BUSI 4940 Northern Essex Community College Strategic Implementation Report

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BUSI 4940

Northern Essex Community College



Please complete section 3. Instructions are in the word files. Thank you!!

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Strategy & Implementation– 75 Total Points Assignment Overview: Please provide a 2-5 page written report (without Tables or Graphs) analyzing the companies’ business-level and corporate-level strategies. This assignment also asks that you recommend 1 new strategy for the company and describe the plan for implementation. As explained in Chapter 4 and 6 in the text, it is essential to continually analyze and adapt firm strategies to the environment. Below, you will find description of the structure of the report and a template to help guide you through this portion of the group project. It is broken down into paragraphs and identifies the internal analyses that need to be completed for a full report of the internal environment. Other Information: This is a team assignment. Feel free to divide the work between team members as you see fit, but a designated person or a small group should be responsible for a final read through that checks for consistency and grammar. Assessment Rubric: The grades will be assessed using 4 factors: 1) how well the analyses are conducted, 2) the detail of information, 3) whether or not data is used and cited, and 4) the overall presentation (writing, tables, and graphs). Each is weighted at 25%. Submission: Please list every member in the group the submission. One person in your group should submit your assignment via CANVAS before the due date/time. You must cite sources of information in APA format (include a reference page at the end of your submission). All submissions will be submitted using Turnitin. Plagiarism will result in a 0% on the assignment for all members of the group. Template for the Strategy & Implementation Analysis Section 1 – Overview (1-2 paragraphs) Please provide a brief overview of the products and services the company offers. Please also discuss which products and services are most profitable for the firm. Then, identify how these products and services differ from the company’s primary competitors listed in the external environment analysis. Section 2 – Company Strategies (3-4 paragraphs) In this section, please detail the strategies of the company. Specifically, please write 3 paragraphs: 1. Paragraph 1 should detail the business-level strategy of the company. Please provide as many details as possible to support your claim. 2. Paragraph 2 should detail the corporate-level strategy of the company. Please provide as many details as possible to support your claim. This paragraph should also discuss its level of diversification, any merger & acquisitions strategies, and also any cooperative strategies. 3. Paragraph 3 should detail how the company’s business-level and corporate-level strategies (discussed above) have changed over time. Please refer back to Chapter 4 and lecture for details of this analysis. Please include any graphs and tables that help visually aid present the information. Please write this as concisely as possible while still presenting the information effectively. Section 3 – Strategic Planning & Implementation Related to COVID-19 (3-4 paragraphs) In this section, please use your existing knowledge of the company from the previous analyses to discuss how COVID-19 has impacted the company. Given this, please provide an alternative strategy (i.e., a solution) for how the company will handle the COVID-19 pandemic. This strategic alternative can be as focused or broad as you wish. The goal is to find a way for the company to be successful during and after the COVID-19 pandemic. Please provide data that supports your strategic alternative for the company. After you suggest an alternative strategy for the company, please describe how the strategy will be implemented. Importantly, you should discuss: 1. How much the alternative will cost 2. 2: The timetable for the how the alternative strategy will unfold (i.e., immediately or a roll-out over the next few years…etc) 3. 3. A (quick) breakdown of the return on investment (ROI) for your investment. Please also forecast future revenue depending on all aspects of the external and internal environment analysis. Use the template provided below. Provide robust explanations for each of the income statement items in the template below. 2021-2016 (5year) Estimates % Growth or Decline over 2020 actual Robust explanation / discussion of the factors that led you to the average growth rate or decline rate that you ended up with for each variable below Revenue Cost of Revenue Operating Expense Tax Provision Normalized EBITDA Please refer back to Chapters 4, 6, and 11 for more information about strategic planning and implementation. Please also provide data that supports your information and any graphs or tables that help visually aid the information. Please write this as concisely as possible while still presenting the information effectively. Section 4 – Additional Information In this section, please list your references cited in the text. Please also include any graphs and tables that help visually aid the analyses. Section 1 Section 2 Section 3 Power Point Josh Jacob Adip Cherika & Viviani PART 3 - DUE Sunday, April 18, 2021 @ 11:59pm. Sections are due Wed. April, 14, 2021 Please make sure you CITE your work in your paragraphs as well as APA citations for the Reference page. Our last section we received a 60/70. Let's aim for 65-75 this go around. *IF you have not looked at the feedback for the last assignment PLEASE do so.* Strategy & Implementation: Royal Caribbean International MKTG 4940 - Group 4 Viviani Cruz Joshua Harrelson Adip Shelly Jacob Springer Cherika Ward Internal Analysis: Cruise Line Industry I. II. OVERVIEW (1-2 paragraphs) - Josh Company Strategies (3-4 paragraphs) - Jacob Royal Caribbean’s business-level strategy of differentiation provides a wide range of products and services, each uniquely targeted to the needs of many various market segments. Their strategy drives for maximal revenue, making it easier for passengers to spend money throughout each cycle. Expanding Royal Caribbean’s variety and upgrading luxury elements support a core philosophy that bigger is better. In a Business Insider article, CEO Michael Bayley says “size, scale, allows huge choice in options,” (1) and emphasizes the segmenting of customers by their needs, recognizing that different groups will have different preferences. This broadens the competitive scope while increasing distinctiveness in quality offered to each segment. Bayley goes on to claim “value is a combination of price and quality. If the quality is high enough, you can raise the price accordingly...People are perfectly happy to pay for a product that they perceive as being of value, and we just elevated that perception of value and we elevated the price,” (1) highlighting that Royal Caribbean’s unique products have perceived value for which customers are willing to pay a premium since they exceed minimum levels of quality, service, and attributes. The company gives customers many chances to spend money at various points in each cycle since “generally, people don’t think about spending rationally. We tend to think of prices as relative, rather than absolute” (1). By allowing prepayment for all or partially inclusive packages, passengers think less about money spent onboard, and can also prepay for excursions and events post-voyage. “What we found is that, if you spend $100 before you sail, that’s spent and gone. You don’t even put it in your budget for when you are on vacation,” says Bayley, “So every pre-cruise revenue dollar that we generate will often generate 50% more on-board revenue for that customer” (1). Royal Caribbean deploys a single business corporate-level strategy, a low level of diversification. As a global cruise company, it controls and operates four global cruise brands: Royal Caribbean International, Celebrity Cruises, Azamara and Silversea Cruises. Collectively, these are its “Global Brands,” (2) and, according to the most recent Form 10-K Filing, “Although each of our Global Brands has its own marketing style, as well as ships and crews of various Internal Analysis: Cruise Line Industry sizes, the nature of the products sold and services delivered by our Global Brands share a common base (i.e., the sale and provision of cruise vacations).” (3) Each of the four also offer similar itineraries, have similar cost and revenue elements, have sourced passengers from similar global markets, and historically operated in similar economic environments with a significant degree of commercial overlap. “As a result,” the document continues, “we strategically manage our Global Brands as a single business with the ultimate objective of maximizing long-term shareholder value” (3). Royal Caribbean also owns “a 50% joint venture interest in TUI Cruises GmbH (‘TUIC’), that operates the German brands TUI Cruises and Hapag-Lloyd Cruises (collectively, our ‘Partner Brands’)” (2) serving as a cooperative strategy. The document later reveals “On June 30, 2020, TUIC acquired Hapag-Lloyd Cruises, a luxury and expedition brand for German-speaking guests, from TUI AG for approximately…$1.3 billion,” (4) as a M&A strategy within the joint partnership. Revenue is categorized between passenger ticket revenues, and onboard and other revenues, the latter of which includes further cooperative strategy in “revenues from independent third party concessionaires that pay a percentage of their revenues for the right to provide selected goods and/or services onboard our ships” (5) as well as “revenues received for our bareboat charter, procurement and management related services we perform on behalf of our unconsolidated affiliates” (5). On a business level, a new operating focus includes “[supporting] the healthy return of cruising globally along with our industry partners, including national and local governments and regulators, the communities in which we operate, other cruise companies, shipyards, our guests, and trade partners,” (6) in response to the spread of COVID-19. Being a leader in safely bringing the industry back to life and working with said authorities further strengthens the company’s differentiated reputation. In Royal Caribbean’s 2014 Form 10-K filing, approximately ten months prior to Michael Bayley being named CEO, the company still “strategically [managed its] brands as a single business with the ultimate objective of maximizing long-term shareholder value” (7). This indicates the single business corporate level strategy has remained constant. III. Strategic Planning & Implementation Related to COVID-19 (3-4 paragraphs) - Adip Internal Analysis: Cruise Line Industry IV. Additional Information (Resources, Work Cited) - Everyone Internal Analysis: Cruise Line Industry References (1) Business Insider Article: Royal Caribbean’s CEO Reveals How the World’s Biggest Cruise Line Got Travelers to Spend More Money -- and Doubled Its Earnings by Mark Matousek Apr 2, 2018, 12:30pm https://www.businessinsider.com/royal-caribbean-ceo-explains-business-strategyinterview-2018-4 (2) (3) (4) (5) Form 10-K Annual Report Item 1. Business: General Form 10-K Annual Report Item 1. Business: Our Global Brands Form 10-K Annual Report Item 1. Business: Our Partner Brands Form 10-K Annual Report Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations: Financial Presentation -- Description of Certain Line Items (Revenues) (6) Form 10-K Annual Report Item 1. Business: Operating Focus https://www.sec.gov/ix?doc=/Archives/edgar/data/0000884887/000088488721000006/rcl -20201231.htm (7) Form 10-K Annual Report Item 1. Business: Our Brands https://www.sec.gov/Archives/edgar/data/0000884887/000088488714000023/rcl20131231x10k.htm External Analysis: Cruise Line Industry MKTG 4940 - Group 4 Viviani Cruz Joshua Harrelson Adip Shelly Jacob Springer Cherika Ward External Analysis: Cruise Line Industry I. FIRM OVERVIEW Royal Caribbean International’s (RCL) industry has SIC 4724-Travel Agencies and NAICS 561510-Travel Agencies. It holds 23.6% market share of the worldwide cruise market by passengers and 21.2% by totaling $5.05 billion. RCL’s 2019 Returns on Assets (ROA) were 7.5707% and -12.9% in 2020. The top 3 industry competitors are Carnival Cruise Lines (CCL), Norwegian Cruise Line (NCLH), and MSC Cruises (private). Their SIC codes are CCL 4489Water Transportation of Passengers, Not Elsewhere Classified; NCLH 4489-Water Transportation of Passengers, Not Elsewhere Classified; and MSC Cruises 4412-Deep Sea Foreign Transportation of Freight. The NAICS codes are CCL 487210-Scenic & Sightseeing Transportation, Water; NCLH 487210-Scenic & Sightseeing Transportation, Water; and MSC Cruises 483111-Deep Sea Freight Transportation. Competitor market shares are as follows. CCL holds 42% by passengers, and 37.1% by revenue totaling $8.83 billion. NCLH holds 9.5% by passengers, and 12.6% by revenue totaling $3 billion. MSC Cruises holds 10.2% by passengers, and 6.5% by revenue totaling $1.54 billion. In 2019, ROAs were CCL 7.2386%, NCLH 7.1032%, and MSC Cruises 3.6222%. In the 2020 pandemic, these fell to CCL -19.319%, NCLH -18.52%, and MSC Cruises N/A%. Noting the previous data, RCL carries a competitive advantage most strongly from its 2019 and 2020 ROAs. The firm also currently holds the second-highest market shares and revenue totals of its top 3 industry competitors. II. GENERAL ENVIRONMENT ANALYSIS For the general environment analysis, we will look at the top 4 segments that most greatly influence the long-term performance of Royal Caribbean. These segments will be arranged in order, starting with socio-cultural, economic, physical, and political/legal segments. In looking to the future, Royal Caribbean is a global competitor in cruise travel and investment, however, the current COVID-19 pandemic may continue to hinder performance for an unforeseeable amount of time. The socio-cultural environment of Royal Caribbean is competitive and diverse. Royal Caribbean is taking deliberate steps to move more and more women into higher-level positions. In late External Analysis: Cruise Line Industry 2020, two women were promoted to the rank of Captain, thus being put in charge of vessels in the Royal Caribbean International fleet (Woman, 2021). Amongst their seafaring competitors, Royal Caribbean leads the pack in diversity and inclusion initiatives. They are ranked #30 in Glassdoor’s, “Best places to work” for 2021. Along with this achievement, Royal Caribbean received a perfect score of 100% on its Disability Equality Index. The company is without a doubt leading the way in Diversity and Inclusion initiatives. Royal Caribbean’s environmental sustainability investments are large. This campaign encompasses 17 areas of investment from education, clean water, gender equality, climate action, responsible consumption, and production, et al. The economic segment is broken down to market share and growth rate, the demand for cruise travel in a COVID-19 environment, and the overall level of uncertainty in future performance due to these factors. Royal Caribbean is placing second to Carnival Cruise Lines with around 23.6% of the global market share in cruise lines (Growth, 2021). This places them in good shape to weather the potential sustainability problems that smaller cruise lines may encounter in the future. The demand for cruise line services is falling largely due to government regulations as well as an overall fear of spreading the COVID-19 virus. Royal Caribbean has pushed further toward a clean operating environment, limiting their carbon footprint in the world (At, 2021). As far as the physical segment of this analysis, the culture of sustainability and environmental concern is first in its class. In the future, the advances in industry-leading technology will undoubtedly lead the industry in the development of such measures. The future effects of operating a cruise line in a continuingly unsteady global environment around COVID-19 is unpredictable. Royal Caribbean has been at port from early 2020 but plans on reopening its services to the public sometime in Q2 2021. The political and legal segment that Royal Caribbean will have to circumvent largely depends on government intervention in their practices due to the COVID pandemic. During the stimulus spending in the CARES Act of 2020, Royal Caribbean did not receive any funding from the stimulus (Hochberg, 2020). According to Royal Caribbean Blog, during Q2 of 2020, Royal Caribbean hired Brownstein Hyatt and independent lobbyist Kevin Kayes to represent its interests in Washington D.C. External Analysis: Cruise Line Industry III. INDUSTRY ANALYSIS A. BARGAINING POWER OF SUPPLIERS (LOW-HIGH) Suppliers bargaining power in any industry is the pressure that the supplier applies to a business when purchasing raw materials, labor, or technology. Stress may come from a rise in prices or a change to the quality/quantity of a supplier's products. As for the cruise line industry supplier power is considered to be low to high. Suppliers bargaining power can fluctuate due to the different categories of supplies a cruise line will need. Based on the Cruise Line International Association (CLIA), in 2017, cruise lines had 28.5 million passengers; this, in turn, calls for purchasing necessities at a moderate cost. Such essentials are things like, food, adequate shelter, and toiletries. Vendors in the market of necessity goods tend to be overly saturated. With an abundance of necessity and entertainment vendors, the suppliers bargaining power is low due to cruise lines having the ability to shop around for reasonable prices. Cruise lines like Royal Caribbean have the advantage of seeking any vendor who fits with their company budget. This is just one aspect as to how the bargaining power of suppliers can be low. A high fluctuation is geared more towards shipbuilders and docks that help clean, and perform maintenance on the ships. The regions of East Asia and China are currently the leaders in shipbuilding. With such leverage in the shipbuilding industry, the companies that reside in these regions have high bargaining power over their supply prices. Cruise lines like Royal Caribbean will struggle to find lower prices and will need to adjust their budgets to meet that of the shipbuilding companies. Even with the fluctuation of bargaining power, this helps the cruise line industry so that companies like Royal Caribbean can maintain budgets and forecast out for the foreseeable future. B. BUYER POWER (MODERAT-HIGH) Buyer power in any industry means the control that the buyer or consumer has over the company. Companies will often forecast pricing, quantities of supply, and how to supply products for the demand of their consumers. The cruise line industry tends to be different. When forecasting pricing for future sails, cruise lines tend to make sure that their forecasted prices will maximize their profits and meet passenger capacity. They do this by partnering with travel External Analysis: Cruise Line Industry agencies who help influence consumers on their next voyage. Travel Agencies make it easy for the consumers to book when marketing prices include flight, hotel, and cruising fees. Agents tend to get 7-20% in commission, depending on the cruise line. Cruise lines do not all pay the same commission, which can cause competition amongst each other to source the best travel agency. In this case, buyer power isn’t so much the amount that they are spending but what and whom consumers are using to buy voyages. When a consumer finds an agency or social media structure that offers stress-free booking, they tend to go with that platform. Cruise lines can then become influenced to follow the trends of where a consumer is booking. This, in turn, causes the buyer power to be low to moderate depending on how long that trend may last. In the last year, the buyer power has become high due to the effects of COVID-19. Cruise lines have had to cancel sails due to it being a high-risk environment for passenger safety. According to CLIA, the cruise line industry generates 53 billion dollars in revenue alone. “From mid-March through today, it is estimated that the suspension of cruise operations has resulted in a loss of more than $25 billion in economic activity. (CLIA, 2020)” Buyer power not only adds to the 25 billion in loss of revenue but also controls it. Many Americans struggle with little to no income due to the rise in unemployment. Buyer power is now higher than ever, and cruise lines are now having to appeal to a struggling economy as they strategically forecast on increasing revenue in the future. C. THREAT OF SUBSTITUTES (LOW-MODERATE) The threat of substitutes in all industries is essential because it is another form of competition. In the cruise industry, the prices somewhat remain the same across the board. The real deciding factor of whether a consumer will stay loyal is consistency, diversification, and innovation of the cruise line itself. The threat of substitutes is low due to the fact the cruise industry has a diverse customer base. This is due to how they have planned out their target markets. Organizations like CLIA tend to use a marketing tactic called socio-demographic segmentation. This views their target market into three realistic categories: geographic segmentation, the family life cycle, and income. All three types allow the cruise line industry to target specific groups. This allows for the cruise line to build on their innovation of diverse amenities and itineraries. CLIA reports have stated that “24% of cruise clients are first-time cruisers, indicating that efforts to attract a External Analysis: Cruise Line Industry new generation of cruisers are bearing fruit. (CLIA, 2017)” Also, Generation Z and their attraction to the cruise line experience is increasing fast. CLIA reports indicated that by 2020 Generation Z would out weight the millennials as passengers. Due to COVID, those predictions will slow down. This can temporarily cause the threat of substitutes to become moderate due to consumers seeking vacation and travel within the U.S. and with other companies. D. THREAT OF NEW ENTRANTS (LOW) The Threat of New Entrants is defined as the threat new competitors pose to existing competitors in an industry. The cruise industry has a low threat of new entrants and that is because there are considerable barriers to entry. A ship for 500-1,000 passengers will cost the cruise line about $394 million, while a ship that can accommodate 1,000 to 2,000 passengers can cost $442 million (Bolluyt, 2018), showing that entry into the cruise industry requires high capital. As of December 2020, the pandemic has cost the cruise industry about $32.7 billion in total expenditures (Arrojas, 2020), making it even more unlikely for new entrants at the time. Besides the cost of purchasing a new vessel, a new entrant would also need to create agreements with hotels, restaurants, and other companies at the ports that they will be visiting. Without established brand recognition, it would be difficult for a new cruise line to compete with established cruise lines such as Carnival, Royal Caribbean International, or Norwegian cruise lines. The only exception for this would be cruise line industries in other countries, such as Latin America and Asia. Another factor to consider for new entrants would be which countries to register their ships in. E. INDUSTRY RIVALRY (MODERATE-HIGH) The industry rivalry increases when there are a number of competitors, increased diversity in competition, industry concentration, industry growth, brand loyalty, and barriers to exit. As of 2017, there are currently 51 cruise lines (Colakovic, 2020). Currently, the top cruise lines in revenue and passengers are Carnival, Royal Caribbean International, and Norwegian. Of the top competitors, Carnival is Royal Caribbean International’s largest competitor with an 18.4% lead on passengers and 15.9% on revenue. However, due to COVID-19 the cruise line industry is External Analysis: Cruise Line Industry currently halted and between 2019 to 2021 a total of 31 ships are leaving the worldwide ocean cruise operations, but that will be slightly offset, as 8 ships will be joining the industry (Growth, 2021). The cruise line industry is very diverse, with cruise lines offering different price ranges, destinations, lengths of cruises and even themed getaways. Established cruise lines also have strong brand loyalty, making it harder for other cruise lines to gain those loyal consumers. The cruise line industry also has high exit barriers, this is due to how difficult it may be for the company to sell its assets. *2021 worldwide passengers carried estimates assume post-COVID-19 sailings begin March 1, 2021, at 50% capacity and reach 90% capacity by end of the year (Growth 2021). IV. FUTURE OUTLOOK & CONCLUSION The COVID-19 pandemic dealt a huge blow to Royal Caribbean’s financials and economic status. The pandemic halted the company’s operations, which has caused a loss in profits since the business came to a standstill. According to GlobalData (2020), the company lost nearly $150m to $170m every month. The pandemic led the company to suffer great losses that affected the company greatly. This highlights how much the economics of Royal Caribbean were affected by the pandemic resulting in retrenchment within the organization to cut on operational costs. The power of the customers was one of Porter's Five Forces that was greatly affected by COVID-19. The pandemic caused a surge in unemployment as businesses were forced to shut down, this affected many household incomes by lowering discretionary income. Also, due to the External Analysis: Cruise Line Industry mandatory lockdown and closure of borders, movement was not allowed between countries. Therefore, the company could not set cruises due to not being able to have customers aboard. The virus meant a smaller and more powerful customer base that would mean that the company charges very low prices since the customers have the power to negotiate prices. Although the COVID-19 pandemic has affected most cruise line companies, Norwegian Cruise Line (NCL), who is among Royal Caribbean’s top competitors, has been greatly affected. The cruise line refunded their passengers the money from booked flights which was estimated to be at least £2.3m, this amount was paid by NCL in passenger refunds (Moussalli, 2020). The company was forced to lay off most of its staff to sustain their financial standards. External Analysis: Cruise Line Industry References Annual Report (pp. 1-103, Rep.). (2019). MSC Cruises Group. doi:http://m.msccruises.com/engl/Mobile/Assets/MSC%20Cruises%20Annual%20report%202019.pdf Arrojas, M. (2020, December 14). Bizjournals.com. Retrieved February 10, 2021, from https://www.bizjournals.com/southflorida/news/2020/12/14/cruise-industry-shutdownlosses-to-surpass-32b.html At Royal caribbean, respect for the oceans is not a choice, it's a way of life. (n.d.). Retrieved February 13, 2021, from https://sustainability.rclcorporate.com/ Bolluyt, J. (2018, August 10). How much do cruise ships cost? And why are they so expensive? Retrieved February 10, 2021, from https://www.cheatsheet.com/culture/howmuch-do-cruise-ships-cost.html/ Budget Your Trip. (n.d.). Travel agents & Cruise Lines: Byt Agent. Retrieved February 10, 2021, from https://www.budgetyourtrip.com/cruise-line Carnival & the CRUISE INDUSTRY: Smooth sailing ahead. (2015, May 19). Retrieved February 10, 2021, from https://seekingalpha.com/article/3194766-carnival-and-thecruise-industry-smooth-sailing-ahead Carnival cruise line - zip 80239, naics 487210. (2019, November 28). Retrieved February 13, 2021, from https://siccode.com/business/carnival-cruiseline#:~:text=%E2%80%9DCarnival%20Cruise%20Line%E2%80%9D%20of%20Denver ,is%20new%20in%20its%20industry Clia ocean-going cruise line members voluntarily extend suspension of u.s. operations. (2020, November 3). Retrieved February 10, 2021, from https://cruising.org/en/newsand-research/press-room/2020/november/clia-cruise-line-members-voluntarily-extendsuspension-of-us-operations External Analysis: Cruise Line Industry CLIA. (2017). 2016 Q2 travel Agent cruise INDUSTRY OUTLOOK. Retrieved February 11, 2021, from https://cruising.org/en/news-and-research/research/2016/december/2016q2-travel-agent-cruise-industry-outlook Colakovic, D. (2020, January 24). Number of cruise lines. Retrieved February 13, 2021, from https://www.lipcon.com/frequently-asked-questions/many-cruise-lines-world/ GlobalData. (2020, May 14). COVID-19 has placed Royal Caribbean cruises under severe financial strain. Ship Technology. https://www.shiptechnology.com/comment/covid-19-royal-caribbean-cruises-financial-strain/ Growth. (n.d.). Retrieved February 11, 2021, from https://cruisemarketwatch.com/growth/ Hochberg, M. (2020, March 10). Royal Caribbean promises to PROTECT travel agent commissions on deferred cruises FROM coronavirus concerns. Retrieved February 10, 2021, from https://www.royalcaribbeanblog.com/2020/03/10/royal-caribbean-promisesprotect-travel-agent-commissions-deferred-cruises-coronavirus Hochberg, M. (2020, May 12). Royal Caribbean hires new Washington lobbyists. Retrieved February 13, 2021, from https://www.royalcaribbeanblog.com/2020/05/12/royal-caribbean-hires-new-washingtonlobbyists Hochberg, M. (2020, March 26). Royal Caribbean will not qualify for bailout under US stimulus package. Retrieved February 13, 2021, from https://www.royalcaribbeanblog.com/2020/03/26/royal-caribbean-will-not-qualifybailout-under-us-stimulus-package Kennedy, S. (n.d.). 2019 State of the Industry. Retrieved February 10, 2021, from https://cruising.org/en/news-and-research/research/2018/december/2019-state-of-theindustry External Analysis: Cruise Line Industry Moussalli, M. (2020, March 10). Coronavirus and the impact on the cruise industry. Lexology. https://www.lexology.com/library/detail.aspx?g=34e1effe-f144-4ca4-b92e52e438625f2b NAICS code 483111. (2018, July 26). Retrieved February 13, 2021, from http://classcodes.com/lookup/naics-code483111/#:~:text=NAICS%20Code%20483111%20-%20Deep%20Sea,to%20or%20from %20foreign%20parts Norwegian cruise line - Zip 33132, naics 487210. (2019, November 28). Retrieved February 13, 2021, from https://siccode.com/business/norwegian-cruise-line Peterson, J. (2015, September 15). Barriers to entry in the cruise industry and how they might be overcome. Retrieved February 10, 2021, from https://medium.com/@jesspeterson/barriers-to-entry-in-the-cruise-industry-and-howthey-might-be-overcome-c8ec3ab848b Rodrigue, J., & Wang, G. (2020, September 2). Cruise shipping supply chains and the impacts OF disruptions: The case of the Caribbean. Retrieved February 10, 2021, from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7467074/#:~:text=Typically%2C%20fiv e%20to%20ten%20suppliers,suppliers%20for%20restaurants%20and%20bars Royal Caribbean Cruises, Ltd - Zip 33132, NAICS 561510. (n.d.). Retrieved February 13, 2021, from https://siccode.com/business/royal-caribbean-cruisesltd#:~:text=Business%20Overview,NAICS%20Code%20561510%20-%20Travel%20Ag encies Royal Caribbean group named a 2020 best places to work for Disability Inclusion. (n.d.). Retrieved February 13, 2021, from https://www.royalcaribbeangroup.com/news/royalcaribbean-group-named-a-2020-best-places-to-work-for-disability-inclusion/ Royal Caribbean - OWLER. (n.d.). Retrieved February 11, 2021, from https://www.owler.com/company/royalcaribbean External Analysis: Cruise Line Industry Sheivachman, A. (2014, May 7). Selling cruises: Does it still pay? Retrieved February 10, 2021, from http://www.travelmarketreport.com/articles/Selling-Cruises-Does-It-Still-Pay SIC 4412 deep SEA Foreign transportation of freight. (2020, April 03). Retrieved February 13, 2021, from https://siccode.com/sic-code/4412/deep-sea-foreigntransportationfreight#:~:text=SIC%20Code%204412%20-%20Deep%20Sea%20Foreign%20Transport ation%20of%20Freight%20is,estimated%20employment%20of%201%2C094%20people Thakkar, E. T. (2021, January 16). Royal Caribbean Cancels cruises, set to restart in May 2021. Retrieved February 13, 2021, from https://www.cruisehive.com/royal-caribbeancancels-cruises-set-to-restart-in-may-2021/45686 Threat of new entrants definition (one of Porter's Five Forces). (n.d.). Retrieved February 10, 2021, from https://strategiccfo.com/threat-of-new-entrants-one-of-porters-five-forces/ This text provides general information. Statista assumes no liability for the information given being complete or correct. Due to varying update cycles, S. (2021, January 25). Topic: Shipbuilding industry. Retrieved February 10, 2021, from https://www.statista.com/topics/3712/shipbuilding-industry/ Woman power on the high seas. (n.d.). Retrieved February 13, 2021, from http://www.jamaicaobserver.com/news/woman-power-on-the-high-seas-two-female-boatcaptains-at-sandals-royal-caribbean_209013 Internal Analysis: Royal Caribbean International MKTG 4940 - Group 4 Viviani Cruz Joshua Harrelson Adip Shelly Jacob Springer Cherika Ward Internal Analysis: Cruise Line Industry I. OVERVIEW As Royal Caribbean International (RCL) pulls in as the second-largest cruise line operator, they continue to stay true to their mission, values, and overall morals. RCL’s mission statement includes not just their company but everyone externally and internally: “We always provide service with a friendly greeting and a smile. We anticipate the needs of our customers. We make all effort to exceed our customers' expectations. We take ownership of any problem that is brought to our attention. We engage in conduct that enhances our corporate reputation and employee morale. We are committed to act in the highest ethical manner and respect the rights and dignity of others. We are loyal to Royal Caribbean and Celebrity Cruises, and strive for continuous improvement in everything we do” (Mission: RCL Investors, n.d). RCL strives to incorporate matters from all angles hoping to keep company growth continuous. RCL also envisions to “Generate superior returns for our shareholders by empowering and enabling our employees to deliver the best holiday experience and enhancing the well-being of our communities” (Royal Caribbean International, n.d). As RCL works on improvement for the future, they focus primarily on innovations that increase their shareholder’s experiences. Royal Caribbean International has global operations which focus on all individuals with different walks of life. This level of inclusivity allows for them to have their hands in all forms of innovation. In 2020, RCL took a severe loss due to the global pandemic. “Royal Caribbean Cruises annual revenue for 2020 was $2.209B, a 79.83% decline from 2019” (Royal Caribbean Cruises Revenue, 2006-2020), but even as they faced their worst year yet, RCL still brings in income from multiple segments. Bookings from consumers is the main driver of revenue for RCL and all cruise lines. Consumer bookings “account for about 75% of money brought in” (Kosciolek, 2021). These bookings do not include any extras like excursions, packages, or even on-board upgrades. Adding these in cruise purchases and add-ons “account for approximately 25% of cruise lines' gross income” (Kosciolek, 2021). On-board promotions, excursions, and packages amount to things like offshore activities, wedding packages, Wi-Fi, and on-board activities, to name a few. Even with these income streams, RCL has had to result in loans and stockholder investment to keep their cash flow among the pandemic. RCL and other cruise lines “were forced to put themselves tens of billions of dollars in debt to cover operating expenses” (Kosciolek, 2021). Internal Analysis: Cruise Line Industry In addition to RCL’s fight to rebuild after their financial loss in 2020, they have been forced to use technological resources to help gain their trust of consumers about their safety aboard RCL’c cruise ships. RCL innovations have helped to provide their passengers a safe and monitored cruise with more detailed cleaning protocols and two designs that are believed to lessen the contact of COVID-19. These two innovations are “Muster 2.0” or “e-mustering” and their new on-board watch, “Tracelet.” Both technologies provide information to and about the passengers aboard RCL ships. These innovations will minimize the spread of COVID-19 and provide details on when someone has contracted the virus and how. An explanation of the functionality of these two designs is in the following section. These innovations further solidify how RCL stays true to its mission and vision statements. As stated by the Royal Caribbean Group, “It’s that state of mind that helps us see opportunity where others see only risk. It reminds us that “good enough” is not remotely good enough. Instead, we greet every new idea with the words “What if?” instead of “It won’t work” (About Royal Caribbean Group 2021). II. RESOURCE BASED VIEW (RBV) ANALYSIS In 2020, Royal Caribbean International (RCL) reported $10.95 billion annual revenue, $1.91 billion net income, and over $30.32 billion assets (Case Study, 2021) According to the About Us section on the Royal Caribbean webpage, RCL operates 24 ships across the 4 cruise lines it owns which are, Royal Caribbean International, Celebrity Cruises, Silversea Cruises and Azamara. RCL shared two of its new technologies with the CDC. First, “Muster 2.0 -- otherwise known as ‘e-mustering’ -- ...helps to keep large groups...from congregating for what, previously, was an in-person safety drill,” explains president and CEO, Michael Bayley. They now watch briefings by cell phone and report to the crew who verifies completion. Bayley then discussed the second innovation -- contact tracing. He said “a Tracelet...each guest wears, and you can tell exactly how long they’ve been in contact with everybody else who’s wearing a Tracelet. Then,...artificial intelligence connected into...CCTV cameras that use facial and body recognition...double check and verify contact tracing.” Staffing’s two components, hotel and marine, are further split into various departments, employing roughly 77,000 onboard in 2019 (Department, 2021). Reputation to drive innovation at sea and redefine cruise vacations has been strong since launching in 1969. Onboard, it has debuted countless “firsts” -- including ice skating, rock climbing and surfing at sea. Internal Analysis: Cruise Line Industry Capabilities of RCL are financial dominance, crew size per ship, and technological leadership. With industry-wide revenue expected to show an annual growth rate of 18.98%, we can project RCL’s 2021 revenue to roughly $13.03 billion and the cruises segment is projected to reach US$16,821m in 2021(Cruises, 2021). Thus, we can estimate that RCL will earn about 77% of its entire segment’s revenue in 2021. At $1.91 billion net income, RCL towered over top competitors in 2020, such as Carnival Corporation who recorded a net loss of over $10 billion(Carnival, 2020). Dwarfing others in total assets, RCL’s were valued at over $30.32 billion, while Norwegian Cruise Line reported only $17.4 billion in September 2020(Norwegian, 2021). While Carnival employs 100,000 shipboard staff, operating 104 ships at roughly 962 crew members per ship, RCL provides about 3,208 members per ship, more than triple that of Carnival to provide the best service (Corporate, n.d.). And finally, working closely with the CDC, with Muster 2.0 and Tracelet it is leading the industry in technology preventing the spread of COVID19. Some of the firm's core competencies include human resources, innovations and global operations. Human resources is a competency that Royal Caribbean International is dependent on since their qualifications determine the level and quality of services delivered to clients. This, in turn, develops customer satisfaction, empowering the organization to sustain consumer loyalty and attract new clients. This core competency enables the organization to continue progressing and improve its competitive position in the industry. RCL also holds a strong position due to its core competency of innovation that allows it to have an efficient marketing strategy (Pike, 2014). Innovation allows Royal Caribbean International to introduce new products and services. This makes them different from their rivals. RCL creates a marketing mechanism focused on innovation that enables the organization to offer attractive products and services. Some of the products result in changes within the industry since they are effective and vital for maintaining and improving their competitive position in the international market. The company's network, fleet, and operations make it a strong brand that allows the organization to concentrate on particular market segments. Global operations is another core competency of Royal Caribbean International as the company operates worldwide. This competency can be seen as a marketing strategy to have advantage over its rivals. RCL’s concentration on its international bases comes from its investments in the cruising industry since they need to offer clients diverse destinations, thus making its offers attractive and increasing competitive advantage. The cruise ships travel to Internal Analysis: Cruise Line Industry approximately more than 450 destinations every year, spread on all seven continents (Carnival Cruise Line n.d.). The availability of vast financial resources enables the organization to take advantage of the opportunities; thus the rapid expansion the company is constantly going through. Despite a slight decline in its tangible assets, this does not affect the company's continuous development. III. VALUE CHAIN ANALYSIS- Josh Inbound logistics is an important step in the value chain which helps maintain professional relationships with vendors that are vital to reducing latency. Royal Caribbean International cruise line prides itself on being a global leader in sustainable and ethical operations (Sustainability, 2020). Building relationships and creating a steady supply line with vendors and suppliers of the same mind is important as well. The primary mission of this segment is receiving raw materials, semi-finished, or finished products from vendors in a timely manner. Operations is an equally important step in the chain. This segment can create a competitive advantage by streamlining the arrival of raw materials and products from vendors and converting them to a consumer ready finished product. Maintenance and upkeep procedures are also part of the operations segment, this is vital to keeping all of the vessels seaworthy and in compliance with standards and safety protocols (Cruise Industry Regulation n.d.). This is important, because maintenance shutdowns are expensive and an efficient operations department will minimize downtime (Ovation, 2021) and increase productivity. Outbound Logistics is a vital part of the value chain. The components involve receiving products that are crucial for operating a vessel but, equally important is distributing the finished products and services to the consumer efficiently and in the highest quality. Outbound logistics is much more complex for RCL than for other firms in order to maintain efficiency and deliver the highest quality products and services while constantly abroad. The ability to resupply and provide underway replenishment to vessels efficiently provides great value and a competitive advantage over their rivals. Growing their global investments will be needed as the number of ports and vessels serviced grows. A good marketing department is becoming a more vital part of a modern and global brand. The marketing segment is important to attracting new and repeat customers as well as promoting the brand, core values and building brand equity (What you need to know about brand Internal Analysis: Cruise Line Industry equity, n.d.). Advertising provides critical value in outreach to current and new businesses, geographic areas, demographics and potential customers. The sales segment truly is the backbone of any company where, without it, a company will not survive especially in times of pandemic (Reeves, 2020). The competitive advantages gained in promotional pricing and advertising is vital to recovering losses incurred due to the pandemic. The tactics employed by the marketing and sales team will decide how much economic recovery RCL sees in the coming years because of this downturn. RCL’s primary function to the consumer is the many services provided aboard its vessels from entertainment, recreational activities, and leisure related services aboard the vessel. In order to compete in the market, RCL must provide a superior service than its competitors. Procurement related activities are tied into the inbound logistics segment in that it is the responsibility of the procurement team to negotiate arrangements with suppliers and vendors as well as initiate new business. Building lasting relationships with suppliers/vendors and being cognizant of new business avenues can add value to RCL. A firm is only as good as its people so having a good Human Resources team only leads to success with the firms’ strategic mission and customer loyalty (Ferres, 2015). In order to compete with its rivals, RCL must be on the forefront of technology and innovation, specifically with concerns to R&D and safety protocols post-COVID-19. Being the first to operate a safe and regulation compliant cruise will lead to greater value and a competitive edge in the future. Having a solid firm infrastructure will lend better support and provide greater value for all other segments of the value chain. IV. FUTURE OUTLOOK & CONCLUSION Since the day COVID-19 was declared a global pandemic many industries, including the cruise line industry have suffered substantially. Royal Caribbean International’s stock still remains down by over 30% from its pre-pandemic highs (Team, 2021) while their annual revenue for 2020 declined 79.83% from 2019 (Royal Caribbean Cruises Revenue, 2006-2020). The pandemic has affected the core competencies of the cruise line, but the core competency that has been affected the most is RCL’s global operations. Due to the pandemic many countries have been in and out of quarantine, with countries passing bans on tourism and creating stricter guidelines that do not allow people from other countries to enter. This has affected Royal Internal Analysis: Cruise Line Industry Caribbean International’s global operations by forcing the cruise line to dock all their cruise ships in order to comply with social distancing guidelines and travel restrictions. While all segments of the value chain analysis have been impacted, the segment that has been impacted the most by COVID-19 is services. RCL has not been able to hold cruises for its customers due to social distancing guidelines. When the cruise line industry is allowed to resume cruises Royal Caribbean International will need to be innovative with safety and awareness protocols while not losing sight of customer satisfaction. Once RCL has successfully determined its services, the company will be able to address the rest of the segments. Overall, the future outlook for the company is positive with three vaccines having received Emergency Use of Authorization (EUA) and potentially receiving Food and Drug Administration approval in the future. An increase in vaccinated population and decrease in COVID-19 cases will see travel restrictions, regulations and social guidelines loosen up. This means that RCL will need to be on the forefront of technology and innovation to get creative on how to attract new customers and bring back existing customers. As stated previously, being the first to operate a safe and regulation compliant cruise will lead to greater value and a competitive edge in the future. Internal Analysis: Cruise Line Industry References About Royal Caribbean Group. (2021). Retrieved March 6, 2021, from https://www.royalcaribbeangroup.com/about/ About Us. (n.d.). Retrieved March 13, 2021, from https://www.rclinvestor.com/about-us/ Carnival corporation net INCOME 2020. (2021, February 03). Retrieved March 18, 2021, from https://www.statista.com/statistics/301610/income-of-carnival-corporation-and-plc/ Carnival Cruise Line. (n.d.). About us. Retrieved March 19, 2021, from https://www.carnival.com/about-carnival/about-us Caribbean, R. (n.d.). Royal Caribbean International. Retrieved March 08, 2021, from http://www.royalcaribbean.com.au/ourCompany/ourVision.do Case Study: Royal Caribbean International [PDF]. (2021, January). Corporate information. (n.d.). Retrieved March 18, 2021, from https://www.carnivalcorp.com/corporateinformation#:~:text=Combining%20over%20225%2C000%20daily%20cruise,passenger %20cruise%20days%20a%20year Cruise Industry Regulation. (n.d.). Cruise Line Industry Association. Retrieved March 10, 2021, from https://cruising.org/en/about-the-industry/policy-priorities/cruise-industryregulation Cruises - Worldwide: Statista market forecast. (n.d.). Retrieved March 06, 2021, from https://www.statista.com/outlook/mmo/travel-tourism/cruises/worldwide Cruises - Worldwide: Statista market forecast. (n.d.). Retrieved March 18, 2021, from https://www.statista.com/outlook/mmo/travel-tourism/cruises/worldwide Department. (2021, February 03). Carnival corporation net INCOME 2020. Retrieved March 06, 2021, from https://statista.com/statistics/301610/income-of-carnivalcorporation-and-plc/ Department, P., & 1, M. (2021, March 01). Royal Caribbean CRUISES: Number of employees 2020. Retrieved March 18, 2021, from https://www.statista.com/statistics/224269/royal-caribbean-cruisesemployees/#:~:text=This%20statistic%20shows%20the%20number,thousand%20shipboa rd%20employees%20in%202019 Employees. (2021, March 01). Royal Caribbean CRUISES: Number of employees 2020. Retrieved March 06, 2021, from https://www.statista.com/statistics/224269/royal- Internal Analysis: Cruise Line Industry caribbean-cruisesemployees/#:~:text=This%20statistic%20shows%20the%20number,thousand%20shipboa rd%20employees%20in%202019 Ferres, Z. (2015, May 11). The Human Element: Your Most Important Business Resource. Entrepreneur. https://www.entrepreneur.com/article/245848 Kosciolek, A. (2021, February 23). CDC asks Royal Caribbean to SHARE COVID safety technology from its cruise ships. Retrieved March 5, 2021, from https://www.royalcaribbeanblog.com/2021/02/23/cdc-asks-royal-caribbean-share-covidsafety-technology-its-cruise-ships Kosciolek, A. (2021, February 23). Technology. Retrieved March 06, 2021, from https://royalcaribbeanblog.com/category/category/technology Kosciolek, A. (2021, March 2). How Do Cruise Lines Make Money? Retrieved March 03, 2021, from https://www.royalcaribbeanblog.com/2021/03/02/how-do-cruise-lines-make-money Mission: RCL Investors. (n.d.). Retrieved March 08, 2021, from https://www.rclinvestor.com/about-us/232/#:~:text=Mission%20Statement&text=We%20anticipate%20the%20needs%20of,corpo rate%20reputation%20and%20employee%20morale. Norwegian cruise LINE Holdings total Assets (Quarterly):. (n.d.). Retrieved March 06, 2021, from https://ycharts.com/companies/NCLH/assets Norwegian cruise LINE Holdings total Assets (Quarterly):. (n.d.). Retrieved March 18, 2021, from https://ycharts.com/companies/NCLH/assets Ovation of the Seas enters dry dock for routine five year maintenance. (2021, March 8). Royal Caribbean Blog. https://www.royalcaribbeanblog.com/2021/03/08/ovation-of-the-seasenters-dry-dock-routine-five-year-maintenance Pike, S., & Page, S. J. (2014). Destination Marketing Organizations and destination marketing: A narrative analysis of the literature. Tourism management, 41, 202-227. Reeves, S. (2020, December 9). Air, Cruise Industries Face Rocky Road to Recovery Even with COVID-19 Vaccines. Newsweek. https://www.newsweek.com/air-cruise-industries-facerocky-road-recovery-even-covid-19-vaccines-1553519 Royal Caribbean Cruises LTD. job Application Wizard. (n.d.). Retrieved March 06, 2021, from https://rclctrac.com/ Royal Caribbean Cruises Revenue 2006-2020: RCL. (n.d.). Retrieved March 09, 2021, from https://www.macrotrends.net/stocks/charts/RCL/royal-caribbean-cruises/revenue Internal Analysis: Cruise Line Industry Royal Caribbean international jobs at sea. (n.d.). Retrieved March 06, 2021, from https://careers.royalcaribbeangroup.com/royal-caribbean/ Sustainability. (2020, September 17). Royal Caribbean Group. https://www.royalcaribbeangroup.com/sustainability/ Team, T., & Speculations, G. (2021, March 03). After last Week's Rally, is Royal Caribbean Stock poised for FURTHER GAINS? Retrieved March 11, 2021, from https://www.forbes.com/sites/greatspeculations/2021/03/03/after-last-weeks-rally-isroyal-caribbean-stock-poised-for-further-gains/?sh=4d86b2bc5cc5 What You Need to Know About Brand Equity. (n.d.). Investopedia. Retrieved March 10, 2021, from https://www.investopedia.com/terms/b/brandequity.asp
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Strategic Implementation
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Strategic Implementation
The COVID 19 pandemic brought fast-moving and random variables that existing
crisis management strategies were not prepared to handle. The contagion brought a ripple
effect in operation and supply chain, financial liquidity in organizations, and complexity to
navigate through tax, trade, and regulatory (Ofori, 2021). The cruise line industry was among
the firms that were greatly affected which unsteady revenue flow. Managers have streamlined
an alternative entrepreneurial, critical role in selecting related financial strategies to navigate
through the impact of COVID-19.
Regarding the control variables to ensure efficient...

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