 4 0.28 3 0.21
with household income of $40000 or more to cruise
5. Capacity utilization of cruise's consistently >90% 0.05 4 0.20 3 0.15
for 2004
6.Industry target passenger market is between ages 0.07 2 0.14 4 0.28
of 25 & 40,only 34% of this have ever cruised, 127
Mn have never cruised.
7.Presence of players in every segment very low 0.07 2 0.14 3 0.21
8.Projection of >11mn passengers in 2005 (9.4 Mn in 0.08 4 0.28 1 0.08
N America)
9.Only 16 % of US population has ever cruised 0.06 4 0.24 1 0.06
Threats weight AS1 TAS1 AS2 TAS2
10.Outbreak of Noro virus on cruise ships 0.05 - - - -
11. Political unrest in Haiti, UK bombings 0.07 1 0.07 3 0.21
12. Effect of September 11 attack on Cruise industry 0.06 1 0.06 4 0.24
13. Change in US tax regulations 0.02 1 0.02 4 0.08
14. Average cruise customer is 50 yr old with income of approx 0.04 2 0.08 4 0.16
$99000

15. Cruise industry highly dependent on External promotions and 0.05 3 0.15 2 0.10
marketing

16. Of 10.6 Mn people that took cruise in 2004, 9mn were from N 0.04 4 0.16 2 0.08
America

17. 90% of bookings done through travel agents, who make more 0.02 - - - -
than 50% of their sale.
18. Highly differentiated competition in terms of ships & market 0.04 2 0.08 3 0.12
between the top leader( carnival) and the rest competitors
KEY INTERNAL FACTORS Weight AS1 TAS1 AS2 TAS2
Strengths
1. RCC is worlds 2nd largest cruise line after carnival 0.08 2 0.16 3 0.24
with 29 cruise ships and 60,590 berths.
2. Covers approximately 160 destinations 0.06 3 0.18 4 0.24
3. Leader in ship design and cruise marketing, also 0.07 3 0.21 4 0.28
order given to biggest ship (1,60000 tons.)
4. Owns land properties in Miami, Florida, Cocay, 0.06 2 0.12 4 0.24
Bahamas which are given for lease as tourist
destinations.
5. Offered industry’s first fully automated cruise 0.05 2 0.10 3 0.15
vacation reservation system helping 250000 travel
agents to access it.
6. Occupancy rate of 105% compared to industrial 0.08 4 0.32 3 0.24
average of 102%.
7. 30.2% market share in 2004(3.5mn out of 10.6mn) 0.07 2 0.14 4 0.28
8. Earning per share of $2.39 in 2004 compared to 0.07 2 0.14 3 0.21
$1.45 in 2003
9. Offering unique midnight chocolate buffet. 0.04 - - - -
10. Anchor programs which allows customers to accrue 0.04 2 0.08 3 0.12
credits that can be used for cruises, upgrades and RCC
products.
weakness Weight AS1 TAS1 AS2 TAS2
11.Substantial drop in RCC stock because of fears 0.06 2 0.12 3 0.18
of collapse in tourism resulting from London
subway bombing
12.In 2004 Company anticipated a decrease in 0.04 1 0.04 4 0.16
net income of $9.5mn to $11.5mn in 2005 when
the new tax regulations took effect.
13. Carnival cruise has 77 ships where as 0.08 3 0.24 2 0.16
Caribbean cruise has 29 ships.

14. U.S presence 82% and other countries 18% 0.07 2 0.14 4 0.28
15. Passenger ticket are the primary source of 0.06 - - - -
revenue for RCC
16. RCC’s Return on assets in 2004 is 0.039 as 0.06 2 0.12 4 0.24
compared to Carnivals 0.06

Sum Total Attractive Score

4.79 5.29

Favourable Strategy is to create new Markets globally, (Market Development)

 Reference
• www.royalcarribean.com
• www.cruiseindustrynews.com
• www.cruising.org
• www.iccl.org
Strategic Management by Fred R. David
Thank you
Market share

JK Cement (2.6%)

ACC (12%)

Relative Market Share Ratio=0.2
IFE = 2.61 Relative Market share Position
EFE = 2.59

High Medium Low

1.0 0.5 0.0

High 20
JK Cement
Industry II
I
Growth Medium 0
Rate

Low - 20 III IV
IFE= 3.0
EFE=2.83
IFE Total Weighted Score

Strong Average Weak

3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

High JK Cement
3.0 to 4.0 II
EFE I
Total
Weighted Medium
Score 2.0 to 2.99

III IV
Low
1.0 to 1.99
IFE= 2.61
EFE= 2.59 IFE Total Weighted Score

Strong Average Weak

Strategy-Hold and Maintain 3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

High I II III
3.0 to 4.0
EFE
Total
Weighted Medium IV V VI
Score 2.0 to 2.99
JK Cement

Low VII VIII IX

1.0 to 1.99