Memo 5
To: David White
From: Austin Lee
4/16/13
Re: Carnival Cruiseline

Problem
Carnival Cruiseline needs to repair its public image and remain competitive after events over the few years.

Background ← Strength of Carnival Cruiseline. Carnival Cruiseline is one of the strongest cruise lines. Running lines such as Holland America, Cunard, and its own namesake, makes it the world’s largest cruise operator. It owned 52% of the market in early 2012 and operates a fleet of 101 ships. Carvnial Cruiseline is the strongest competitor in the cruise industry with strong influence and background. ← Recent Failure in Ships. Recently, Carnival Cruiseline has been having multitudes of problems with their ships and, in effect, negative publicity. In past years ships such as the Triumph and ships parts of the Costa Corceire line had engine problems; this led to passengers stranded at sea. Publicity, especially about safety standards, has gained negativity and company shares have recently fallen 4.3%. Recent ship failures have had detrimental consequences on Carnival Cruiseline. ← Attempts to Compensate. Carnival Cruiseline has taken many measures to compensate for recent ship disasters. The company has had to fly 4,300 passengers from a stranded cruise and gave monetary and discount compensation for many canceled cruises. The company has also increased spending in safety measures by $200 million. Carnival Cruisline has attempted to recover from negative publicity by increase spending for compensation.

Opportunities and Threats Posed by the Situation Opportunities Posed by the Situation ← Increased Publicity. Carnival Cruiseline can use this increased media attention to turn this into a more positive image. The company can demonstrate increased concentration on safety standards and exhibit public friendly behavior, e.g. a focus on the environment. Using the increased publicity, the company has the chance to start developing a positive public image. ← Capitalize on Failure. The recent failures can help Carnival Cruiseline develop their company. The recent failures on the liners have been mostly engine failures or other mechanical problems. Revenue should be distributed from places like advertising to improving on these engines. Future ships can be constructed with foresight of including extra safety considerations. The failures of the past years and negative publicity can help the company develop for the future.

Threats Posed by the Situation ← Competition From Other Companies. The negative publicity may cause other cruise line companies to gain Carnival Cruiseline’s traffic. The recent failures may cause customers of Carnival to go on cruises of other companies. Carnival Cruiseline currently has the majority of the market; however, consumer turnover to companies such as Royal Caribbean and Star Cruise may hold lasting detrimental effects for Carnival Cruiseline’s future. ← Increase Price of Fuel. Increasing fuel prices may cause troubles in Carnival Cruiseline’s funding capabilities. The U.S. Environmental Protection Agency requires low sulfur fuel, which causes increased fuel prices. Especially with Carnival’s increased spending in safety upgrades and maintenance, the increase in fuel prices may be a huge limitation for Carnival Cruiseline’s growth and stability

Alternatives and Implications ← Hold Another Accountable. An individual can be held responsible and the negativity would shift away from Carnival Cruiseline. Most of the problems seem to stem from engine and ship mechanical problems. The company that produces the ship’s parts or the ship contractor can be held responsible and can be used as scapegoat for Carnival