Carnival Matrix
Essay Preview: Carnival Matrix
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Section 1
Carnival Corporation was incorporated in Panama in 1972 and Carnival plc was incorporated in England and Wales in 2000. Carnival Corporation and Carnival plc operate a dual listed company (“DLC”) The two companies operate as if they are a single economic enterprise with a single senior executive management team and identical Boards of Directors, despite each having retained a separate legal identity. Over the years, Carnival has acquired representation in virtually every market segment of the cruise industry. With 100 cruise ships, they are the largest cruise company and among the most profitable and financially strong leisure travel companies in the world.
The foundation for the company was laid by cruise industry pioneer, Ted Arison. In 1972 Arison forged a partnership to build the young company into a full-fledged cruise line. The company struggled for two years, but Arison remained as focused on his vision. In 1974, he proved his determination, buying full ownership of the Carnival, and its uncertain future, for $1 in cash and the assumption of $5 million in debt. It was then, when Arison would spend the rest of his life making his $1 investment into the largest and one of the most profitable cruise lines in the world.
Carnivals operating structure is decentralized, with each of its major brands having its own headquarters and operating team, creating an ownership culture that is an important for driving internal performance. This approach results in delivering products and services that are tailored to specific geographic markets and lifestyles, allowing more effective target marketing. Although Carnival operates under a decentralized structure, they consolidate their purchasing power and implementation of cross-branding. Their 100 ships sail to all of the worlds major cruise destinations, including the Caribbean, Europe, Asia, Australia, and Alaska.
Carnivals “mission is to take the world on vacation and deliver exceptional experiences through many of the worlds best-known cruise brands that cater to a variety of different geographic regions and lifestyles, all at an outstanding value unrivaled on land or at sea.” They stand for the ability to provide and exceed the expectations of their costumers, while providing unique cruise products and services, for a great value.
Section 2
Opportunities
Weight
Rating
Weighted Score
Emerging Ports/ New Cruise Destinations
Shipboard Innovations
More specific customer segments
Chinese Market
Co-Branding
Threats
Weight
Rating
Weighted Score
Public Image
Environmental Impact
Terrorism/ World Political Unrest
Tax Challenges
Energy Costs
Total
Section 3
IFE Matrix
Strengths
Weight
Rating
Weighted Score
Strong Cash Flow / Steady Revenue
Low Debt To Income
Billion Dollar Credit Line
Management Experience & Excellence
Dominant Cruise line in the industry
Weaknesses
Weight
Rating
Weighted Score
Large fleet / Low Quality
Inconsistency with Brands
Uncoordinated Business Operations
Deep Discount Pricing
“Low Cost” Strategy being copied
Total
Section 4
Profitability Ratio – Net Profit Margin – This is the bottom line margin that tells management how much of every sales dollar is left after
deducting the cost of goods sold, operating expenses, financial charges and taxes.
Nov 30, 2012
Nov 30, 2011
Nov 30, 2010
CLL
RCL
CLL
RCL
CLL
RCL
Net profit after taxes
1,298,000
18,287
1,912,000
607,421
1,978,000
515,663
Sales (Revenue)
15,382,000
7,688,024
15,793,000
7,537,263
14,469,000
6,752,504
Net profit margin
0.0844
0.0024
0.1211
0.0806
0.1367
0.0764
12.11
13.67
Net profit margin is an indicator of how efficient a company is and how well it controls its costs. The higher the margin is, the more effective the company is in converting revenue into actual profit.
Answer the question: “would you invest in this stock?”
Carnival has had a very rough year so far. They are still suffering because of the Costa Concordia accident in 2012 in this year incidents do not seem to stop either. Carnival had several power outages and passengers were forced to live without AC and working toilets. Last month a six year old boy drowned in the pool. There are no lifeguards at the pools and children under 13 are supposed to be under parental supervision. So even if it was just a terrible accident it will has consequences for Carnival.
These incidents did not only damage their reputation but also meant a loss