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Brief HistoryCarnival Cruise Lines is one of the largest and most successful cruise line company in the world. The history of Carnival Cruise Lines started in 1972. The Chairman and CEO, Ted Arison, purchased an ocean liner for $6.5 million. The ocean liner was named Mardi Gras and included in the deal was another ship called the Carnivale. In the beginning, Carnival experienced a deficit due to fuel and ship concerns. With the design of on-board activities, entertainment, an enhanced marketing approach, and travel packages, Carnival began seeing their successes and revenue grow. Carnivals' prices were competitive with other travel packages, which was a major factor in their success. Slowly, Carnival began buying out their competitors and adding more cruise ships to their company. Carnival Cruises became an industry leader with the finalization with Princess Cruises, which allowed Carnival to become a global cruise line.

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Timeline1970s1972- Carnival was formed by cruise industry pioneer Ted Arison1972 The maiden voyage of Carnivals first ship, theMardi Gras, which ran aground on a sandbar outside the Port of Miami1975 Carnival purchasesEmpress of Britain, which enters the service as the Carnivale1978 Festivale begins service for Carnival as the largest and fastest vessel sailing from Miami to the Caribbean

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Timeline1980s-1982 Debut ofTropicale, the first new cruise ship the cruise industry had seen in many years; ship marks the beginning of an industry-wide multi-billion-dollar shipbuilding boom.1984 Carnival becomes first cruise line to advertise on network television with the premiere of new advertising campaign starring company spokesperson Kathie Lee Giffordhttp://www.youtube.com/watch?v=BECwNurBbEQ1985 Debut of the Holiday1986 Launch of theJubilee1987 The Celebrationenters service1987- Carnival Cruise Line made an initial public offering of 20% of its common stock. This provided capital that allowed the company to begin its expansion through acquisition. 1988- Carnival Cruise Line expanded into charter airlines with the purchase of Pacific Interstate Airlines1989- Carnivals first acquisition was Holland America Line

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Timeline1990s-1990- The Fantasy enters service as first new ship ever placed on a three and four day Bahamas cruise program from Miami. 1992- Carnivals second acquisition was Seabourn Cruise Line1994- Parent company renamed Carnival Corporation to distinguish between it and its flagship brand, Carnival Cruise Lines.1994- Launches the first passenger vessel to exceed 100,000 tons, Carnival Destiny, at the time it was the worlds largest cruise ship1997- Carnivals third acquisition is with Costa Cruises1997- Carnivals fourth acquisition is with Celebrity Cruises1998- Carnivals fifth acquisition is with the Cunard Line 1998 Introduces Elation, the first new cruise ship deployed on the West Coast1998 Carnival Paradise, enters service.Paradisewas the only non-smoking cruise ship in the world.5

Timeline2000s2000 Carnival Victory is launched2001 Introduces a new class with the launch of Carnival Spirit. It was the first new Fun Ship ever positioned in the Alaska and Hawaii markets2002 Carnival Pride is launched2002- Carnival Legend enters service2002- Carnival debuts Carnival Conquest, the largest Fun Ship ever constructed at the time2003- Carnival merged with P&O Princess Cruises to form Carnival Corporation and PLC to become the largest cruise ship company in the world2005 Carnival Liberty debuts, operating the line's first ever Mediterranean cruises2007 Carnival Freedom debuts 2008 The Carnival Splendordebuts &Celebrationleaves the fleet2009 Carnival Dream, the largest "Fun Ship" ever constructed enters service on September 21 and is the largest ship ever built http://www.youtube.com/watch?v=pdgMlBTILq06

Timeline2010s-2010 A fire onCarnival Splendor leaves the ship crippled2011 Carnival Magic enters service 2012 Carnival Breeze enters service2012- Carnival Spiritmoved to Sydney, Australia in October 2012, it became the first Fun Ship to sail Australian waters and also became the largest cruise ship in Australia year-round2012- An accident on Costa Concordia, operated by Carnival brand Costa Cruises, leaves 32 people dead.2012-Carnival added features to ships, including the Guy Burger Joint, Blue Iguana Cantina Taco Bar, Red Frog Rum Bar and Blue Iguana Bar.2013- A fire on Carnival Triumph leaves the ship crippled with no power for 5 days

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Mission Statement"Our mission is to deliver exceptional vacation experiences through the world's best-known cruise brands that cater to a variety of different lifestyle and budgets, all at an outstanding value unrivaled on land or at sea." Product: Exceptional vacation experiencesTarget Groups: Low, medium, and high income groups, vacation travelers, and various lifestyle groups8

Current Performance ObjectivesCarnival is currently expanding and focusing on the European and Asian markets.

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Historical Corporate StrategyConcentrationVerticalIntegration (Internal): In 2007, Carnival expanded their cruises with expanded water parks, adult-only areas and resort styled pools. In 2012, Carnival now has 90,000 employees. They have increasingly adding employees to their company to further assist their customers. In 2013, Carnival further developed safety training and management training after the Concordia tragedy. Horizontal Integration (External): In 1988, Carnival Cruise acquired Holland American Line. The deal included two Holland America subsidiaries, Windstar Sail Cruises, and Holland America Westours. This acquisition allowed an aggressive building campaign. In 1992, Carnival acquired 50% of Seabourn. This acquisition allowed for additional cruise operations in South America, the Mediterranean, Southeast Asia, and the Baltic. In 1997, Carnival merged with Celebrity. The merged resulted in 17 ships and 30,000 berths.

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Historical Corporate StrategyDiversificationConcentric(Internal) : Carnival Cruise Lines owns cruise ships and has developed many other travel necessities for their customers. Carnival has hotels, motor homes, and rail cars. Carnival owns 12 hotels, 300 motor coaches, and 20 domed rail cars. All these transportation products relate to developing travel and vacations. Conglomerate(Internal): Carnival experienced risk with the purchase of Riviera Towers. The hotel consisted of 692 rooms. In 1991, Carnival reached a settlement to surrender the hotel project and settle their debt with the Bahamian government. In the late 1980's, Carnival invested into the Airline industry to transport their guests. In 1997, Pan Am Corp purchased Carnival Air Line as most of their revenue came from the Carnival Cruise Corporation. By terminating these travel industry companies, Carnival reduced their debt, which allowed for a greater focus on dominating the global cruise line industry.

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Stability of CarnivalCarnival Cruises has ambition for profit stability. In 1988, Carnival acquired Holland American Line. In 1992, Carnival gained 50% of the Seabourn Cruise Lines. In 1997, the purchase of Costa. Carnival Cruises continued more acquisitions and mergers to become a global cruise line.

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RetrenchmentTurn AroundDivestment : In 1997, Carnival Corporation finalized an agreement with Pan Am Corp for their airline. The airline did not produce high profits, which allowed for a divestment and acquisition of the airline.

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HistoricalCompetitive StrategiesFor Each Strategic Business Unit Within the Corporation

Cost LeadershipBroad Market: In the 1970's, Carnival Cruise had competitive packages with other travel packages.

DifferentiationBroad Market: In 1972, the company attracted customers with planned activities, a casino, discos, and other forms of entertainment. Carnival used a lot marketing to differentiate themselves from the competition, but the market is now more narrow as many cruise lines are following their ideas.

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HistoricalFunctional Strategies

Nature of MarketConsumerBreadth of Product LinesFullDegree of CustomizationStandardCustomNumber of Distribution Channels:MultipleNature of Multiple Distribution Channels:ComplimentaryDistribution form :Direct Selling to End-usersDirect Selling to Retailers

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Geographic CoverageInternational coverage(United States, Australia, Pacific Islands, Caribbean Islands, Europe, Russia, Scandinavia, South America and Italy)22 departure ports(Baltimore, Boston, Charleston, Fort Lauderdale, Jacksonville, Miami, New York, Norfolk Virginia, Port Canaveral, Tampa, Galveston, New Orleans, Seattle, Vancouver, Venice, Barcelona, Barbados, Sydney, Pacific Islands, St. Peterburg in Russia, San Juan in Puerto Rico and Los Angeles)

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Sailing Calendar17

DestinationsBaltimore: Grand Turk and BahamasBoston: Grand Turk and BahamasCharleston: Grand Turk and BahamasFort Lauderdale: Grand Turk, Bahamas, Mexico, and Cayman Islands Jacksonville: Bahamas, Jamaica, Caribbean Islands, Dominican Republic, British Virgin Islands, Antigua, Mexico, Puerto Rico, Key West and Grand Turk Miami: Key West, Mexico, Bahamas, Cayman Islands, Grand Turk, Costa Rica, Caribbean Islands, Isla Roaton, Belize, Panama, ColumbiaNew York: Canada, Bahamas, Caribbean Islands, Puerto Rico, Grand Turk, Tampa, Curacao, Jamaica, and Cayman IslandsNorfolk, Virginia: The BahamasPort Canaveral (Orlando), FL: The Bahamas, Key West, Belize, Puerto Rico, Caribbean Islands, Grand Turk, Mexico, and Isla RoatanSydney, Australia: Pacific Islands and Australia citiesSt. Petersburg: Amsterdam, Denmark, England, Finland and Belgium

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DestinationsTampa: Mexico, Cayman Islands, Panama Canal, Columbia, Long Beach, Belize, and Costa RicaGalveston, TX: Mexico, Belize, Belize, Jamaica, The Bahamas, Key West, Isla Roatan and Cayman IslandsNew Orleans: Mexico, Cayman Islands, Belize, Jamaica, British Virgin Islands, The Caribbean Islands, Puerto Rico, Grand Turk, and Key WestLos Angeles: Mexico cities, Catalina, Hawaii, Tahiti and Fiji IslandsSeattle: Alaska and CanadaVancouver, BC: Canada and AlaskaLondon: Ireland, Scotland, Greenland, New York, and CanadaBarcelona: Spain, New Orleans, Grand Turk, and Canary IslandsBarbados: The Caribbean IslandsSan Juan, Puerto Rico: The Caribbean Islands, Grand Turk, and Miami19

Historical Functional Strategies

Degree of Selectivity of ChannelsLow (not selective/ intensive distribution)Pricing LevelCompetitiveAdvertising mediaPrintRadio TVMoviesBillboardsPromotion emphasisPush (The company uses many aspects to promote their packages to travel agencies and suppliers. They also use lowest guaranteed price on their website.) Pull (They rely on word-of-mouth, advertising promotions, sales promotions, and social media.)20

Carnival: Source of Funds21

Royal Caribbean: Source of Funds22

Norwegian Cruises: Source of Funds23

Dividend Payment vs. Competitors24

Inventory Turnover vs. Competitors25

II. Historical Review of the Corporate Actual Performance

Carnivals Biggest Competitors: -Royal Caribbean Cruise Line-Norwegian Cruise Line26

Stock PerformanceStock performance is the measurement of a stock's ability to increase or decrease the wealth of its shareholders. Performance is typically measured by its fluctuation in price. When the stock price increases, the stock shows good performance. Conversely, a decrease in price is a poor performance.27

Stock PerformanceTicker Symbols: Carnival: CCL Royal Caribbean: RCLNorwegian Cruise Line: NCLH

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Stock Performance of CCL

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Market ShareThe percentage of an industry or market's total sales that is earned by a particular company over a specified time period. Market share is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period. This metric is used to give a general idea of the size of a company to its market and its competitors.

Formula: Sales revenue over a specified time/total sales of the industry over the same period30

Market Share of the Companies in 200831

Market Share of the Companies in 200932

Market Share of the Companies in 201033

Market Share of the Companies in 201134

Market Shares of the Companies in 201235

Overall Market Share of the Industry from 2008-201236

Net IncomeNet income is a company's total earnings. Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses. This number is important measure of how profitable the company is over a period of time. Formula: Net income = net revenue - expensesNet revenue = gross revenue - cost of goods sold37

Net Income from 2008-201238

Net SalesNet sales is the amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any discounts allowed. Formula: Net Sales = Gross Sales - Returns and Allowances 39

40Net Sales from 2008-2012

Number of Employees vs. Competitors41

Number of Cruise Ships Per Cruise LineCarnival: 102 shipsNorwegian: 12 shipsRoyal Caribbean: 21 ships42

Chart of Cruise Ships for each Cruise Line43

Profitability RatiosA class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses during a specific period of time.

The 3 Formulas that will be used: Gross Profit Margin: Revenue-COGS/RevenueOperating Profit Margin: Operating Income/Net SalesNet Profit Margin: Net Income/Sales44

Gross Profit MarginA financial metric used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. 45

Gross Profit Margin in 200846Cruise Line2008Carnival38.20%Norwegian25%Royal Caribbean32.50%

Gross Profit Margin in 2009Cruise Line2009Carnival37.50%Norwegian30%Royal Caribbean30.80%

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Gross Profit Margin in 201048Cruise Line2010Carnival37.10%Norwegian33%Royal Caribbean33.90%

Gross Profit Margin in 2011Cruise Line2011Carnival34.00%Norwegian33.8%Royal Caribbean34.40%

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Gross Profit Margin in 2012Cruise Line2012Carnival32.00%Norwegian35.0%Royal Caribbean32.90%

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Operating Profit MarginOperating profit margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages and raw materials. A healthy operating margin is required for a company to be able to pay for its fixed costs. The higher the operating profit margin, the better.

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Operating Profit Margin 2008Cruise Line2008Carnival19.60%Norwegian-3.0%Royal Caribbean12.70%

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Operating Profit Margin 2009Cruise Line2009Carnival21.50%Norwegian9.2%Royal Caribbean8.20%

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Operating Profit Margin 2010Cruise Line2010Carnival16.20%Norwegian11.4%Royal Caribbean11.80%

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Operating Profit Margin 2011Cruise Line2011Carnival14.20%Norwegian14.2%Royal Caribbean12.35%

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Operating Profit Margin 2012Cruise Line2012Carnival10.60%Norwegian15.6%Royal Caribbean5.20%

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Net Profit MarginNet profit margin measures how much out of every dollar of sales a company actually keeps in earnings. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. 57

Net Profit Margin 2008Cruise Line2008Carnival15.90%Norwegian-10.0%Royal Caribbean8.70%

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Net Profit Margin 2009Cruise Line2009Carnival13.20%Norwegian3.6%Royal Caribbean2.70%

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Net Profit Margin 2010Cruise Line2010Carnival13.60%Norwegian1.1%Royal Caribbean7.60%

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Net Profit Margin 2011Cruise Line2011Carnival12.10%Norwegian5.7%Royal Caribbean8.00%

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Net Profit Margin 2012Cruise Line2012Carnival8.40%Norwegian7.4%Royal Caribbean0.20%

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Common Sized Income StatementsThis type of financial statement can be used to allow for easy analysis between companies or between time periods of a company.63

Common Sized Income Statements for 200864Common Sized Income Statements for 2008PercentagesTotal Revenue 100%Cost of Revenue67%Gross Profit32%Selling & Admin Exp.9%Depreciation Exp.9%Special Income1%Operating Expenses22%Operating Income10%Net Interest-2%Other Income-0.9%Pretax Income8%Net Income8%

Common Sized Income Statements for 200965Common Sized Income Statements for 2009PercentagesTotal Revenue 100%Cost of Revenue65%Gross Profit34%Selling & Admin Exp.11%Depreciation Exp.9%Special Income-Operating Expenses20%Operating Income14%Net Interest-2%Other Income0.6%Pretax Income12%Net Income12%

Common Sized Income Statements for 201066Common Sized Income Statements for 2010PercentagesTotal Revenue 100%Cost of Revenue62%Gross Profit37%Selling & Admin Exp.11%Depreciation Exp.9%Special Income-Operating Expenses20%Operating Income16%Net Interest-2%Other Income-0.1%Pretax Income13%Net Income13%

Common Size Income Statements for 201167Common Sized Income Statements for 2011PercentagesTotal Revenue 100%Cost of Revenue62%Gross Profit37%Selling & Admin Exp.11%Depreciation Exp.9%Special Income-Operating Expenses21%Operating Income16%Net Interest-2%Other Income-0.1%Pretax Income13%Net Income13%

Common Size Income Statements for 201268Common Sized Income Statements for 2012PercentagesTotal Revenue 100%Cost of Revenue62%Gross Profit38%Selling & Admin Exp.11%Depreciation Exp.8%Special Income-Operating Expenses19%Operating Income18%Net Interest-2%Other Income-0.1%Pretax Income16%Net Income15%

Carnivals Current PerformanceCarnivals current performance is above satisfactory. Carnival has a significant market share in the cruise industry and twice as much net income as the second largest cruise line, Royal Caribbean. 69

III. Examination of the Corporate Top Decision Makers

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Board of DirectorsThe responsibility of the directors is to exercise their business judgment to act in what they reasonably believe to be in the best interests of Carnival and their shareholders. The directors are authorized to operate and carry into effect the agreements. 71

Internal vs. ExternalInternal directors: Affiliated with companyExternal directors: Not engaged with company

Carnival Cruises Board of Directors: 4 internal directors 7 external directors72

External Board Members (7)Sir Jonathon Band63 years oldBorn in United KingdomBritishBachelors Degree in Social Science from Exeter UniversitySalary from Carnival: $440,408 in 2011Stock ownership: 27,454 shares as of 2013First Sea Lord & Navys most senior serving officer Married with two daughters73

Richard J. Glasier67 years oldAmericanBachelors Degree in Economics from Cornell College and MBA in Finance from Southern Methodist UniversityPresident and CEO Officer of Argosy. Former CFO and Executive Vice President of Royal Caribbean Cruises. Has 20 years experience in hotels, gaming, and cruises. Carnival Cruise Salary: $525,298 in 2011Ownership of stock: 44,050 shares in 201374

Stuart Subotnick71 years oldBachelors Degree in Business Administration at Baruch College, Master of Law Degree from Brooklyn Law School, and Juris Doctorate degree from New York University. President and CEO of Metromedia Company. He is also member of the board of directors of Above.netDirector since 1987Carnival Cruise Salary: $518,928 in 2011Stock ownership: 54,408 shares in 2013

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Debra Kelly-Ennis56 years oldAmericanBachelors Degree from University of Texas and MBA from University of Houston.Completed executive Leadership program at Harvard Business School.Former President and CEO at Diageo, Canada. She served as Chief Operating Officer at Saab. She was General Manager of Oldsmobile.She joined the board of directors on May 15, 2013.76

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Laura Weil55 years oldAmericanBachelors Degree in Art History and Government from Smith College and MBA Degree in Finance and Marketing from Columbia University.Chief Operating Officer of New York and Company. Former CEO of Ashley Stewart, CEO of Urban Brands, and CFO of American Eagle Outfitters. Carnival Cruise Salary: $488,428 in 2011Stock ownership: 52,738 shares in 201377

Sir John Parker71 years oldBorn in Ireland; IrishDoctor of Science in Engineering from Queens UniversityPresident of Royal Academy of Engineering and Vice President of Engineering Employers FederationDirector of the board since 2000Carnival Cruise Salary: $482,928 in 2011Stock ownership: 52,008 shares in 2013Married with two children78

Randall J. Weisenburger54 years oldAmericanBachelor's Degree in Finance and Accounting from Virginia Tech. He has a Master's degree in Business Administration from the University of Pennsylvania's Wharton School of Business.He is the Chief Financial Officer and Executive Vice President of Omnicom Group Inc. He is also on the board of director for Valero Energy Corporation. Carnival Cruise Salary: $448,928 in 2011Stock ownership: 156,954 shares in 201379

Internal Board Members (4)

Micky Arison

Son of Carnival Cruise founder, Ted ArisonChairman of the Board64 years oldBorn in IsraelJewishAttended the University of Miami but dropped out1979-2013 CEO of Carnival CorporationOwner of Miami Heat basketball team

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Howard Frank

VP of the Board & CEO of Carnival Corporation72 years oldVice Chairman of the board of directors since 1993Joined Carnival as senior VP finance & Chief Operating Officer in 1989Chairman of the Executive Committee of The Cruise Lines International Association

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Arnold DonaldPresident & CEO of Carnival Corporation58 years oldBachelors Degree in EconomicsMasters Degree in Mechanical EngineeringBoard of Director of Carnival since 2001Chairman of the Board of Merisant Company from 2000-2005

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Pier Luigi FoschiChairman & CEO Carnival Asia and Chairman Costa Crociere66 years oldItalianChairman of Costa Crociere since 2000Appointed Chairman and CEO of Carnival Asia in 2012

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Executive CommitteeMicky Arison (Chairperson)Howard S. FrankStuart Subotnick2 internal & 1 external

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Audit CommitteeThe purpose of the Audit Committee is to assist the Boards' oversight of the integrity of the Companies financial statements, the Companies compliance with legal and regulatory requirements, the independent auditors qualifications and independence, the performance of the Companies internal audit functions and independent auditors, and relevant elements of the Companies risk management programs.

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Members of the Audit CommitteeRichard Glasier (Chairperson)Laura WeilStuart SubotnickRandall Weisenburger(All external members)86

Compensation CommitteeThe Compensation Committee has overall responsibility for approving and evaluating the director and officer compensation plans, policies and programs of Carnival, including annual base salary, annual incentives, long-term incentives, stock options, terms of employment agreements and severance arrangements.87

Members of the Compensation CommitteeRichard GalsierRandall Weisenburger (Chairperson)Laura Weil(All external members)88

Nominating and Governance CommitteeThe purpose of the Nominating & Governance Committee is to develop and recommend to the Boards a set of Corporate Governance Guidelines applicable to the Companies. They also assist the Boards by identifying individuals qualified to become Board members and to recommend to the Boards the director nominees for the next annual meeting of shareholders.89

Members of the Nominating and Governance CommitteeSir John ParkerStuart Subotnick (Chairperson)Richard GlasierRandall Weisenburger(All external members)90

Health, Environmental, Safety & Security CommitteeThe purpose is to assist the Boards in fulfilling their responsibility to supervise and monitor health, environmental, safety and security policies, programs, initiatives at sea and onshore, and compliance with health, environmental, safety and security legal and regulatory requirements.91

Members of Health, Environmental, Safety & Security Committee

Sir John Parker (Chairperson)Sir Jonathon BandDebra Kelly-Ennis(All external members)92

Prior DecisionsOn November 15, 2012, the Boards of Directors declared a special dividend to holders of Carnival Corporation common stock and Carnival plc ordinary shares of $0.50 per share. In September 2007, the Boards of Directors authorized the repurchase of up to an aggregate of $1 billion of Carnival Corporation common stock and Carnival plc ordinary shares.93

Management Team for CarnivalMicky Arison- Chairman of BoardHoward Frank- VP of Board & Chief Operating OfficerArnold Donald- President & CEODavid Bernstein- Senior VP & CFORichard Ames- Senior VP Shared ServicesArnaldo Perez- Senior VP, General Counsel & SecetaryLarry Freedman- Chief Accounting Officer & VP Controller94

Other Top ManagementManagement AIDA:Michael Ungerer- PresidentManagement Carnival Cruise:Gerald Cahill- President & CEOManagement Carnival Australia:Ann Sherry- CEOManagement Carnival UK:David Dingle- CEO

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96Management Holland America:Stein Kruse (President & CEO)Management Princess Cruise:Alan Buckelew (President & CEO)Management Seabourn:Rick Meadows (President)Management Costa Crociere:Pier Luigi Foschi- ChairmanMichael Thamm- CEO

Other Top Management

Top Management Involved with Board of DirectorsMicky ArisonArnold DonaldPier Luigi FoschiHoward Frank

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Management StyleChairman Micky Arison is known for being less hands on than most. Micky is said to have a hands-on, but provides an open-door management style. He gives great independence and authority to his executive teams who operate Carnival and Carnival brand ships.

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Managements Compensation99

Management Efficiency Ratios/ActivityReceivables TurnoverIndicates the number of times that accounts receivables are cycled during the period (usually a year)Formula = Annual credit sales/Accounts receivables

Average Collection PeriodIndicates the average length of time in days that a company must wait to collect a sale after making it; may be compared to the credit terms offered by the company to its customersFormula = Accounts receivable/(Sales for year/365)

Management Efficiency Ratios/ActivityInventory TurnoverMeasures the number of times that average inventory of finished goods was turned over or sold during a period of time, usually a year.Formula = Net sales/Inventory

Days of InventoryMeasures the number of one days worth of inventory that a company has on hand at any given timeFormula = Inventory/(Cost of goods sold/365)

Management Efficiency Ratios/ActivityFixed Asset TurnoverMeasures the utilization of the companys fixed assets (i.e., plant and equipment); measures how many sales are generated by each dollar of fixed assets.Formula = Sales/Fixed assets

Total Asset TurnoverMeasures the utilization of all the companys assets; measures how many sales are generated by each dollar of assets.Formula = Sales/Total Assets

Management Efficiency Ratios/Activity 2012RatiosCarnivalRoyal CaribbeanNorwegian CruiseAccounts receivable Turnover56.9727.32151.13Average Collection Period Ratio6.4113.362.42Inventory Turnover26.535.337.3Days of Inventory13.810.49.8Fixed Asset Turnover0.480.440.46Total Asset Turnover0.390.30.38

Management Efficiency Ratios/Activity 2011RatiosCarnivalRoyal CaribbeanNorwegian CruiseAccounts receivable Turnover60.0525.77272.01Average Collection Period Ratio6.0814.161.34Inventory Turnover27.534.240.5Days of Inventory13.310.79Fixed Asset Turnover0.490.450.48Total Asset Turnover0.410.380.4

Management Efficiency Ratios/Activity 2010RatiosCarnivalRoyal CaribbeanNorwegian CruiseAccounts receivable Turnover58.3425.32255.38Average Collection Period Ratio6.2614.421.43Inventory Turnover28.435.241.4Days of Inventory12.810.48.9Fixed Asset Turnover0.470.400.43Total Asset Turnover0.390.340.36

Management Efficiency Ratios/Activity 2009RatiosCarnivalRoyal CaribbeanNorwegian CruiseAccounts receivable Turnover37.1817.38235.79Average Collection Period Ratio9.8221.001.55Inventory Turnover25.337.744.7Days of Inventory14.49.78.2Fixed Asset Turnover0.450.390.48Total Asset Turnover0.360.320.39

Management Efficiency Ratios/Activity 2008RatiosCarnivalRoyal CaribbeanNorwegian CruiseAccounts receivable Turnover35.7624.08348.34Average Collection Period Ratio10.2115.161.05Inventory Turnover28.745.853.5Days of Inventory12.786.8Fixed Asset Turnover0.560.470.51Total Asset Turnover0.440.40.42

IV. Examination of Internal Environment of the Company

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Corporate CultureMaintain friendly, family-like atmosphere in their ships and in their work environment

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Corporate StructureCarnival Cruise is one of 10 subsidiary companies owned by Carnival Corporation & PLCWithin Carnival Cruise, an Open Door policy is advocatedEmployees have the freedom and flexibility to express their ideas in working toward solutions that benefit the company. Promote from Within advancement strategy110

Common Size Balance Sheet 2012CarnivalRoyal CaribbeanNorwegian CruiseTotal Current Asset5%4%3%Property and Equipment, Net82%88%84%Goodwill8%2%10%Other Assets5%5%3% Total Assets100%100%100%Current Liabilities19%21%16%Long-Term Debt18%35%47%Other long-term liabilities2%2%3%Shareholders Equity61%42%34% Total Liabilities and Shareholder Equity100%100%100%

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Common Size Balance Sheet 2011CarnivalRoyal CaribbeanNorwegian CruiseTotal Current Asset3%5%3%Property and Equipment, Net83%86%83%Goodwill9%4%11%Other Assets5%6%3% Total Assets100%100%100%Current Liabilities16%15%15%Long-Term Debt21%40%51%Other long-term liabilities2%2%1%Shareholders Equity62%42%33% Total Liabilities and Shareholder Equity100%100%100%

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Common Size Balance Sheet 2010CarnivalRoyal CaribbeanNorwegian CruiseTotal Current Asset3%5%2%Property and Equipment, Net83%85%83%Goodwill9%4%11%Other Assets6%6%3% Total Assets100%100%100%Current Liabilities15%17%12%Long-Term Debt21%40%56%Other long-term liabilities2%2%1%Shareholders Equity61%40%31% Total Liabilities and Shareholder Equity100%100%100%

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Common Size Balance Sheet 2009CarnivalRoyal CaribbeanNorwegian CruiseTotal Current Asset4%6%3%Property and Equipment, Net81%84%80%Goodwill9%4%13%Other Assets6%6%5% Total Assets100%100%100%Current Liabilities13%15%10%Long-Term Debt25%42%53%Other long-term liabilities2%2%1%Shareholders Equity60%41%35% Total Liabilities and Shareholder Equity100%100%100%

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Common Size Balance Sheet 2008CarnivalRoyal CaribbeanNorwegian CruiseTotal Current Asset5%6%5%Property and Equipment, Net79%84%82%Goodwill10%5%12%Other Assets6%5%1% Total Assets100%100%100%Current Liabilities17%16%20%Long-Term Debt23%40%49%Other long-term liabilities2%3%1%Shareholders Equity57%41%31% Total Liabilities and Shareholder Equity100%100%100%

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Information Systems In the early 2000s, 95% of sales were made through travel agentsNow, individuals can purchase tickets through online services and the telephone. The website is carnivalcruise.com and 1-800-Carnival.Entire ship carries onboard Wi-FiElectronic-access control systemPlastic card that allows in and out access, room key, and on-board credit card. 116

Marketing Product Carnival Cruise markets their cruise-based vacation products with many different mediums.Current slogan: Fun for all. All for fun Carnival emphases on the word FunExample of copyrighted words: Carnival, The Fun Ship, and all their ship names.

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Marketing PromotionsIn 2013, Carnival launched a first ever sweepstakes contest. For a week, any customer who booked a vacation were automatically entered into a contest to win over 1,000 prizes. Current promotions and offers from their website:118

Price GuaranteePrices range depending on the length, destination, and amenities.Currently, Carnival Cruise advertises on their website with Price GuaranteeIf you find a betterCarnival advertiseddeal somewhere else within two days of booking your cruise, we'll not only be very surprised we'll give you 110% of the difference in onboard credit.

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Marketing Advertisements 120

Human ResourcesCarnival has a Shipboard Human Resources DepartmentDivided into two tiers: Staff Admin and TrainingThe department is responsible for Employee relations, Employee Communication, Training and Development, Staff Administration, Coaching and Counseling, Quality of Life and Leadership TrainingThe crew training centers have over 400 learning resources including e-learning courses, books, tapes, DVDs, management courses and language resourcesThis team also conducts fun and informative training programs including regulatory/ safety training, Team Carnival Orientation, English Classes, Hospitality Training, Sales Training and other department-specific trainingThis department is also responsible for overseeing the star employee of the month program, the service award program and the Crew Recreation Committee which is responsible for all crew activities and FUN on board121

V. Examination of the External Environment of the company122

CompetitorsNorth America: Royal Caribbean, Disney Cruise Line, and Norwegian Cruise LineSouthern Europe: Mediterranean Shipping Cruises, Louis Cruise Line, Festival Cruises, and Spanish Cruise LineGermany: Festival Cruises, Hapag-Lloyd, Peter Deilmann, Phoenix Reisen, and TranoceanUnited Kingdom: My Travel's Sun Cruises, Fred Olsen, Saga and Thomson

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Barriers to EntryCompetitionHigh start-up costsUse of ports and facilitiesReputation and establishment124

Substitute Product/ServicesHigh substitute product/servicesOther cruise ship competitors-Royal Caribbean-Norwegian Cruise Line, etc.Other forms of transportation-Airplane-Car-Train125

Customers Low bargaining power for customersLow bargaining power is due to fixed prices by:-Travel agents -Website booking126

SuppliersLow bargaining power for Carnival CruiseLow bargaining power is due to:-Competitive prices from suppliers around the world-But Carnival does use a limited number of suppliers for their fuel and port facility services.127

Societal EnvironmentSocio-cultural: Age (mostly older demographic), and Attitudes (think its expensive & will get sea sick) Legal/political: Pollution and energy guidelines. Also safety concerns with falling off ships, terrorist attacks and potential wars with other countriesTechnological: Wireless internet and cell phone useEconomic: Fuel price concerns, fluctuating economy and interest rate risks128

SWOT AnalysisStrengths:Largest cruise line in the worldHigher market shares than competitorsAcquired several companies in the cruise line industryGlobal and International presenceStrong consumer demand in EuropeHigh value entertainment on shipsCost advantages over most of their competitorsHigh customer satisfactionAffordable vacation packages for families129

SWOT AnalysisWeaknesses:Poor safety recordBad publicityMany people think cruises are too expensive Need to advertise low average prices

130

SWOT AnalysisOpportunities:Cruise industry appeals to large demographicMore destination route locationsAsian and African marketsAdvertising with different medias

131

SWOT AnalysisThreats:DiseasesWeatherTight competition with other cruise companiesEnvironment regulationsIncreasing fuel pricesCheaper vacation packages through competition with hotels, airline travel, and car driving132

VI: Recommended Plan of Action133

Mission/ObjectiveMission: Continue to make customers feel appreciated by giving them great customer service. Customers who feel appreciated and have a fun time will tell their friends, co-workers and family about the wonderful experience they had. Objectives: Attract customers by having promotional campaigns. Carnival also needs to make it aware to customers how a cruise vacation is affordable in a time where money can be scarce.

134

Recommended Strategies for Environmental ConcernsSupport environmental issues and laws

Improve cruise ships to become even more environmentally friendly

Fuel technology advancements

Solar technology advancements135

Recommended Strategies for OpportunitiesOffer special discounts for repeat customersContinue building relationships with travel booking companies, especially online companies. Expanding on social media marketingSending promotional emailsContinue to add more entertainment activitiesOffer more destination spots to attract customers who want to travel to different countries Create a Referral ProgramCreate an alliance with an airline company

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Program DevelopmentMake enhancements to emergency power capabilities, additional emergency generators and new fire safety technology. Carnival also needs to create procedures to communicate quicker with passengers to let them know what is happening.Create solar paneling on ships

137

Feedback ImplementationSend customers who went on a cruise an email survey rating their satisfaction and experience. As a reward, give them a free drink ticket for any future cruises. 138