Royal Caribbean Cruises

Royal Caribbean Cruises Ltd. is a global cruise vacation company that operates Royal Caribbean International, Celebrity Cruises, Pullmantur and Azamara Cruises. The company has a combined total of 35 ships in service and seven under construction. It also offers unique land-tour vacations in Alaska, Asia, Australia, Canada, Europe, Latin America and New Zealand.

Since the company was founded in 1968, Royal Caribbean Cruises Ltd. has become a mainstay in the travel world. Based in Miami, Florida, the company is known for setting the standard in cruise vacations with its innovative onboard amenities. They compete principally on the basis of innovation and quality of ships, quality of service, variety of itineraries, choice of destinations and price. They believe that their commitment to build state-of-the-art ships and to invest in the maintenance and revitalization of the fleet to, among other things, incorporate the latest signature innovations, allows them to continue to attract new and loyal repeat guests and expand into growing international markets and provides them with the flexibility to deploy ships among their brand portfolio.

Its commitment to innovation extends to information technology. Evidence of IT can be seen shipboard—for instance, with bow-to-stern wireless networks, interactive digital signage, and real-time restaurant availability tracking on recently launched ships—as well as shore side, where IT is used to help guests plan cruise activities in advance of their trip, and employees rely on the latest technologies to perform daily business operations.

I. STATEMENT OF THE OBJECTIVES

* To discuss the growth and expansion strategies adopted by Royal Caribbean against the backdrop of some major problems and challenges faced by the company. * To design better cruise experience than their top competitor, Carnival. * To reduce cost and at the same time continually growing revenue. * Improve competitive position with respect to the quality and innovation of on-board product and state-of-the-art cruise ships.

II. CENTRAL PROBLEM
Though RCCL is the top innovator when it comes to the cruising industry, they still lack a significant market share compared to their competitor. They must consider other means of improving their marketing scheme despite of their financial flaws. Likewise, the company must think of ways of how to reduce expenses while continually being profitable. III. AREAS OF CONSIDERATION (SWOT ANALYSIS)

STRENGTHS
* Newer ships are faster and more energy efficient
* Strong brand recognition
* 60-65 percent passengers are returning customers meaning a high retention rate * Big innovations in the market – implement new entertainment and activities onboard (e.g. Rock climbing walls, surfing pools, etc.) WEAKNESSES

* Not enough berths to accommodate their 103 percent occupancy rate
* Spent $97.9 million on advertisement in 2002
* Marketing: Only 35 percent are first time passengers
* Lacks significant market share in comparison with their top competitor: Carnival OPPORTUNITIES
* Increase number of ships
* Buy out smaller competitors
* Demand for cruises has increased and is predicted to continue to increase
* Provide more amenities to accommodate greater customer demographic THREATS
* Increase in oil prices
* Customer expectations are continually growing
* Severe weather
* Carnival is expecting to ship more sails than of RCCL

IV. ALTERNATIVE COURSE OF ACTION

1. RCCL needs to horizontally integrate.
2. Look for potential investors.
3. Lessen the budget for innovations and the said amount to be allotted for marketing and promoting purposes.

V. STRATEGY FORMULATION
I therefore conclude that the best solution to the problem is alternative course of action number 1. RCCL needs to horizontally integrate. Horizontal integration is a strategy used by a business or corporation that seeks to sell a type of product in numerous markets. RCCL must also set aside a friendly suitable budget for their marketing approach to avoid financial failure and to maximize the remaining assets for more company modifications. The goal of horizontal integration is to consolidate like companies and monopolize an industry which means that RCCL can begin to compete with Carnival. VI. POTENTIAL PROBLEM

1. What if fuel frequently increases in price?
2. What if the safety of passengers is not secured because of the company’s new entertainment and activities on board? 3. What if severe weather condition strikes to the land-tours of the cruise?

VII. CONTIGENCY PLAN

1. Look for potential fuel supplier that can provide much affordable price. 2. The company must insist on involving their entertainment machines into several trials before affixing it on the cruise to avoid putting their passengers in jeopardy in the middle of the sea. 3. Additional land-tours must be initiated specifically in tropical areas. This way we can include others choices of tour vacations for our customers and not only providing them in chilly vicinities.