Faculty of Built Environment, Art and Design

FACULTY OF BUILT ENVIRONMENT, ART AND DESIGN

(DEPARTMENT OF CONSTRUCTION MANAGEMENT)

Assignment No.1

STRATEGIC DEVELOPMENT PLAN

Simon Lukas Bayer: 13821922

Simon Martinengo: 13728874

Frederick Jacobus Hugo: 13617723

Ronald Gigmai: 13559964

Assignment presented as part of the requirements of the unit of

Strategic Project Management 641 (10900)

Lecturer: Steve Klomp

Word Count: 4,676

14.04.2008

CONTENTS:

LIST OF FIGURES IV

LIST OF ACRONYMS 4

1 NEED AND THE MARKET ANALYSIS 1

2 CURRENT AND FUTURE MARKET SITUATION 1

3 INTERNAL ENVIRONMENT ANALYSIS OF CARNIVAL CORPORATION 2

3.1 Mission Statement 2

3.2 Management 2

3.3 Goals and Values 3

3.4 Corporate Culture 3

3.5 Core Competencies 3

3.6 Marketing 3

3.7 Research and Development 3

3.8 Information Systems 4

3.9 Financial Performance 4

3.10 Market Share 4

3.11 Resources and Capabilities of Carnival Corporation 4

3.12 Strengths 4

3.13 Weaknesses 4

4 EXTERNAL ENVIRONMENTAL FOR CARNIVAL CORPORATION 5

4.1 Socio-Cultural Environment 5

4.2 Economic Environment 5

4.3 Political вЂ" Legal Environment 5

4.4 Task/Industry Environment 5

4.4.1 Threat of Entry 5

4.4.2 Threat of Substitution 5

4.5 Power of Suppliers 6

4.6 Power of Buyers 6

4.7 Competitive Rivalry 7

4.8 Opportunities 7

4.9 Threats 7

5 TIMEFRAME: SALIENT POINTS AND STRATEGIC OBJECTIVES 8

6 LIST OF SALIENT POINTS 8

7 PROFITABILITY 9

8 LIQUIDITY 10

9 LEVERAGE 11

10 ACTIVITY 12

11 COMMISSIONING OF THREE ADDITIONAL SUPER-LINERS 13

12 INCREASE IN CRUISE INDUSTRY CAPACITY 14

13 VERTICAL INTEGRATION WITHOUT OWNERSHIP (STARWOOD) 14

14 RECENT OPERATING FAILURES 14

15 STRATEGIC OBJECTIVES FOR FY96 15

REFERENCES 17

List of Figures

Figure 1: Reasons for Cruising 1

Figure 2: Gross Profit Ration Carnival 9

Figure 3: Gross Profit Ratio Starwood 9

Figure 4: Current Ratio Data Carnival 10

Figure 5: Current Ratio Data Starwood 11

Figure 6: Dept to Asset Ratio Carnival 11

Figure 7: Dept to Asset Ratio Starwood 12

Figure 8: Fixed Asset Ratio Carnival 12

Figure 9: Fixed Asset Ratio Starwood 13

LIST OF ACRONYMS

Carnival Carnival Corporation

Starwood Starwood Hotel Resorts Worldwide INC

FY Financial Year

1 NEED AND THE MARKET ANALYSIS

Carnival Corporations ability to influence customer behaviour, to reap greater financial rewards relies on understanding its customer’s needs (Peppers and Rogers 2004). Knowing the need is important to any organisation because it represents the why and how behind the customers actions (Peppers and Rogers 2004). However, the behaviour of the customer varies depending on their age group (Cartwright and Baird 1999).

Carnivals 1987 customer profile shows that 30% of their passengers were between the age group of 25 and 39 (Wheland and Hunger 2006). Therefore, it is assumed that 70% of the passengers are over 40, traditional cruise market is for the post family segment (Cartwright and Baird 1999) which can be seen in the over 50 year olds. A study shown by Cartwright and Baird (1999) reflects the top eight reasons why people go on cruises (cf. Figure 1).

Figure 1: Reasons for Cruising

Source: (Cartwright and Baird 1999)

Therefore, the need has been identified as “a safe vacation activity”. Safety on cruise travels is provided by the self contained aspect of the ship (Cartwright and Baird 1999).Customers dip into an alternative culture when they take a shore excursion and then retreat to the safety of the ship. The ship matches their usual culture such as nationality.

According to Michman (1991) the market is active retires, high rollers, and elderly travellers.

2 CURRENT AND FUTURE MARKET SITUATION

The current situation in the cruise industry and for Carnival Corporation is not as favourable as they would like it to be. The increasing industry capacity and the decline in industry demand puts companies under pressure to earn a reasonable return on invest. Therefore, “… the likelihood