Dusan Vasic

Royal Caribbean Cruises Ltd.

Step 1

Vision statement

Our vision is to empower and enable our Employees to deliver the best vacation experience

for our Guests, thereby generating superior returns for our shareholders and enhancing the

well-being of our Communities.

Mission statement

We always provide services with a friendly greeting and smile. We anticipate the needs of our

customers. We take ownership of any problem that is brought to our attention. We are loyal to

Royal Caribbean and Celebrity and strive for continuous improvement in everything we do.

Objectives

Royal Caribbean Cruise (RCC) ultimate objective is to maximize long-term shareholders

value.

Strategies

RCC strategy is to increase the awareness and market penetration of their brands globally.

Step 2

Vision

We intend protect the health, safety and security of our guests and employees and protect the

environment in which our vessels and organization operate.

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Mission

Focus on cost efficiency, manage our operating expenditures and ensure adequate cash and

liquidity, with the overall goal of maximizing our returns on invested capital and long-term

shareholder value.

Step 3

Opportunities

Construction of new mega-ships creating publicity

European Market

Increase in online booking by customers

Increase in social media popularity

Six primary cruise line brands

Asia’s large population market

Moderate growth in the U.S. economy

Threats

Cruise ships are heavily regulated

Different countries have different laws and regulations

Environmental impacts of large ships

MARPOL laws and regulations

Rising fuel costs

Slow recovering world financial crisis

More efficient competitors

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Step 4

Critical success factor RCC, Ltd. Carnival Norwegian Cruise Weight Rating Score Rating Score Rating Score

Market Share 0.30 3 0.90 4 1.20 2 0.60Advertising 0.20 3 0.60 4 0.80 1 0.20Revenue Expectation 0.10 3 0.30 4 0.40 3 0.30Financial Position 0.10 4 0.40 4 0.40 3 0.30Customer satisfaction 0.10 3 0.30 3 0.30 3 0.30International expansion 0.10 3 0.30 4 0.40 2 0.30Cruise Entertainment 0.10 3 0.30 3 0.30 3 0.30

Price comparative 0.10 2 0.20 2 0.20 2 0.20TOTAL 1.00 3.30 3.80 2.50

According to the Matrix, it is evident that Carnival Cruise is dominating the market. Carnival

Cruise has 50% market share and it generates much more profits then RCC. Therefore, RCC

should not try to overtake Carnival rather be more efficient in their operations than Carnival.

In Addition, Norwegian Cruise does not seem to be a big threat to RCC.

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Step 5

Opportunities Weight Rating Weighted

Score

Construction of new mega-ships creating

publicity0.10 4 0.40

European Market 0.10 2 0.20

Increase in online booking by customers 0.07 4 0.28

Increase in social media popularity 0.03 3 0.09

Six primary cruise line brands 0.08 3 0.24

Asia’s large population market 0.05 2 0.10

Moderate growth in the U.S. economy 0.07 3 0.21

Threats Weight Rating Weighted

Cruise ships are heavily regulated 0.10 4 0.40

Different countries have different laws and

regulations 0.09 3 0.27

Environmental impacts of large ships 0.04 3 0.12

MARPOL laws and regulations 0.11 3 0.33

Rising fuel costs 0.07 3 0.21

Slow recovering world financial crisis 0.03 3 0.09

More efficient competitors 0.06 2 0.12

TOTAL 1.00 3.06

According to the EFE Matrix value of 3.06, I would have to say that the company is

responding in an outstanding way to existing opportunities and threats in its industry.

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Step 6

Strengths

Strong Market Position

Brand Recognition

Increasing Revenue over last 5 quarters

Customer Satisfaction

2nd biggest Cruise liner by Market Share

2 new high class ships on order

Different Cruise lines from its competitors lines

Weaknesses

Primarily targeting higher income customers.

Political unrest in the Mediterranean

Piracy off the African coast reduced the demand

Recent Shipwrecks decreased the demand

Dependency on high cost fuel

Expansion into unknown markets (EU, Asia)

Step 7

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Strengths Weight Rating Weighted

Score

Strong Market Position 0.10 4 0.40

Brand Recognition 0.10 3 0.30

Increasing Revenue over last 5 quarters 0.09 4 0.36

Customer Satisfaction 0.04 3 0.12

2nd biggest Cruise liner by Market Share 0.04 3 0.12

2 new high class ships on order 0.07 3 0.21

Different Cruise lines from its competitors lines 0.06 2 0.12

Weaknesses Weight Rating Weighted

Score

Primarily targeting higher income customers. 0.13 4 0.52

Political unrest in the Mediterranean 0.05 3 0.15

Recent Shipwrecks decreased the demand 0.14 2 0.28

Piracy off the African coast reduced the demand 0.07 3 0.21

Dependency on high cost fuel 0.10 4 0.40

Expansion into unknown markets (EU, Asia) 0.01 2 0.02

TOTAL 1.00 3.21

According to the IFE Matrix score of 3.21 for RCC, I would have to say that the company is

doing well managing its Strengths and Weaknesses. In addition, by looking at the IFE Matrix

one can determine the possible strategy for the company going forward.

Step 8

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Strengths-Weakness-Opportunities-Threats Matrix (SWOT)

SWOT Strengths:

1. Strong Market Position2. Brand Recognition 3. Increasing Revenue over last 5

quarters 4. Customer Satisfaction 5. 2nd biggest Cruise liner by Market

Share 6. 2 new high class ships on order 7. Different Cruise lines from its

competitors lines

Weaknesses:

1. Primarily targeting higher income customers.

2. Political unrest in the Mediterranean

3. Piracy off the African coast reduced the demand

4. Recent Shipwrecks decreased the demand

5. Dependency on high cost fuel 6. Expansion into unknown

markets (EU, Asia)

Opportunities:

1. Construction of new mega-ships creating publicity

2. European Market 3. Increase in online booking by

customers 4. Increase in social media popularity5. Six primary cruise line brands 6. Asia’s large population market 7. Moderate growth in the U.S.

economy

SO Strategies

1. Find new Ports (S1, O1)

2. Increases Internet accessibility

(S2, O3)

3. Expand into Asia (S5, O6)

WO Strategies

1. Reduce Prices to target

middle-high class (W1, O3)

2. Offer discounts to European

Market customers (W2, S2)

3. Advertise safety of new ships

(O1, W4)

Threats:

1. Cruise ships are heavily regulated 2. Different countries have different

laws and regulations 3. Environmental impacts of large

ships 4. MARPOL laws and regulations 5. Rising fuel costs 6. Slow recovering world financial

crisis 7. More efficient competitors

ST Strategies

1. Increase employee productivity

(T7, S1)

2. Develop more energy efficient

ships (T5, S6, S3)

3. Be protective against laws and

regulations (T1, T2, S3)

WT Strategies

1. Reduce Energy use (T3, W5)

2. Expand to Asia instead of

Europe (T1, T2, W2)

3. Increases safety awareness

(T4, T3, W4)

According to SWOT analysis the RCC is doing good overall. However, RCC should focus its

attention on safety and quality of its passengers as well as safety of marine life. RCC should

closely evaluate its opportunities of expanding into unknown markets.

Strategic Position and Action Evaluation Matrix (SPACE)

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-1 -2 -3 -4 -5 -6 -7

Internal Strategy Position

Financial Strength (FS)

Return on investment 3.00

Cash flow 4.00

Inventory turnover Revenue growth

2.004.00

Average Financial Strength 3.25

External Strategy Position

Environment Stability (ES)

Technological changes -2.00

Laws and Regulations -4.00

Customer Demand -3.00

Competition -3.00

Average Environment Stability -3.00

Competitive Advantage (CA) Market share -3.00 Cruise entertainment -3.00 Customer satisfaction -2.00 Building of new ships -2.00 Average Competitive Advantage -2.50

Industry Strength (IS) Growth potential 4.00 Profit potential 3.00 Financial stability 4.00 Average Industry Strength

3.67

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0 +1 +2 +3 +4 +5 +6 +7

+1 +2 +3 +4 +5 +6 +7

-7 -6 -5 -4 -3 -2 -1

X-Axis= .25Y-Axis = 1.17

The BCG Matrix

Return on investment Cash flow Inventory turnover Revenue growth

Stars II

Technological changes Laws and Regulations Customer Demand Competition

Question Marks I

Market share Cruise entertainment Customer satisfactionBuilding of new ships

Cash Cows III

Growth potential Profit potential Financial stability

Dogs IV

According to the BCG Matrix, I would have to say that RCC is a Stars II organization. It has

best long term opportunities for growth and profitability. However, I would argue that it is

also a Question Market I, because of rapidly changing factors in the industry.

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High Medium Low 1.0 .50 0.0

Relative Market Share Position

According to my Space Matrix RCC should be more aggressive in their operations

The Internal-External (IE) Matrix

Grow

I

Grow

II

Grow

III

Hold

IV

Hold

V

Hold

VI

Divest

VII

Divest

VIII

Divest

IX

EFE Score =3.06 IFE Score = 3.21

According to the IE Matrix, I would have to say that RCC is growing rapidly. This is also

evident by the company profit increases over the last year and a half.

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Strong Average Weak 3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

The IFE Total Weighted Scores

The EFE Total Weighted Scores

3.0 2.0 1.0

The Grand Strategy Matrix

According to The Grand Strategy Matrix, I would put RCC in Quadrant I. Therefore, RCC

should continue to concentrate on current market conditions. In addition, RCC should think

about backward, forward, or horizontal integration in their strategy going forward.

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SLOW MARKET GROWTH

RAPID MARKET GROWTH

STRONG COMPERATIVE POSITION

WEAKCOMPERATIVE POSITION

Quadrant II

Return on investment Cash flow Inventory turnover Revenue growth

Quadrant IV

Growth potential Profit potential Financial stability

Quadrant III

Market share Cruise entertainment Customer satisfactionBuilding of new ships

Quadrant I

Technological changes Laws and Regulations Customer Demand Competition

Royal Caribbean Cruise

The Quantitative Strategic Planning Matrix (QSPM)

Strengths Weight AS TAS AS TAS

Strong Market Position 0.10 0 0.00 3 0.30

Brand Recognition 0.10 3 0.30 4 0.40

Increasing Revenue over last 5 quarters 0.09 3 0.27 3 0.27

Customer Satisfaction 0.04 0 0.00 4 0.16

2nd biggest Cruise liner by Market Share 0.04 3 0.12 3 0.12

2 new high class ships on order 0.07 2 0.14 2 0.14

Different Cruise lines from its competitors lines 0.06 1 0.06 2 0.12

Weaknesses Weight AS TAS AS TAS

Primarily targeting higher income customers. 0.13 2 0.26 2 0.26

Political unrest in the Mediterranean 0.05 0 0.00 0 0.00

Recent Shipwrecks decreased the demand 0.14 0 0.00 0 0.00

Piracy off the African coast reduced the demand 0.07 0 0.00 0 0.00

Dependency on high cost fuel 0.10 0 0.00 0 0.00

Expansion into unknown markets (EU, Asia) 0.01 1 0.01 2 0.20

Subtotal 1.00 1.16 1.97

Opportunities Weight AS TAS AS TAS

Construction of new mega-ships creating publicity 0.10 4 0.40 4 0.40

European Market 0.10 2 0.20 3 0.30

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Global Market Expansion Penetration

Increase in online booking by customers 0.07 3 0.21 3 0.21

Increase in social media popularity 0.03 2 0.06 2 0.06

Six primary cruise line brands 0.08 0 0.00 0 0.00

Asia’s large population market 0.05 2 0.10 4 0.20

Moderate growth in the U.S. economy 0.07 4 0.28 4 0.28

Threats Weight AS TAS AS TAS

Cruise ships are heavily regulated 0.10 1 .10 1 .10

Different countries have different laws and regulations 0.09 0 0.00 0 0.00

Environmental impacts of large ships 0.04 2 .08 3 0.12

MARPOL laws and regulations 0.11 2 0.22 2 0.22

Rising fuel costs 0.07 1 0.07 3 0.21

Slow recovering world financial crisis 0.03 1 0.03 1 0.03

More efficient competitors 0.06 3 0.18 3 0.18

TOTAL 1.00 3.09 4.28

According to the QSPM Matrix, RCC should definitely focus on market penetration. In order

to expand market penetration RCC should focus on targeting different age group. By targeting

different age group RCC could potentially expand its market share and potentially take more

market share in the future.

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Step 9

Some of the specific strategies that I would recommend for RCC would be to do the

following:

Direct target marketing to groups ages 25-40

Establish more departure U.S. port locations such as of coast of California or Georgia

and Florida.

Establish more departure ports in Asia such as Hong Kong and Shanghai, China.

On the other hand, the long-term objective that I would recommend to RCC would be to

invest in researching and potentially building new ships that run on cleaner and less harmful

fuel.

Step 10

The recommendations from step 9 could be implemented in the following way:

Aggressive approach in marketing to target groups or market, specifically groups ages

25-40.

Increase partnership with other entertainment and cruise companies

Intensive market research in Asia, including governmental regulations.

On the other hand, the long-term objective could be implemented by creating or establishing

compliance with the national and international research agencies that focus on developing

cleaner energy.

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Step 11

Specific annual objectives and policies that I would recommend would be to implement

employee incentives to attain industry leader status in customer service. In addition, I would

recommend to RCC to improve employee training with emphasis on the company’s mission,

values, and code of ethics. By doing this, the organization might develop customer loyalty and

possibly have regular customers that otherwise would not be possible.

Step 12

Obviously, current economic conditions include much speculation on the duration and

severity of the downturn. However, RCC was able to generate steady growth over the last two

years. Therefore, Financials and operational efficiencies must take a priority in the short-term.

In addition, work force size should be monitored and adjusted to ensure long-term

organizational success.

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