Situation Analysis of the Royal Caribbean Cruises - Case Study Example

THE ROYAL CARIBBEAN CRUISES Name: Institution affiliated: Date of submission: Tutor: Defining problem/decision area The Royal Caribbean Cruises enjoyed major developments in the industry with their customer base increasing annually. However, after the September 11th 2001 when the country’s World Trade Centre and the Pentagon, the organization started to experience major problem that negatively affected their performance. Since then, the organization has been facing a number of economic and political related problems in the markets that they operate in. The major destinations for the organization are the Europeans countries and American states. The major problem provided developed as a result of these attacks were the political environment is the political stability of the countries and states in which the organization operates. The result of this was that the organization customers reduced immediately. As a result, the organization had to contend with a sizable number of travel cancellation as the consumers of their services chose to use other means that were much faster and were considered safer for use. The economic problem that the organization has faced was also as a result of the same problem in the United States that saw the share price of the organization fall by 40% and the company lost a range of about US$ 20 t0 25 million within the first week after the attack in the United States [Len03]. Relevant and Key facts (qualitative and quantitative) Given that the Royal Caribbean Cruises is not the only organization operating in the industry, competition is a major problem that the constantly face in their daily activities. Since the organizations provide luxury services to the consumers, the competition is usually based on non-price factors such as the quality of services, the brand name and goodwill of the organization and the different destinations that the organization provides for their customers. Carnival, a competitor of the Royal Caribbean Cruises, currently has about 43 vessels that provide the consumers with the services in the organization. The organization has a good command in the market as the reported revenues in 1999 and 2000 were US$ 3.50 billion and US$ 3.779 billion respectively. With such facts, then it is important for the organization to consider improvements to increase their market share and reduce the competition that they face. Situation Analysis (synthesis; qualitative and quantitative) Strengths Among the strengths that the Royal Caribbean Cruises enjoy are the fact that they have purchased more than 3000 new passenger vessels to provide services to the consumers in the Caribbean and Europe. Growth within the organization and the industry as a whole has been triggered by the presence of a healthy economy in both Europe and the Caribbean, a wide range of destinations that are served, good product positioning and additional ships purchased by the organization. In the case of the Royal Caribbean Cruises, the purchase of new ships has helped the organization to e come more competitive as it has the opportunity to serve more consumers and provide an increase in the destinations that that the organization serves. The size of the consumers who use and are loyal t the brand in the Northern part of the Caribbean alone are more than seven million consumers by the year ended 2001. This large size of the consumers in the organization makes the organization to enjoy potential growth over time as well as enjoying positive returns from their activities. Given that the industry only attracts about two percent of the total leisure and travel market, then having such a large population utilizing the products and services of the organization, then the organization is enjoys a large market share of the total market. Other strengths that the organization enjoys include the continuous increase in brand awareness with the marketing efforts that have been put in place. The organization also enjoys a strong distribution system with the opportunity to try out strategic alliances, joint ventures and acquisitions to reduce the competition that they face and increase their profitability. With the high size of vessels that are owned by the organization, it is possible to easily manage the increasing capacity of customers loyal to the organization. Weaknesses The Caribbean and European have enjoyed much political stability over the years. This means that the organizations enjoy working in a politically stable environment. The only major issue that has been identified is the attacks on the American soil when terrorists attached the World Trade Centre and the Pentagon. Most o f the consumers of the organization come from the Caribbean and European nations. This means that any form of instability in these countries, be it political, economic or social may have adverse effects on the performance of the organization. Another major weakness that is evident in the case is that the organization lacks alternative plans to serve the customers other than the use of the cruise vessels. This means that in case of changes in weather or damages to the vessels, the organization may not operate efficiently. Similarly, due to the high risks that are experienced by the services provided in the sea, the organization is forced to pay high insurance cover amounts to cover for theses risks. Opportunities Effective cross border collaboration and communication for multinational companies is critical for their success. It may be expensive to improve the communication and learn to appreciate the beliefs of other countries for companies, but it will create efficiency in their activities in the long run. Cultural differences still remain an issue that hinders the economic growth of some countries around the world. Cultural differences are a broad range of beliefs and behaviours that are found on a daily basis in workplaces. Multinational companies are mostly affected by these problems since they have to develop products that will suit different cultures in the different markets. Diversification is a major opportunity that can be used by the organization to increase their revenues, performance and its profitability. The Royal Caribbean Cruises may also develop an online platform to allow the customers to use the internet to allow the customers to make reservations for their travel online. Similarly, there also exists a big size of untapped markets in different parts of the world. among these markets include the France and Italy. Threats Competition is a fixed threat that any organization faces provided that the organization is not operating in a monopolistic type of market. The Royal Caribbean Cruises has increasingly been facing competition from other organizations around the world such as carnival and princess cruises. It is a major threat as the competitors have been establishing new destinations around Europe and the Caribbean and thus the market size of The Royal Caribbean Cruises has been decreasing as they share the splits with the other competitors. The Royal Caribbean Cruises highly relies on the world oil to fuel the vessels. The changes in oil prices acts as a threat to the organization since it may end up reducing the profits that the made by the organization. Similarly, political instabilities and clashes in the countries that the organization operates in may also have negative effects on the performance of the organization. Finally, the terrorist attacks may also severely damage the performance of the organization. This was experienced in the September 11th attack on the United States. A repeat of such an attack would have an adverse effect on the organization. Alternative Solutions Diversification Diversification for the Royal Caribbean Cruises is a good solution for the organization to use to ensure that reduce the weaknesses and threats that they face. Diversification is the process f developing new products and services and introducing them to new markets. The services provided by the organization are only available to the Caribbean and the European countries. The Cruise ships only travel to these two destinations. However, there are plenty of new markets around the world that the organization can use. Asian countries, Australia and some African countries could serve as good destinations for the consumers to enjoy the services of the organizations. Similarly, the new designations mat serve as new markets for the development of a new consumer base. Advantages The advantages of diversification in this case include the suppression of competition that the organization faces from their competitors. The major competitors of the Royal Caribbean Cruises are the Carnival, who are the main competitors and Princess Cruises. The Royal Caribbean Cruises only provides luxury services to their consumers. Since the organization has more travel vessels than any other organization it is possible to introduce new services such as the contemporary and premium services to lure more consumers to use the organization’s products. Disadvantages The major disadvantage of diversification is the planning process that the organization is required to undertake to develop the new markets, products and services. The planning process consists of a number of stages. First, the organization staff develops a product line and a sales plan, and then sends the information to each sales personnel. Then sales staff can introduce tourist information to visitors according to our product line. If there are some visitors who make some personalized travel requirements, the planning department staff will assist sales staff to identify customer needs. Then, the sales staff can sign the travel contract with customer. After the completion of sales, sales staff needs to do sales records. Finally, financial department staff will provide a receipt for visitors and complete the service process. This process may be hectic, cost the organization a sizeable amount of resources and at the end not provide the organization with the expected returns from their investments. Alternative Solution Innovation Technological advancements, promotion and research and development and the introduction of better processes for new services to be development in the organization will be the best form of innovation that can be used to solve the weaknesses and threats that the organization is currently facing. Innovation is likely to provide the organization with an opportunity to develop new unique and quality services that they offer to their consumers. Advantages Innovation through the encouragement of research and development in the organization will ensure that the organization is able to develop better products and services that are more appealing to the consumers and ensure that they suppress the activities of their competitors and in that way reduce the competition that they face from other companies. Similarly, The Royal Caribbean Cruises is also likely to enjoy the provision of improved consumer services thus increasing the consumer loyalty to the organization Disadvantages The main disadvantage is the financial risks associated with innovation. Through innovation, the Royal Caribbean Cruises may end up purchasing new technologies for the organization that may end up becoming obsolete almost immediately. In this case, the organization risks suffering from financial losses from the initial investments in the new technology. Recommended solution and Implementation Diversification is the best solution to be implemented in this case. Through diversification, it is possible to promote innovation in the organization so at to better achieve the development of new products, services and markets for the Royal Caribbean Cruises. With diversification, The Royal Caribbean Cruises is able to enjoy an increase in the consumer base around the world and as a result, the organization will enjoy an increase in the revenues and profits recorded by the organization. The luxury services are usually expensive and not all consumers are able to afford them. The development of the contemporary and premium services which are cheaper will lure more consumers into using the products and services if the organization. The organization should diversify to new markets in Asia, Africa and Australia. Finally, the organization should encourage advertisements to have more consumers to have the knowledge about the existence of the organizations products and services. Other recommendations on for the organization will be based on the price, promotion, product and place. The recommendations in terms of products should concentrate on the quality of the products and services that are offered in the organization. the organization should ensure that they provide the customers with high quality products and services that cover the value of money that the consumers have paid for in the market. The pricing of the products should be strategic in that they consider the competitiveness of the products and services in the market. The organization provides for luxury services to the customers, therefore, the in as much as the prices are high, they should consider having them lower than those of their competitors. Given that they provide quality products and services, then the organization should lower their products to attract more customers. Given that there already other companies in the same industry, the organizations usually engage in non-price competition. In this way, the organization is expected to provide promotional options to the customers to lure them to use the products and services of the organization. Offering discounts and other promotional benefits to the customers will increase the size of the loyal customers since they will enjoy same products and services at reduced prices. Finally, the place of operations is an important consideration for the organization. since the organizations currently operates in Europe and some of the American countries, the markets in this way are not fully utilized. There still exists unexploited markets in France, and Germany and the exploitation of such markets may increase the performance and profitability of the organization. REFERENCES Len03: , (Lenessa, 2003), Read More